Generally speaking, the answer is yes. Should you put the nonprofit CEO on the board? That answer is less clear.
First, note that every nonprofit is a bound by state requirements. Check state law to find basic guidance pertaining to the makeup of nonprofit boards. Typically, you’ll find that a CEO or other employee may legally serve on a nonprofit entity’s volunteer board of directors.
Now, consider your organization’s dynamic, and practical reasons to place the nonprofit CEO on the board — or not.
Following one school of thought, the CEO’s presence on the board creates a built-in conflict of interest. Your nonprofit may agree. Its leadership and its membership might value an unquestionably independent board of volunteers. Indeed, it’s up to the CEO to make sure a capable board exists, with officers and committees well suited for nonprofit governance.
Your board exists to diligently advance the entity’s mission. It must take its fiduciary duties seriously—not serve as a rubber stamp for the CEO’s ideas. A board that rigorously holds the entity accountable to its strategic goals, and asks pressing questions when necessary, is a board whose members can step up to lead when needed.
In short, a CEO might opt out of board membership to resist the urge to control, and to promote the board’s healthy development. Additionally, a board might prefer the nonprofit CEO not be a member or only a non-voting member to protect their oversight of the executive’s performance.
Having the CEO as a voting board member can put a skilled, knowledgeable leader in a governing position. This can improve an organization whose board is made up of people willing to “advise” but without adequate time to learn and lead.
In reality, this is a common scenario. After all, a nonprofit, in contrast to a for-profit company, depends on a volunteer board. Especially if the nonprofit’s mission is highly specialized, it’s no mean feat to recruit volunteers with experience in governance. More difficult still? Finding time to teach governance to members who need training.
In for-profit entities, the same person often wears both hats: CEO and board chair. Yet a nonprofit cannot regard the for-profit company as its role model.
The for-profit company’s board of directors must protect the company’s interests and maximize returns on shareholder investments. A nonprofit board’s primary responsibility is to the public interest.
So, many nonprofits separate the CEO and board leadership roles. This way, the CEO does not overpower the board’s governing capacity. If needed, training can prepare the volunteer board members to step up to lead the board. Your nonprofit might need to work this goal into its strategic planning.
Some nonprofits hold that their Executive Director has the internal information needed to inspire the best strategic action from the board. Should the other board members ever believe that their leader is overstepping boundaries, they have the ability to vote accordingly. This is their built-in check on the chairperson’s influence.
Nevertheless, many governance teams are more comfortable with a CEO as a voting board member, not as chair. And remember that a CEO as chair may draw a level of liability that a volunteer chair would not incur. In the end, it is up to each nonprofit board and CEO to determine what is most appropriate for the interests of their organization.
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