This is the second in my series of posts about common misconceptions related to non-profit organizations. Non-profits are governed by a Board of Directors, which may be known by other names, including Board of Trustees, Advisory Board, Board of Governors, Board of Managers, or Executive Board. Whatever the name, the Board's role is to govern the organization consistent with the mission, and set policy. Boards are usually, though not exclusively, composed of volunteers (uncompensated for their board work) The staff's role is to execute the mission, under the direction of the Director. Staff are usually, though not exclusively, compensated for their work. The Board hires and evaluates the Executive Director (may also be titled CEO, COO) and the Director hires and evaluates all staff. The single most important relationship in a non-profit organization is that between the Board President or Chair, and the Executive Director.
Different types of non-profit organizations have different expectations of their Board members. Most people equate non-profit status with charitable or philanthropic organizations, such as the American Cancer Society or Catholic Charities. However, there are many organizations that don't serve or directly benefit the public at large, yet still meet the requirements for 501(c)(3) status. These include professional organizations, sports teams, associations, consortia, and others, that serve a particular group of stakeholders. The composition of a given board of directors will typically reflect the type of organization.
For charitable organizations, the board may be composed of members with particular skill sets to contribute to the success of the group. For example, an attorney, an accountant, a marketing guru, a technology expert, a development professional. Each of these bring important expertise to the table. Other organizations may not need professional skills on the board, but may instead expect each of their board members to bring in a specific dollar amount each year. Some groups will have a give, get, or get off policy, expecting board members to donate from their own pockets (give), or attract donor dollars from outside (get) or get off the board to make room for someone who can.
So how are boards actually composed? There are a number of sources that must be considered when establishing or changing a board. First, check your state laws for any requirements they may have regarding non-profit boards. Second, review your bylaws to make sure you are acting in compliance with them. Boards may be elected, appointed, or ex officio. This last type of board, ex officio, is often misunderstood.
To be ex officio does not mean 'non-voting,' as is commonly assumed. It simply means that one is a member of a board because of a particular office one holds. For example, if an organization's bylaws or articles of organization/incorporation name the composition of the board to be the "Deans of the Architecture Schools of the member Universities," then each of those Deans sit on the board only because he or she serves in that capacity in the University. When she or he no longer holds the Deanship, they will no longer serve on the board. So, a board member's voting status is unrelated to their ex-officio status.
In my next post, I'll look at the difference between 'trade' and 'membership' associations.