Who’s in charge? This is a commonly asked question when structuring the governance and management of a nonprofit corporation. Is it the president or chair of the board? Do nonprofits need to maintain both of these positions? And how does an executive director fit into this equation?
Directors vs. Officers
It’s important to first distinguish between directors (board members) and officers. Generally, directors have no inherent individual authority or power. Their authority and power is exercised collectively as a board. Officers, on the other hand, are delegated with certain authority and power, which may be spelled out in a position or job description.
State laws generally require that a corporation have certain officers. In California, the Nonprofit Public Benefit Corporation Law (the “NPBC Law”) requires such corporations to have the following officers:
- A president or a chair of the board;
- A secretary; and
- A treasurer or a chief financial officer.
The NPBC Law does not explicitly require that any officer be a director, though it may be understood that only a director can serve as chair of the board. Regardless, it is relatively common for all-volunteer organizations to elect officers from among the directors. It is also common for large organizations with employees to hire certain officers (like a CEO and CFO) who are not directors.
Who is the CEO?
The NPBC Law provides that the president, or if there is no president, the chair of the board, is the general manager and chief executive officer of the corporation, unless otherwise provided in the articles or bylaws. Accordingly, if a nonprofit corporation’s articles and bylaws are silent on the issue and assuming the corporation has a president, the president will be the CEO. Similarly, if the corporation’s governing documents are silent on the issue and the corporation doesn’t have a president, the chair of the board will be the CEO. See also Who is the Chief Executive Officer – the Executive Director or the Board Chair?
Duties of the CEO
While the duties of any officer are generally those spelled out in a position description, often contained in the bylaws, the CEO is generally thought to have certain inherent responsibilities and authority associated with an executive in charge of the management of a corporation, subject only to the authority of the board (but not of any individual director) or executive committee.
Should a Nonprofit Have Both a President and Chair of the Board?
As might be expected, there is no one answer that will fit all organizations. However, the following represents my general opinions on how a board might reach an answer specific to its specific circumstances:
- For all volunteer organizations, there is probably no need to have both a president and a chair of the board unless there is an intent to select each position independently. If the long-term plan is to have one volunteer lead the organization and the board, it seems unnecessary to provide both titles to the individual. In such case, president may be the preferable position title as it suggests a role beyond presiding over board meetings. Nevertheless, the bylaws might provide for the option of electing a chair of the board should it later become desirable to have a different individual in such role.
- For organizations with paid employees, there may be advantages to having a compensated CEO and a separate volunteer chair of the board. In such case, the CEO is often provided the title of president. Because the CEO serves at the pleasure of the board, and typically has their performance reviewed and compensation determined by the board, separating the CEO and chair of the board functions by assigning them to different individuals can help avoid the major conflicts of interest that would otherwise be possessed by someone with both responsibilities. In some cases, however, having one individual serve as both CEO and chair of the board may be desirable despite the conflict of interest. For example, this may be true where a founder being compensated to act as the CEO is also the champion and clear leader of the board, which lacks another director able to fulfill the responsibilities of a chair of the board. Lack of developing additional leadership can, however, lead to the twin problems of founder’s syndrome and a rubber-stamp board. From a legal perspective, this may reflect the other directors’ breach of fiduciary duties due to the lack of exercising independent judgment and reasonable care.
Duties of the President
If the president is the CEO, the position description will be reflective of such authority and its accompanying duties and responsibilities. If the president is not the CEO, the nonprofit should make sure that there is a clear delineation between the positions and relative authority and responsibilities of president and CEO. For purposes of the following sample description of duties (probably more suited to a small to medium-sized nonprofit), I’ll assume that the president is the CEO and does not preside over meetings of the board.
The President is the general manager and chief executive officer of this corporation and has, subject to the control of the Board, general supervision, direction and control of the business, activities and officers (other than the chair of the board) of this corporation. The President has the general powers and duties of management usually vested in the office of president and general manager of a corporation and such other powers and duties as may be prescribed by the Board. Among other things, the President shall be responsible for:
- Ensuring the organization’s activities are compliant and in furtherance of its mission
- Leading, managing, and developing the organization’s employees, volunteers, and organizational culture
- Developing, implementing, monitoring, and assessing the organization’s programs (including their impact)
- Developing, implementing, monitoring, and assessing sound and compliant financial management practices (including budgeting)
- Developing, implementing, monitoring, and assessing sound and compliant fundraising practices
- Developing, informing, and supporting the board and the board committees to carry out their governance functions
- Partnering with the Chair of the Board to help ensure the Board’s directives, policies, and resolutions are carried out
- Working with the development staff and Chair of the Board in cultivating and soliciting major foundation grants and individual gifts
- Developing and maintaining beneficial relationships with donors, funders, supporters, collaborators, allies, vendors, and other stakeholders
- Ensuring effective external communications about the organization and its mission, priorities, importance, programs, and activities
- Championing the organization and advocating its mission to internal and external stakeholders
- Keeping informed and the organization’s leadership informed of significant developments and changes in the internal and external environment
- Leading the organization’s planning processes
- Ensuring legal compliance (including all required filings) and sound risk management practices
Duties of the Chair of the Board
The Chair of the Board (if there be such an officer) shall, if present, preside at all meetings of the Board and the Executive Committee, act as a liaison between the Board and the President to help ensure the Board’s directives and resolutions are carried out, and exercise and perform such other powers and duties as may be from time to time prescribed by the Board. More specifically, the Chair of the Board shall be responsible for:
- Leading the Board and Executive Committee to carry out its governance functions
- Ensuring the Board has approved policies to help ensure sound and compliant governance and management of the organization
- Partnering with the President/CEO to lead the development and refinement of impact metrics
- Assessing the performance of the Board and its committees
- Assuring ongoing recruitment, development, and contributions of Board members
- Partnering with the President/CEO to help ensure the Board’s directives, policies, and resolutions are carried out
- Working with the President/CEO in cultivating and soliciting major foundation grants and individual gifts
- Coordinating an annual performance review of the President/CEO
- Setting priorities and creating agendas for meetings of the Board and Executive Committee
- Presiding over meetings of the Board and Executive Committee
- Serving as an ambassador of the organization and advocating its mission to internal and external stakeholders
If the chair of the board is the CEO, the position description will be reflective of such authority and its accompanying duties and responsibilities (see Sample Description of President’s duties above). In such case, if the nonprofit also has an executive director, it should make sure that there is a clear delineation between the two positions and their relative authority and responsibilities.