Nonprofit Help - executive Director As Board Member?

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I received an email from a client request my thoughts on either or not the founder of their nonprofit - who is also its executive director - could be a voting member of the board. (Note that the interrogate was 'could' be...)

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Well yes, the executive director 'could' be a voting member of the board, but the interrogate allowed me an chance to reflect on the perceptions of nonprofits as a competing advantage for fundraising, as espoused by my own organization The town for Ethics, Governance, and Accountability. Those three words (ethics, governance, and accountability) have such a strong degree of symbolism and expectations that I must take care to supply my opinions only after pondering what 'could' be and what 'should' be. (What 'shall not be' is all the time the easiest conception to offer.)

My response? While the Irs is the regulator of nonprofits, the corporations of the nonprofits are governed by state law. So, rejoinder amount one was to check the laws of the state in question.

Answer amount two: why does the executive director need to be on the board? Or, does the executive director just want to be on the board? How many board members are currently on the board and would the executive director help or hinder the voting of the board? Presumably, the executive director is the key laborer of the board and is tasked with running the organization and attending board meetings anyway. But, I never did conclude the rejoinder to the basic interrogate of why?

In my years of taste as a board member, it has not been unusual for the executive director to also serve as the corporate secretary and either ex-officio board member, non-voting board member, or voting board member.

Ultimately, my rejoinder to the above interrogate was to make the executive director and ex-officio (non-voting) member of the board keeping the office of corporate secretary. This approach, assuming there is no disagreement with state law pertaining to corporate governance, seems reasonable because it is extremely likely that the board has tasked its executive director with maintaining all corporate records (minutes, resolutions, policies, etc.) anyway.

In addition, the articles of incorporation and the bylaws may or may not speak to the issue of board governance. It the bylaws do not spell out, specifically, how the board is to be structured, then I would extremely suggest that suitable revisions take place at the very next board meeting.

Remembering that it is my strong confidence that ethics, governance, and accountability are the key measures of any nonprofit, the perception about these issues is every bit as leading as the reality when it comes to the decisions of donors/grantors and contributions to the organization. Accordingly, it continues to be my strong recommendation that nonprofits avoid any inherent misperception so as to declare that competing edge within their peer group.

There are two linked issues that need to be discussed in time to come articles. One is the challenges of the founder of the non-profit serving as executive director or board member; the other is the increased scrutiny by the Irs on board members of nonprofits. In short, as a board member, you will be held personally liable for the affairs of the corporation. This accountability is entirely appropriate: nonprofit board member is not a 'resume builder' but it is a serious accountability that Irs regulators have rightly decided to address.

Every endeavor should be made by every nonprofit board to task either its executive director or, perhaps, a committee chair, with a suitable describe of the policies of the organization. The new Irs Form 990 is an exquisite place to start - especially if your nonprofit is a amount of years old -- it would be good to see what issues you will be required to attest to at your next every year filing.

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