We have new board members and one, in particular, has held “meetings” at local bars and charged the expense of drinks to our nonprofit. The meeting was a committee meeting to discuss an upcoming event. However, never before have we had board members spend hundreds of dollars for food & alcohol to hold a committee meeting. This member stated that it isn't against the law. Feels like it is, to me.
This is a good question to illustrate the difference between law and ethics. Law tells you what you can or can’t do. Ethics helps you decide what you should or shouldn’t do.
Your new director is probably right in saying that it is not against the law to hold a committee meeting in a bar and pay for the food and drink with funds from the organization. If it is sufficiently repetitious and sufficiently expensive, it could cost you a tax exemption or violate state law by creating private inurement for the committee members involved. But, as a practical matter, that is not likely to happen even if some people think it is egregious.
From an ethical point of view, however, is that the way your organization wants to spend its money to pursue its mission? It is fine to order in for sandwiches and beverages as an incidental benefit to directors volunteering their time for the organization. (Some nonprofits even ask their directors to contribute separately to the cost.)
But one very good ethical question to ask is how would it look if reported by a reporter who doesn’t like you on the front page of the local newspaper? You don’t have to be a prohibitionist to think that spending hundreds of dollars for food and drink at a meeting in a bar is wasting at least some of that money that could be better spent on whatever it is that you were formed to do. Ask the others on the board whether they want to continue paying for these meetings. If the others say no, I suspect the newbies won’t continue to meet under the same circumstances if they have to pay for it themselves.
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