Nonprofit Governance

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Nonprofit governance simply means how the nonprofit is administered. The key players in a nonprofit organization are the directors, officers, committees, members, staff, and volunteers. This article explains their roles and how they come together to carry out a nonprofit corporation's mission.

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nonprofit governance

As you are reading this article, please refer to the organization chart. Click on the image to download a full-size version.


Nonprofit Corporation

In the eyes of the law, a corporation is a legal entity the same as you and me. It is separate and distinct from the people who run it. The corporation can enter into contracts, be sued, and perform other powers permitted by state law. These activities are carried out exclusively through the the actions of the corporation's Board of Directors.


Board of Directors / Trustees

The board of directors are the nonprofits strategic leaders. Their beacon is the organization’s mission statement and they make decisions, establish goals, and define strategies to achieve it. Individual directors have limited power; they make decisions as a board. A quorum (minimum number) of directors must vote to take action. When a board makes a decision, they document it in resolutions, which are thereby the actions of the corporation. Learn more about the Board of Directors.


Officers of the Board

The directors elect officers of the board. These usually include a president to preside over board meetings (also called chair of the board), a secretary who records meeting minutes, a treasurer who oversees finances, and one or many vice presidents (also called vice chairs).


Committees

A board of directors in an established nonprofit may contain 15-20 participants. At this size, it is prudent to delegate certain research, oversight, and authority to committees. For example, an Executive Committee may contain a subset of key leaders who can make emergency or other timely decisions between board meetings. Committees typically include at least two directors and may include non-directors.


Members

Not all nonprofits contain members. Mutual benefit corporations typically do; public benefit corporations typically do not. Members have rights such as voting to elect directors. There may be multiple classes of membership, qualifications for membership, and membership dues. Members come with additional administrative oversight and can be important in nonprofits that wish to represent the interests of their community by engaging the community through membership.


Executive Director / CEO

The executive director is an employee of the board of directors. This person has primary responsibility for carrying out the direction set by the board. All staff and volunteers report to the executive director. This crucial position is the conduit for most communication (and all formal communication) between the board and the team that carries it out. The performance and compensation of the executive director is overseen by the board.


Staff & Volunteers

Whether they are W-2 employees, independent contractors, or volunteers, these individuals are on the front lines of the nonprofit. They receive direction from and report concerns to the Executive Director.


Advisory Boards / Friends Group

Some nonprofits claim to have members, but these "members" do not have voting rights or other legal provisions that align with true membership. These groups are better termed as advisory or friends groups. They are important in giving informal opinion and perspective, yet fall outside of the formal workings of a nonprofit.


Key Takeaways:

  1. The corporation is run through the board of directors, who have legal authority and ultimate accountability for the actions of the corporation.
  2. The board of directors acts as a group, not as individual directors. The board votes to make strategic decisions.
  3. The executive director is the chief employee of the nonprofit and is responsible for the performance of its staff and volunteers in executing the direction set by the directors.

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