Can Nonprofit Executive Directors Serve on the Board?

Best practices suggest that it is not a good idea to have the Executive Director playing such a role within the organization, whether the position is a voting or non-voting position. Keep in mind the following precautions if the organization decides to place its executive director on the board:

• While it is not uncommon for executive directors to serve as non-voting members of their organizations’ boards, this can lead to a tricky legal situation. Board members are bound by legal and fiduciary obligations. A non-voting board member is still held to these standards but does not have all the legal protections afforded to a full board member with voting privileges.
• If an organization appoints an employee of its organization to serve as a voting member of their board of directors, appropriate policies must be in place to avoid conflicts of interest and to make sure that the employee does not exert undue influence.

Typically, an executive director attends and participates in board meetings as an advisor. However, it may not be appropriate for the ED to participate in meetings when issues arise that directly affect him or her, such as personnel matters. For example, it might not be appropriate for the ED to participate in some benefits discussions because he or she may benefit from the outcome of the decision. Executive directors have an important role to play in advising the board, but their level of participation should be carefully evaluated.

There is a segment of the nonprofit sector that has its executive director/president/CEO serving as a voting member of the board of directors. It is more prevalent that the executive director/president/CEO serves in a role that is ex-officio and without a vote.  

Every other year, BoardSource does a big survey of nonprofit boards. Last year, their report was called Leading with Intent: A National Index of Nonprofit Board Practices.

You can find the section on CEO as voting member of the board under Leading with Intent: Data at a Glance on page 52 of the 54 page document. In Leading with Intent, overall, 12 % of the respondents reported that the CEO was a voting member of the board. They break this statistic down into groups for budget size, type, service area, and affiliation.

The nonprofits with budgets of over $10 million are most likely to have their CEO as a voting member of the board (21 %) and the associations (rather than charity, foundation and other) clock in at 17 %. Interestingly, nonprofits that serve in the international service area, report that 33 % of their CEOs serve as voting board members.

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From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

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