Everything You Wanted to Know About Nonprofits & Committees

The board of directors of a nonprofit corporation is generally empowered to create committees at its discretion, subject to the nonprofit corporation’s bylaws and the laws of the state of incorporation.  While committees can be utilized to alleviate the board of some tasks and help increase efficiency, committee formation should not be taken lightly or used overzealously because the ultimate oversight is still the board’s responsibility.  If done improperly, committees instead complicate the board’s workload and cause inefficiencies in the nonprofit corporation’s operation.  Importantly, successful committee use begins with understanding the basics of a board versus non-board committee and a standing versus ad hoc committee. 
Board versus Non-board committee
The board versus non-board distinction speaks mainly to the authority given to a committee.  In California, every nonprofit public benefit corporation must have a board of directors.  This board possesses corporate powers which can be delegated to a board committee, subject to eight exceptions that only the board can carry out.  See Calif. Corp. Code § 5212(a).  A committee that has been given power to act with the authority of the board is called a board committee.  The board has flexibility in how much authority to give to a board committee; it can grant a specific corporate power or the full extent of authority possible under the law.  Only directors may serve on a board committee (since it would otherwise grant non-directors the powers of directors simply through their committee membership).  California specifically requires a board committee membership size of at least 2 voting directors.  See Calif. Corp. Code § 5212(a).  The IRS has also started to take more notice of board committees as shown in the new Form 990 which asks whether meetings held or actions taken by any committees with the authority of the board are contemporaneously documented.  See Form 990, Part VI, Section A(8)(b).
The board can also choose to create non-board committees, which may be composed of both directors and others.  The more open membership structure allows nonprofit corporations to use these committees to generate more interest by bringing in outsiders such as volunteers, community leaders, and other supporters.  Non-board committees are commonly called advisory committees in the bylaws because they do not have the full authority of the board.  But the term advisory committee is misleading because the role of a non-board committee may be more than advisory.  The board can delegate substantial responsibilities to a non-board committee, including management functions, but all subject to the board’s ultimate direction and oversight.
Even purely advisory non-board committees can be very useful.  They can be created to assist the board for any multitude of reasons, and as Idealist.org explains, advisory committees can “support the nonprofit's activities by providing information, resources, prestige (e.g., ‘letterhead’ value), money, etc., to the nonprofit.” 
Standing versus Ad hoc committee
Committees are also distinguished by their type of existence – permanent or temporary – irrespective of the level of authority.  Standing committees are permanent and exist year-round.  They are often provided for or described in the bylaws.  Examples of common standing committees are the executive, nominating, compensation, and grants committees.  One important standing committee that may required by state law, depending in part on the corporation’s gross receipts, is an audit committee.
Ad hoc committees, also known as temporary committees, exist only for a limited period of time.  They are created by board resolution in response to a need that has arisen and will dissolve upon completion of their specific tasks.  Board Café (CompassPoint's newsletter for nonprofit boards) cites the most common uses of ad hoc committees are for evaluating site relocation, coordinating a special event, undergoing CEO transitions and searches, pursuing a possible merger, strategic planning endeavors, or investigating an unusual problem.  An ad hoc committee can be as specific as the nonprofit corporation needs to address a particular issue and therefore, provides a useful alternative especially when cutting down on current committees that are not needed all-year. 
Common Missteps
Committee structure is generally pretty flexible with the level of authority, size, duration, description of responsibilities, and even the title of the committee being within the board’s discretion or provided for in the bylaws.  Strictly speaking, there is no single “correct” definition for a committee which is why a committee description for one nonprofit corporation may be similar but not completely consistent with another nonprofit corporation despite using the same committee title.  This also means that committees are created for both broad and specific purposes, leading to the existence of many different board committee examples.  For example, Board Café provides a list of 15 different committee descriptions, including committees as specific as a Public Policy Committee and Management Oversight Committee (for geographically distant board members).
While a nonprofit corporation can theoretically create a committee for every conceivable task, committees require ultimate governance by the board and therefore should only be created when it improves efficiency.  David La Piana, President of La Piana Associates, Inc., suggests in most cases to replace a cumbersome structure with a three-committee structure in addition to an Executive Committee: an Internal Affairs, External Affairs, and Governance committee.  Ideally, the Internal Affairs committee is responsible for handling internal and operational issues such as finance and HR; the External Affairs committee is responsible for external issues such as fundraising and PR; and the Governance committee is responsible for recruiting new board members and fostering efficient board functioning.
Ultimately, creating the right committee boils down to why the committee is necessary and the particular circumstances of the nonprofit corporation.  Many good ideas can come from embracing the latitude given to a board.  For example, it is not uncommon for a board to feel conflicted about adding a big donor who has great fundraising leverage but likely cannot commit to the regular attendance and time required of a board member.  Board members who cannot attend meetings and give proper attention to the nonprofit corporation will likely stifle governance rather than help it.  Creating a committee to include the big donor can sometimes provide the middle ground solution to this problem without putting the ultimate governance of the nonprofit organization at risk.  A committee aimed at utilizing the big donor’s strengths will allow the nonprofit corporation to benefit from the skills, PR, and contacts of this super-star while possibly also giving the big donor an important title (e.g., President Emeritus of the Fundraising Committee) and limiting the commitment not only in time but also to those areas that the person is most competent.
Please also view Board Café’s article “Abolish Board Committees?”
Idealist.org’s discussion about advisory committees is available on its website.
Board Café’s discussion about ad hoc committees is available in the “Temporary Committees” section of its article, “Board Committee Job Descriptions”.
More discussion on David La Piana’s three committee structure is available in his article, “Boards Should Only Have Three Committees!”
Explanation regarding the audit committee requirement of the Nonprofit Integrity Act of 2004 is available in the previous posts, “Nonprofit Integrity Act – Audit Committee” (Q&A), “The Nonprofit Integrity Act of 2004”, and “California – Nonprofit Integrity Act of 2004 Becomes Effective January 1, 2005”.
– Emily Chan