Surprisingly, I get asked this question from time to time. Being a natural smart ass, my first response would be: never, because then you don’t have a volunteer anymore. Duh.
There is a difference between paying someone and reimbursing them for the expenses that they incur when doing board business. Each group should set a policy around reimbursements.
It makes sense to pay a volunteer mileage when they travel on group business, or reimburse them for meals when they are out of town again on group business. If you decide that you are going to pay a person to come to a meeting, then you are getting into two issues –
One is that the income is taxable and you need to report that and withhold CPP at the least.
The second issue is that now your board member is no longer a volunteer are they being held to a higher standard of care? The Volunteer Protection Act no longer applies and that person is really now a professional board member. I certainly would expect more from a person who is getting paid than from a volunteer.