When people band together to start a nonprofit organization, they usually do it because they are driven to fix a problem that is meaningful to them. They generally don’t do it because they want to get involved in the world of corporate governance and organizational bylaws. Nevertheless, if they want the nonprofit to succeed in its core mission, they must ensure that it is administratively sound.
Organizational success starts at the top – with the directors and officers. If you are not an expert in corporate structures and operational roles, you may not be aware of the difference between these two job titles. So, to better understand how each individual should be contributing to the running of the nonprofit, it is essential to learn exactly what each title means.
In their position on the board of directors, individuals with this job title vote on matters that are essential to the running of the nonprofit. Generally speaking, these votes tend to be on fairly high-level issues. Directors usually do not have the power or authority to impact the day-to-day activities of the organization.
The state of California Corporations Code Section 5231(a) states that a director must act “in a manner that [the] director believes to be in the best interests of the corporation.” In other words, they have a fiduciary duty to protect the interests of the nonprofit. Directors often review reports, inspect documents, and communicate with stakeholders to help them make their decisions.
There is no universal method for becoming a nonprofit director. In some organizations, directors are elected by the members. In others, the other board members decide on new directors. In fact, directors can even be appointed by the nonprofit’s governing documents or bylaws.
While directors tend to focus on high-level decisions, nonprofit officers are tasked with managing the organization’s regular operational activities. The roles of chair, treasurer, and secretary are among the most common for an officer to take up.
The state and federal governments have far fewer rules and regulations about the responsibilities of officers. As such, it is generally left up to each individual nonprofit to decide on a number and structure of officers that makes sense for them. The officer’s role is then described by the corporate bylaws.
Officers as Directors
It is not at all uncommon for individual officers to also serve as a director of the nonprofit. However, organizations that wish to structure in this way must ensure that the individual is properly installed in both roles. If, for instance, the individual signs a contract as a director when they have only been elected as an officer, the nonprofit may find itself in breach of contract.
Semanchik Law Group
If you are having trouble figuring out how your nonprofit should be structured or how to craft your corporate bylaws, the Semanchik Law Group can help. As nonprofit experts, we can help you make sure that your organization is legally sound from top to bottom. If you would like to set up an initial consultation, just give us a call at (619) 535-1811.