Since a nonprofit organization does not have owners, the board of directors works together to make decisions that are in the best interests of the corporation.
The board of directors uses bylaws to help make decisions.
Executive director of a nonprofit
The first employee hired by the board of directors is usually the Executive Director. The Executive Director position should not be confused with the director or officer roles. The Executive Director runs the day-to-day operations of the organization and takes direction from the board of directors. Other employees can be hired by the Board of Directors or they can give this responsibility to the Executive Director.
Directors of a nonprofit
The directors are responsible for managing the organization and making most of the important decisions about how the organization will operate. The directors are not employees of the organization and do not get involved in the day-to-day activities of the organization. They can meet once a month or only once a year.
The bylaws explain who elects the directors, when they are elected, how long they will serve as directors, and how to remove a director. As a group, the directors make up the board of directors.
See the General Not For Profit Corporation Act of 1986 for more information.
Officers of a nonprofit
The officers of a nonprofit board of directors usually include a President, Vice President, Secretary, and Treasurer. Sometimes other titles are used like Chairperson or Vice-Chairperson. The titles of the officers and a description of the officers' responsibilities should be included in the by-laws.
The officers run the board meetings, sign significant contracts, and keep meeting notes. The officers are asked to fill those roles by the other members of the board of directors and are usually not paid.
The by-laws should have:
- A job description for each officer
- A description of how officers are chosen
- Instructions on how to remove an officer from their position
It is common in smaller, newer organizations for one person to fill two officer roles. For example, if the organization has a board of directors with only three people on it, each person is a director of the organization and each could be an officer.
Employees of a nonprofit
- The employees of the organization are responsible for following the rules of the board of directors.
- They should make decisions according to the rules of the board of directors. Volunteers can be managed by the employees.