Hi Anna,Tony and Julie have offered you some sound advice about the structure of your organization.
Your situation is not a textbook case, however. From your brief posts, it seems you're developing a structure wherein you will be able to seek funding for specific research projects. Your organization is really a network of research scientists and community development professionals.
If I'm right about these assumptions, then you will have no problems with your governance and structure.
The PMs can be paid as PMs -- not as board members -- and may continue to serve on the board.
Make sure your salaries pass the "reasonable person" test (whatever a reasonable, disinterested person would deem sound business management is the appropriate decision to make.)
Have separate contracts between each PM and the organization in which you describe in detail the duties, responsibilities, expectations, and compensations of both PMs and organization.
Have straightforward evaluations of each PM project. Evaluate each PM on the basis of his or her performance on the project.
The prohibitions against inurement are made in consideration of how profit, earnings, or income benefits (inurement) an individual or discrete set of individuals such as a proprietor/partner, or stockholders. If you are paying PMs to conduct business that is the normal and operative transactions of the organization; i.e. if you're a research organization and you're paying PMs to conduct research then you are paying PMs compensation for the normal and ordinary operation of your organization. Such practices are not inurement -- even if the PMs comprise the bulk of your governing board.
For instance, a charitable organization may well pay the customary fees of a law firm of an attorney who is a board member. Or, an organization will pay for an audit conducted by an accountant who is sitting as a board member. As long as the fees are competitive and reasonable, the organization is not at peril with the IRS.
Now, I am not an attorney, and am not licensed to offer legal advice in any state. So, to get a legal opinion, you would want to visit a lawyer or contact the IRS and ask for a letter of opinion. These are the only two ways to get legal substantiation for your organization. Contacting the IRS, by the way, will in no way jeopardize your pursuit of a 501(c)(3) recognition.
Hope some of this helps,
Carl
