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The executive director reports to the board, with the chief liaison being the chair of the board. This is the body that hires the ED, monitors and evaluates that person’s performance, and directs the search for a new chief executive if that becomes necessary. The ED and the board work together as a team to carry out the mission of the organization, but each entity has autonomy in certain areas. Though there are over-lapping areas, in general the board is responsible for mission and vision, sets policy, and develops the strategic plan of the organization; and the staff, headed by the executive director, is responsible for day-to-day operations.

For access to our Board and Executive Partnership Educational Resource Packet, join the Standards for Excellence Institute! Located in Maryland? Join the Standards for Excellence Institute. Located in Maryland? Join Maryland Nonprofits for these resources and more!

From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

The Standards for Excellence® Institute, a program of Maryland Nonprofits, provides the best possible resources to nonprofits nationwide, helping build their capacity to effectively and efficiently meet the needs of their communities. Members of the Standards for Excellence Institute gain access to an online community with an expansive library of resources and customizable templates. The Institute also offers nonprofit accreditation and recognition, a national network of consultants licensed to provide training on the Code, and professional volunteer opportunities.

One way to look at an executive director’s responsibilities is through the same lens as that of the board. In the best of worlds, the two entities operate as a team to advance the organization and its purpose. In this context, BoardSource, a national nonprofit devoted to board issues, suggests this list of executive director (ED) responsibilities:

• Commit to the Mission – Not only should executive directors passionately subscribe to the organization’s mission but they should also care enough about the mission to motivate themselves and others to work hard to accomplish the organization’s goals.
• Lead the Staff and Manage the Organization – This is the prime responsibility of the executive director and includes inspiring and motivating the staff, ensuring that they have the work environment and equipment need to do their jobs, supporting the growth and development of existing staff, and ensuring the quality and effectiveness of programs and services.
• Exercise Responsible Financial Stewardship – This includes being familiar with the basic principles of finance and accounting, helping the board carry out its fiduciary responsibilities, and ensuring that the organization has sound financial controls.
• Lead and Manage Fundraising – The ED participates in building relationships with individual and institutional funders and ensures effective board involvement in fundraising.
• Follow the Highest Ethical Standards, Ensure Accountability, and Comply with the Law – The ED participates, with the board, in ensuring the organization’s compliance with legal and regulatory requirements, including setting and reviewing policies that govern practices and behaviors of the board and staff.
• Engage the Board in Planning and Lead Implementation – This includes monitoring the organization’s mission and vision, setting strategies and day-to-day activities that are aligned with the mission, and understanding the plan’s financial implications.
• Develop Future Leadership – An often-neglected ED responsibility is developing leadership among the board and the staff. This also means planning for an orderly executive transition.
• Build External Relationships and Serve as an Advocate – The ED should be skilled in the role of advocate, communicator, and relationship builder.
• Ensure the Quality and Effectiveness of Programs – The executive director’s role in ensuring quality and effectiveness includes listening to the organization’s various constituencies, explaining what the organization is trying to accomplish, allocating sufficient resources, using information garnered through evaluation to make management decisions and strengthen programs, and encouraging the board to have periodic discussions about program effectiveness.
• Support the Board – The board can’t do its job without information, direction, administrative support, and encouragement from the executive director.

The Board of Directors may choose a title for the top staff member, and that title may be Executive Director, President, Chief Executive Officer or some other title appropriate for your organization. Often the Chair of the Board is referred to as President, and that is a separate role from the top paid staff person. Executive Director is the most common title for the top nonprofit staff person, but many ED’s are also called Chief Executive Officers, and some hold the title of President, as well.

For access to our Board and Executive Partnership Educational Resource Packet, join the Standards for Excellence Institute! Located in Maryland? Join the Standards for Excellence Institute. Located in Maryland? Join Maryland Nonprofits for these resources and more!

From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

The Standards for Excellence® Institute, a program of Maryland Nonprofits, provides the best possible resources to nonprofits nationwide, helping build their capacity to effectively and efficiently meet the needs of their communities. Members of the Standards for Excellence Institute gain access to an online community with an expansive library of resources and customizable templates. The Institute also offers nonprofit accreditation and recognition, a national network of consultants licensed to provide training on the Code, and professional volunteer opportunities.

Attorneys, accountants, and other professionals can contribute valuable expertise to a board. In the best-case scenario, it would be nice if their services would be given voluntarily. However, that is not always feasible.

The underpinnings of the policy that allows tax exemption for public charities is that the dollars raised are used for “exclusively charitable and educational” purposes. The IRS wants to be sure that none of the tax-exempt dollars raised by the nonprofit inure to the benefit of directors. The prohibition against private gain steers us away from hiring “interested persons” to conduct services in exchange for a fee. That said, it is possible to address the apparent conflict of interest you describe by following the Conflict of Interest Policy your board has adopted.

When making the determination whether to “hire” a board member to conduct a service for a fee, the board should be guided by the question: What is in the best interest of the organization?

You can address the conflict by:

1. Raising it with the board;
2. Discussing the conflict without the participation of the interested person;
3. Voting about the conflict without the vote of the “interested person,” and recording that process in the minutes.

It is common for the “interested person” to offer the services at, or below, market rate, which helps the board demonstrate the value to the organization. All of this assumes the board has determined the service provider meets a reasonable standard of competence in the field and will provide the assistance the organization needs.

In most instances, there is nothing unlawful about an organization transacting business with an insider. The fact that a conflict exists does not necessarily mean that the organization shouldn’t proceed with a specific action or transaction. Rather, what is important in these circumstances is assuring that such transactions are scrutinized to determine whether the action or transaction is in the best interests of the organization. Generally, a conflicts policy will use a combination of “disclosure” and “independent review and approval” to evaluate potential conflicts. Also note that even if your organization properly follows your conflict of interest policy, contracting with a board member could raise questions in the community. Generally, if you wouldn’t want to read about it in the newspaper, don’t do it.

Want access to resources like sample bylaws, board member job descriptions, board policies, common board member forms, and board orientation? Join the Standards for Excellence Institute. Located in Maryland? Join Maryland Nonprofits for these resources and more!

From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

The Standards for Excellence® Institute, a program of Maryland Nonprofits, provides the best possible resources to nonprofits nationwide, helping build their capacity to effectively and efficiently meet the needs of their communities. Members of the Standards for Excellence Institute gain access to an online community with an expansive library of resources and customizable templates. The Institute also offers nonprofit accreditation and recognition, a national network of consultants licensed to provide training on the Code, and professional volunteer opportunities.

It is probably impossible to find a board member who will never have a conflict of interest. An active board member often has numerous professional and personal affiliations and, undoubtedly, some of them cross paths with your organization. He or she may have been chosen as a board member partly because of these associations or the contacts they might provide.

However, if these associations develop into a conflict of interest and become a major obstacle to fulfilling the duty of loyalty — one of the main legal obligations of board members — it may be necessary to re-evaluate the board member’s suitability for current board service. Examples of conflicts that warrant reconsideration of a board member or candidate include the following:

• The board member or candidate is a close relative of the chief executive of your organization.
• The board candidate is the chief executive of an organization with a similar mission and program structure.
• The board candidate is affiliated with an organization that competes for funding with your organization.

Want access to resources like sample bylaws, board member job descriptions, board policies, common board member forms, and board orientation? Join the Standards for Excellence Institute. Located in Maryland? Join Maryland Nonprofits for these resources and more!

From the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. The Standards for Excellence code, developed by the Standards for Excellence Institute, includes specific benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability in your nonprofit organization. The code identifies 6 major areas of nonprofit governance and management: Mission, Strategy, and Evaluation; Leadership: Board, Staff, and Volunteers; Legal Compliance and Ethics; Finance and Operations; Resource Development and Fundraising; and Public Awareness, Engagement and Advocacy.

The Standards for Excellence® Institute, a program of Maryland Nonprofits, provides the best possible resources to nonprofits nationwide, helping build their capacity to effectively and efficiently meet the needs of their communities. Members of the Standards for Excellence Institute gain access to an online community with an expansive library of resources and customizable templates. The Institute also offers nonprofit accreditation and recognition, a national network of consultants licensed to provide training on the Code, and professional volunteer opportunities.