No one.
A major misconception about nonprofit organizations concerns ownership of a nonprofit. No one person or group of people own a nonprofit organization.
Ownership is the major difference between a for-profit business and a nonprofit organization. For-profit businesses can be privately owned and can distribute earnings to employees or shareholders. But nonprofit organizations do not have private owners and they do not issue stock or pay dividends. And while nonprofit organizations earn revenue, that revenue is usually reinvested in the nonprofit organization — possibly to benefit or expand programs according to the charitable mission. But that income is not distributed to persons.
Please note that each state has its own rules and regulations regarding nonprofit management and you should seek counsel in your own state on this matter.
If there is no owner, who manages and controls a nonprofit?
Once incorporated, the newly created nonprofit organization is a separate legal entity from its founders, incorporators, directors, officers, and employees. The nonprofit corporation generally owns assets of the business and is entitled to receive the revenue from its operation.
Many nonprofits are managed by boards, others may be managed by voting members, some are managed by a combination of those. This is a state-specific concept, and you should check with your state on management issues. Many times, when a nonprofit organization first begins operating, the board members, along with the founder(s), may perform many of the tasks of the organization. As the organization grows, the board may begin hiring staff members to develop and lead programs as the board and/or voting members continue to oversee the organization.
But none of these individuals or groups have any ownership rights in the organization.
And while they don’t own the nonprofit, they do have significant legal and ethical duties that cannot be delegated to others. Learn more about directors’ duties.
What about the founder? Doesn’t the founder of a nonprofit own it?
No. The founder usually does not own the nonprofit organization. The founder does not control the nonprofit organization.
Certainly, starting a nonprofit organization takes considerable time, effort, and money. And the founder may feel closer to the mission and the programs than anyone else. But that founder usually does not have any ownership rights in the nonprofit.
Often times the founder will serve on the initial board of directors, which manages the nonprofit. The board safeguards the public’s interest to ensure that the organization operates in accordance with its mission and the purpose for which it was granted tax-exempt status and protects the assets of the nonprofit.
If the founder is a member of the board of directors, a founder usually has the same responsibilities as other board members. While a founder may feel closer to the organization that they helped to form, a founder usually has no ownership rights regarding the nonprofit corporation.
Again, this the duties of boards of directors are set out by each state. You need to check with your state laws regarding this.
To whom is the the nonprofit accountable?
The organization is accountable to many constituencies.
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- The General Public. Most nonprofits are created to provide a charitable purpose to the public good, whether as charities, educational programs, churches or religious groups, or scientific or artistic organizations. Of course, there are other types of organizations that must be considered (professional associations, trade groups, others).
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- State Agencies. Nonprofits must also comply with certain regulations in the states in which they operate. These may also require public disclosure of specific documents or the filing of certain reports.
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- The IRS. Certain tax-exempt entities follow rules set by the IRS to keep their tax-exempt status.
Can a nonprofit be sold?
Generally, a nonprofit cannot be sold to another individual or organization. Each state has particular rules regarding sale of assets of a charitable organization and you should check with your state.
Additionally, the assets acquired by a nonprofit usually were acquired with the understanding that they will be used to further the mission of that organization. If a nonprofit decides to cease operations, usually the organization must settle all debts and distribute all of the nonprofit’s remaining assets to another nonprofit corporation before it can be dissolved or get specific permission from that state’s charitable division.
Learn More:
It should be noted that some states do allow nonprofit corporations to issue stock and own stocks. This is not discussed above. Contact us for state-specific inquiries.
Cullinane Law Group: Can the Executive Director Serve on the Board?
Cullinane Law Group: What are the Duties of Nonprofit Directors?
Cullinane Law Group: Nonprofit Corporation Vs. 501(c)(3) Organization
The Cullinane Law Group works exclusively with the nonprofit tax-exempt sector: new nonprofits, foundations, and business associations throughout the United States who seek to create positive change.
Posted at 00:57h in Employer Tips by isaacschild
Generally speaking, you will find that in medium size to smaller nonprofit organizations and foundations, the highest-ranking nonprofit executives use the title of Executive Director. Traditionally, Executive Directors can be more focused on executing the vision of the Board and working in close partnership with Board Members to carry out the strategic vision and goals of the Board.
The Board of Directors appoints and oversees an Executive Director. Executive Directors work with the Board to create a strategic plan for the organization and ultimately execute the work and programs that the organization leads.
Executive Directors fill the key administrative leadership role for their organization and lead the staff. As a result, they must prove skilled at setting the cultural tone of their organization. In essence, they represent the keystone of their nonprofit. Responsibilities include motivating staff, overseeing finances, and working to create the most impact possible on behalf of the mission of the organization.
Executive Directors also supervise the budget and marketing efforts. Further, they work hard to inspire a positive culture and work closely on Board governance to make sure the policy oversight of the organization is effective and healthy.
Executive Directors of nonprofits face unique stress when it comes to fundraising, program execution, and financial management. They work on limited budgets. That means finding ways to meet operational needs for less money is considered a normal part of the nonprofit organization management culture compared to corporate business practices.
Excellent planning is a critical skill. So is cultivating a large volunteer workforce. The best Executive Directors grow their organizations despite limited financial resources.
Role of a Nonprofit CEO in Nonprofit Management and Title Use
Nonprofit CEO’s are tasked with being a visionary leader for the strategic direction of the nonprofit and are viewed as a leader in the nonprofit boardroom. Whether an organization requires a CEO or an Executive Director to lead their organization often depends on the culture of the nonprofit Board, and if they themselves are setting the full mission, vision, values, and strategy for the organization. The more strategic and visionary the needs of the role are, the more likely the role will be named as a nonprofit CEO.
The CEO is ultimately responsible for justifying the impact and performance of the organization (or lack thereof) to the board. Like the Executive Director, the CEO runs many of the organization’s day-to-day operations but is normally more involved in the direction and future strategy of the organization. To assist them, CEO’s assemble teams that supervise various departments. A CEO may not be familiar with every event that happens at the lower levels of the organization, but they must nevertheless understand how these processes impact retention, services, and fundraising.
The Difference Between Nonprofit CEO and Nonprofit Executive Director Roles
Each charitable group has a unique organizational structure. In some nonprofits, the Executive Director effectively works as a CEO.
Why does this elevation to the role of CEO occur? Because an organization experiences growth in both paid staff and revenue. Nevertheless, a CEO title comes with more clout than an Executive Director title. There can also be significant differences between them.
Many perceive CEO’s as above Executive Directors even when they fulfill very similar roles. As a result, a CEO title can pave the way for forming strategic alliances and taking advantage of fundraising opportunities.
So, CEO’s tend to make more money. CEO salaries vary widely, particularly for those within a nonprofit organization.
As the titles of CEO and Executive Director are many times misused in the nonprofit sector, here are a few key differences:
- -CEO’s are generally the highest-ranking staff member of medium size nonprofit over 5M in budget to large nonprofit above 50M in size.
- -They are the chief/lead strategic creator of ideas for programs and fundraising to carry out the mission of the organization.
- -CEO’s are trusted to execute the mission and work of the organization at a high level and are visionary leaders who may have come from the nonprofit or for-profit sector.
- -They tend to have Director-level staff report to them and seek to build out well-staffed organizations.
- -CEO’s generally are more effective in creating and leading organizational budget growth but also carry higher salaries nationally.
- -Executive Director roles are known to carry more hands-on oversight than nonprofit CEO positions.
- -CEO’s tend to have more hiring, firing, and purchasing power that is established for the organization than Executive Directors.
- -It is best practice for both the oversight of CEO’s and Executive Directors for Boards to set policies for the organization and empower and allow the chief executive to execute the work for the organization.
Nonprofit CEO and Executive Director Salaries
What CEO’s earn is also impacted by an applicant’s experience. For example, novice CEO’s can expect to receive a minimum of a few thousand dollars each month. Those with a proven track record warrant much higher salaries.
As for Executive Directors? They tend to receive smaller salaries. On average, they make between $75,000 and $124,000 per year. That being said, these numbers take into consideration that most nonprofits are very small, operating on less than 500K annually. For organizations that are larger, the following is a more accurate description of the average Executive Director / CEO (highest ranking staff member) salaries:
500k to 750k: $90,000 plus full benefits
750k to 1M: $110,000 plus full benefits
1M to 2.5M in size: $125,000 plus full benefits
2.5M to 5M in size: $150,000 plus full benefits
5M to 8M in size: $200,000 plus full benefits
8M to 20M in size: $220,000 plus full benefits
20M to 40M in size: $245,000 plus full benefits
40M to 60M in size: $275,000 plus full benefits
60M to 100M+ in size: $300,000+ plus full benefits
The Skills You Should Focus on When Finding an Executive Director
CEO’s and Executive Directors bolster an organization’s overall structure. So, you must craft an excellent job description for each. Let’s start with the nonprofit Executive Director.
Nonprofit Executive Directors create business plans. They oversee day-to-day activities. Executive Directors establish goals, objectives, and operational plans in collaboration with the Board of Directors, staff, and other leaders.
Seek individuals with well-honed managerial skills. Find inspiring candidates who improve employee performance. Look for candidates skilled in establishing organizational culture. Supervising the heads of various departments is another task. They should prove skilled in directing corporate strategy, too. What’s more, their ability to handle finances and report revenues remains vital.
Nonprofit Executive Director Job Description
Ready for a nonprofit Executive Director job description? Take a look at the sample we’ve developed below. Tailor it to your organization’s specific needs and structure:
[XYZ Organization] seeks a mission-driven and experienced nonprofit business leader skilled in successfully executing strategic plans and empowering high performing staff. Reporting to the Board of Directors, the Executive Director will be based at the organization’s offices in City, State, and have overall management responsibility for growing an impactful organization with a $XYZ million annual budget, and XYZ+ employees.
POSITION OVERVIEW:
This full-time permanent position is for immediate hire and reports to a supportive and professional Board of Directors. This impactful leadership position is responsible for overseeing the administration, programs, and strategic plan of the organization. This position requires a dynamic, mission-driven leader who is passionate about leading hands-on operations, fostering growth, as well as developing and managing XYZ programs.
POSITION RESPONSIBILITIES:
- -Oversee the day-to-day operations of the organization and ensure its overall successful long-term operations
- -Assure that the organization makes consistent and timely progress in achieving its mission and target programmatic impact
- -Provide leadership in developing program, organizational, and financial plans and execute on the policies authorized by the Board
- -Plan, actively manage, and oversee the organization’s operations, programs, fundraising, and operations while ensuring the organization’s financial sustainability
- -Oversee and report on the organization’s results for Board of Directors
- -Drive development and fundraising in collaboration with the Development Director, leveraging the Board as needed
- -Lead, manage, and guide the organization to attain continued growth, success, and optimal mission impact for XYZ programs and services
- -Actively engage in complex fiscal management through hands on budgetary development and oversight; routinely report performance and financial activities to the Board
- -Provide thoughtful executive leadership that is inclusive, transparent, and empowering in a manner that supports and guides the organization’s mission as defined by the Board of Trustees
- -Foster a collaborative working environment, encourage professional development, and champion accountability amongst staff
- -Attend all Board meetings and provide reports and updates on staff as well as all current work, project timelines, and project and organizational progress
- -Establish goals, objectives, and operational plans in collaboration with the Board of Directors, staff, and other leaders
- -Communicate effectively with the Board by providing members with all information necessary to continually function properly and make informed decisions in a timely and accurate manner
- -Effectively represent the organization and promote a positive organizational image to ensure adequate community representation
- -Organize, motivate, and mentor internal team leaders to strategically grow the organization’s impact, programs, and fundraising, and to effectively fulfill its important mission
- -Apply innovative thinking and performance measurements to analyze and support strategic decision-making
- -Continually foster a culture that encourages collaboration between departments and recognizes positive contributions
- -Contribute to the strategic plan and drive its implementation
- -Manage and motivate staff, overseeing processes such as hiring, separation, ongoing staff development, performance management, and compensation and benefits
- -Inspire a business-oriented, professional, results-driven environment across the organization
- -Perform general management duties ensuring the successful operations of the organization
MINIMUM QUALIFICATIONS:
The ideal candidate for this role embraces servant-leadership as well as a thoughtful approach to day-to-day operational management, strategic planning, and organizational leadership. Qualified candidate should bring:
- -At least seven years of prior executive experience as a successful leader of a related nonprofit organization and/or organization
- -A proven track record of growing organizational capacity and programmatic impact
- -A strong passion for the mission and programs of XYZ
- -Proven abilities and experience in fiscal management and preparing and securing Board approval for a complex budget
- -Passion for creative program creation and organizational funding growth
- -Ability to review current organizational programs/structures and make recommendations that empower programmatic refinements
- -Capacity to excel at influencing and leading an organization towards positive growth
- -Capable of designing and directing strategies that enhance and support organizational operations
- -Knowledge of how to foster an environment of accountability, healthy work relationships and partnerships, and inclusivity among organizational staff in order to maintain a positive and collaborative work environment
- -Experience in creating and establishing clear, measurable business goals
- -Outstanding communication skills and ability to work well with media, staff, and the community
COMPENSATION:
This wonderful opportunity offers the ability to make significant impact leading and growing an impactful nonprofit leading XYZ. This career opportunity offers a strong starting base salary, a full benefits package, and a team-oriented atmosphere that is both positive and rewarding. Starting compensation includes: a very competitive salary dependent on experience of XZY to ZYX, plus full benefits package that includes [list out as many positive aspects of your package as possible].
HOW TO APPLY:
For immediate consideration please send your resume, cover letter, and salary requirements in a WORD.docx format to First Last via email to Attn: First Last, Title using the subject title: “XZY ORG CEO SEARCH.”
Review of applications, nominations, and expressions of interest will begin immediately and continue on a confidential basis until an appointment is made.
XZY is an Equal Opportunity Employer and encourages diversity and equity in all facets of the organization’s work. All qualified applicants will receive consideration for employment without regard to race, color, religion, gender, national origin, disability status, protected veteran status, or any other protected class.
The Skills a Nonprofit CEO Should Have
The governing Board of a nonprofit organization holds ultimate responsibility for ensuring that the organization serves its mission and for the overall welfare of the organization. The CEO is ultimately the governing Board’s sole employee and partner.
When hiring a nonprofit CEO, find an individual with a thorough understanding of nonprofit practices, your industry, and true passion for your mission and programs. They should bring prior experience, as an Executive Director or a CEO also bring proven experience working with nonprofit Boards and creating and implementing organizational strategy.
A CEO must interact well with the Board of Directors. Why? Because as you know they are the liaison between the Board of Directors and the nonprofit’s supervisors and directors. Find an individual with exceptional communication skills and proven track record of growing a nonprofit to the size your Board envisions. They’ll be the public face of your organization. They will also help with Board development, recruiting, and training board members. Look for a leader that already understands the Board’s responsibilities and role, and who knows how to work with the Boards. If you can find a leader that believes in the same approach to nonprofit governance as the Board, that can ensure a strong long term match.
Search for an individual also highly skilled in finances and marketing. They’ll be involved in the creation of the organization’s direction and in turn the annual budget. So, they’ll need a firm grasp of accounting and budgeting.
They’ll also review financial reports regularly, as well as communicate with donors.
Nonprofit CEO’s should also work actively in fundraising and partnership creation while aligning their work closely with organizational marketing. They lead when it comes to advertising, fundraising, and promotions. So, make sure you find someone with demonstrated experience in these vital areas.
Finally, a talented CEO must be skilled in human resources, staff management, and diversity, equity, and inclusion. Why? Because they’ll be involved in all aspects of employee management, mentorship, recruitment, and ultimately set the tone for the entire organization.
Nonprofit CEO Job Description Sample
How do you incorporate these responsibilities into a job description? Let’s take a look at one example:
[XZY Organization] seeks a visionary nonprofit business leader skilled in driving organizational success and empowering high performing staff. Reporting to the Board of Trustees, the CEO will be based at the organization’s offices in City, State and have overall management responsibility for a growing impactful organization with a $XYZ million annual budget, and XYZ+ employees.
Combining inspirational leadership and sophisticated management abilities, they will advance the organization in terms of culture, capability, processes, and impact. While working closely with the organization’s executive team, the CEO will inspire innovation and ensure that the organization is continually well equipped to advance its mission of XZY.
This full-time permanent position is for immediate hire onsite in beautiful XZY City.
POSITION RESPONSIBILITIES:
Executive Leadership and Organizational Management
- Provide thoughtful and visionary executive leadership that is inclusive, transparent, and empowering in a manner that supports and guides the organization’s mission as defined by the Board of Trustees
- Present strategic options and plans for organization impact and gain Board approval as needed to carry out the work of the mission of the organization
- Oversee the day-to-day operations of the organization and ensure its overall successful long-term operations
- Organize, motivate, and mentor internal team leaders to strategically grow the organization’s impact, programs, fundraising, and to effectively fulfill its important mission
- Apply innovative thinking and performance measurements to analyze and support strategic decision-making
- Continually foster a culture that encourages collaboration between departments and recognizes positive contributions
- Contribute to the strategic plan and drive its implementation
- Manage and motivate staff, overseeing processes such as hiring, separation, ongoing staff development, performance management, and compensation and benefits
- Inspire a business-oriented, professional, results-driven environment across the organization
- Perform general management duties overseeing the day-to-day operations of the organization
- Establish goals, objectives, and operational plans in collaboration with the Board of Directors, staff, and other leaders
Board Governance
- Maintain regular and ongoing communication to build strong relationships with the entire Board, providing leadership and support to members at all times
- Communicate effectively with the Board by providing members with all information necessary to continually function properly and make informed decisions in a timely and accurate manner
- Attend all Board meetings and provide reports and updates on staff as well as all current work, project timelines, and project and organizational progress
- Gracefully manage the board as needed to build consensus, remind of outstanding deliverables, and offer support
- Implement Board policies and procedures and build support for Board decisions amongst staff
- Work closely and openly with the Board and its committees, ensuring ongoing communication of risks, issues, as well as successes
Development and Fundraising
- Drive development and fundraising in collaboration with the Development Director, leveraging the Board as needed
- Initiate, cultivate, and extend relationships with the organization’s portfolio of individual, foundation, and corporate supporters
- Ensure the organization’s financial stability and sustainability by maintaining healthy cash flow and adequate reserves
Financial Management and Administration
- Provide strategic leadership and hands-on management for all of the administrative and operational functions of the organization in accordance with the mission, objectives, and policies
- Prudently direct resources and manage all financials within budget guidelines and according to current laws and regulations
- Assume responsibility for the fiscal integrity of the organization
- Monitor board-approved budget and manage daily financial operations to ensure maximum utilization of resources and optimum financial positioning for the organization
- Ensure maximum resource utilization, budget management, and maintenance of the organization in a positive financial position
- Build and administer the annual budget, with Board approval
External Relations and Communications
- Represent the organization and serve as chief spokesperson publicly at events, conferences, and partnership meetings
- Present and promote the organization and its mission, programs, partners, and members in a consistently positive manner
- Ensure high visibility to prospects and the public, and build interest in engaged philanthropy
- Manage all aspects of the organization’s marketing and public relations
QUALIFICATIONS:
Candidates may emerge from nonprofit, foundation, government, or industry backgrounds and should possess the following:
- Five years of prior experience as a CEO, Executive Director, or in a related position at a nonprofit, foundation, government, or industry
- Strong business acumen and a history of providing visionary leadership at the executive level
- Proven experience executing organization growth and leading a similar or larger size successful nonprofit and/or related entity
- Proven experience working with and leading a nonprofit Board and working with diverse groups of people
- Familiarity with diverse business functions such as Marketing, Public Relations, Human Resources, etc.
- Experience and success in motivating, recruiting, developing, retaining, and mentoring high performance, mission-driven, and results-oriented teams
- Excellent written, oral, and public speaking skills; a persuasive and passionate communicator with strong interpersonal and multidisciplinary project skills
- A bachelor’s or advanced degree
COMPENSATION:
This wonderful opportunity offers the ability to make significant impact leading and growing an impactful nonprofit leading XYZ. This career opportunity offers a strong starting base salary, a full benefits package, and a team-oriented atmosphere that is both positive and rewarding. Starting compensation includes: a very competitive salary dependent on experience of XZY to ZYX, plus full benefits package that includes [list out as many positive aspects of your package as possible].
HOW TO APPLY:
For immediate consideration please send your resume, cover letter, and salary requirements in a WORD.docx format to First Last via email to Attn: First Last, Title using the subject title: “XZY ORG CEO SEARCH.”
Review of applications, nominations, and expressions of interest will begin immediately and continue on a confidential basis until an appointment is made.
XZY is an Equal Opportunity Employer and encourages diversity and equity in all facets of the organization’s work. All qualified applicants will receive consideration for employment without regard to race, color, religion, gender, national origin, disability status, protected veteran status, or any other protected class.
Other Items to Mention in Nonprofit CEO Job Descriptions
Executive Director and CEO roles within a nonprofit organization often overlap. In some cases, an Executive Director fulfills the same essential role as a CEO. It’s a mistake to assume they are one and the same, though.
CEO’s generally get paid more and carry more responsibility for the ultimate strategic direction of the organization. So, they also at times require slightly higher qualifications than executive directors. These qualifications relate to experience and education.
As a result, you may wish to list additional qualifications. Consider the following requirements for nonprofit senior leadership jobseekers:
The ideal candidate will possess:
- Expertise on issues relevant to the organization
- Substantial experience working in the nonprofit sector
- Significant experience interacting with diverse Boards and volunteers
- Proven passion for your mission
- Extensive strategic leadership experience in the management of organizations of comparable mission and size
- Demonstrated track record of promoting diversity
- Ability to build collaboration with the community at large
- Capacity to command respect and confidence from stakeholders
- Between 7 and 10 years experience in a senior strategic leadership role or an advanced degree (3 years reduced experience)
- A high level of curiosity and intellectual intelligence
- Desire to explore innovative approaches and new ideas to solving problems
- Experience increasing philanthropic support and building revenue
- Experience in conflict management
- Expertise building teams and developing partnerships
Pick and choose from the list above based on your organization’s culture and needs. It provides a wide array of skills that an effective CEO should have.
CEO’s must also exhibit good judgment. They must have unquestioned integrity. Finally, they should cultivate a thoughtful management style.
Educational and Other Requirements for Executive Directors Versus CEOs
In your job description, stipulate basic educational requirements. What should these basic educational requirements look like? For both Executive Directors and CEO’s, we recommend a minimum of an undergraduate degree.
Here’s a caveat, though. Not all degrees provide the same preparation for candidates.
Which degrees should you consider? Ideally, find candidates with degrees in public administration or business.
For CEO’s, you may also wish to raise the educational bar. Many organizations do this to ensure the highest performance from candidates.
Why? Due to the nature of a CEO’s more robust job responsibilities. Some organizations require a minimum of a Master’s Degree. If you go this route, we suggest stipulating an advanced degree in one of the following fields:
- -Business administration
- -Nonprofit management
- -Finance
- -Law
- -CPA
- -Public Health
- -Marketing / Communications
- -Human Services
- -Another field related to your mission
For both Executive Directors and CEO’s, you’ll also want to require an impeccable work ethic, integrity, and a sense of humor. Knowledge of Excel and Office Suite are also musts.
Last but not least, emphasize the importance of having a “can-do” mindset. After all, nonprofit leaders have to deal well with lots of stress. They must find innovative ways to help their community despite restricted resources and a limited budget.
Finding the Right Nonprofit CEO or Executive Director
Now you have a solid understanding of what defines a great nonprofit Executive Director and a nonprofit CEO.
We’ve also gone over some of the key differences between each post.
While there’s plenty of overlap in each position, don’t assume the titles are interchangeable.
CEO’s come with more overall prestige. They may prove better suited to help your organization leverage networking and other fundraising efforts.
Why? Because of their experience and higher educational attainment. That said, be ready to pay more for their expertise.
Are you trying to fill an executive position at your nonprofit organization? We can help. Learn more about our nonprofit executive search firm services and how we can help you find the best candidates.