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The board of directors is the governing body of the nonprofit, as required by state and federal laws. The nonprofit board ensures that the organization carries out its charitable mission and complies with the requirements of its tax-exempt status. The executive committee, one of many committees the board may establish, includes the board’s officers – president, vice president, treasurer and secretary. Although the members of the executive committee hold the board’s leadership positions, the committee differs from the board in the scope of its authority and its ability to act independently.
Boards and Committees
The nonprofit’s organizing documents, which are its articles of incorporation and bylaws, detail the authority and powers of the board and its committees. The documents dictate the required number of board members and provide for the creation of committees and appointment of committee chairs. Boards may have standing committees, such as the finance or executive committee, and might establish ad hoc committees to address specific issues. Committees do the work of the board by focusing on specific issues, which allows for closer attention to important tasks. Committees, generally, answer to the full board and may be supervised by one or more of the board leaders.
Board of Directors
The independent, volunteer board of directors oversees the nonprofit’s operations, manages its finances and hires the chief executive officer. The nonprofit board sets policy and makes major decisions for the nonprofit. The entire board of directors, as the governing body, is legally responsible for the nonprofit organization and its activities. Boards for large organizations often provide liability insurance for directors and officers. Directors serving on nonprofit boards attend meetings and cast votes to make important decisions and to carry out the board’s duties.
In addition to the board’s officers, the executive committee includes committee chairs and the organization’s chief executive officer. The executive committee, even considering its membership, still answers to the entire governing body and is bound by the board’s voting power and the provisions of its organizing documents. Some nonprofit boards give executive committees broad powers to act on behalf of the board between meetings and when addressing urgent situations. Some executive committees directly supervise the organization’s CEO, including compensation decisions and performance evaluation.
Balance of Power
Board size and the complexity of the nonprofit’s assets and operations might determine how much authority or power to act independently an organization grants to its executive committee. Some nonprofits afford executive committees no authority to act without the approval of the full board. Executive committees can function like other committees in meeting independently to hammer out solutions or gather information, followed by reports to the full board for voting and decision-making. In the end, the role of the executive committee is balanced against the power of the full board to ensure proper governance.
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