“Director” and “executive director” are two titles that people often get confused about. In this article, we’ll try to shine a little light on the differences between the two.
What’s an executive director?
In a nonprofit organization (NPO), an executive director is an employee at the highest echelon of the hierarchy, reporting directly to the board of directors. The title is commonly used in three different sectors: nonprofits, volunteer organizations, and cooperatives.
Even in a volunteer organization, this is usually a paid position. However, the executive director is often the only paid job in this type of enterprise.
While some charitable organizations have unpaid executive director jobs, this usually only happens only if the company is very small. Quality candidates need compensation so they can devote the time necessary to meet the needs of the organization.
In for-profit companies, the equivalent title is chief executive officer (CEO).
An executive director’s responsibilities include providing strategic direction for the enterprise and working alongside the board of directors to fulfill the organization’s mission. While it's a common misconception that nonprofit organizations don't have business plans, most of them do, and executive directors oversee their creation.
They also coordinate fundraising campaigns and promote the organization to raise public awareness and boost membership. An executive director might share management duties with a chief operating officer (COO) or director of operations (DOO).
The board of directors appoints the executive director. In some cases, the vote must be approved by a specific percentage of the membership. Some states allow executive directors to serve on their organizations’ board of directors. However, most states see this as a conflict of interest.
What’s a director?
Director refers to an individual who is a member of a company’s board of directors. They’re responsible for making decisions for the enterprise that the executive director then must execute.
A non-executive director may not be a direct part of the everyday workings of a business, rather, they bring additional expertise to help facilitate decision-making on behalf of the business.
What’s a nonprofit board of directors?
The nonprofit board of directors is the governing body of an NPO.
Boards are charged with carrying out the organization’s mission. Their primary duties include goal setting, strategy, and overseeing programs and initiatives. One of the most important duties carried out by an NPO board is selecting the executive director.
Board members periodically meet to discuss and vote on the organization’s affairs. Laws require that nonprofit boards meet at least once a year.
However, most boards meet more frequently. As part of their bylaws, most NPOs outline terms for board directors that run between two and five years. Boards usually have an odd number of board members to avoid tie votes. The bylaws usually ensure that board members have staggered terms, so the terms don't all expire simultaneously.
NPO board officers
Nonprofit boards usually have three or four officers who are voted into office by the rest of the board. Officers hold a higher degree of responsibility than other board members. The organization’s bylaws describe each officer’s role, duties, and responsibilities.
Board officers can accept financial compensation for their service. However, some public boards are prohibited from doing this.
While anyone can serve on a nonprofit board of directors, most boards choose people from their communities who have the experience to support the NPO's mission. However, there often aren't enough local candidates to fill all the positions in many small communities.
Board officer roles and duties
Chairperson
The chairperson of the nonprofit board of directors presides over meetings, working with the executive director to create an agenda and to set priorities. They try to get all board members to participate in the decision-making process and create the conditions under which the directors can have productive group discussions.
Vice-chairperson
The vice-chairperson is secondary to the chairperson and may fill in for the chairperson in the case of their absence. Some NPOs have the current chair mentor the vice-chair, so they're ready to assume the role when the chairperson steps down.
Secretary
The board secretary works closely with the board chairperson and executive director to set the agenda for meetings. The secretary also helps ensure that the NPO complies with all applicable local, state, and federal laws.
During board meetings, the secretary will typically record the minutes. Most of the board communication goes through the secretary, who keeps contact information for all board members.
Treasurer
Nonprofit board treasurers prepare the annual budget and the income and expense reports. Usually, another officer is assigned the role of a second signer for all financial transactions. Having two signers ensures that there’s greater accountability.
Treasurers also make recommendations to the board about financial matters and keep members informed about the NPO’s financial health.
Nonprofit organizations
A nonprofit organization is a company that has been granted tax-exempt status by the Internal Revenue Service (IRS). It's eligible for this status because it furthers a social cause and benefits the public.
The public needs a lot of services, many of which private companies don't offer. That's why the government created tax exemptions for nonprofit organizations. Boards of directors of NPOs are directly responsible for responsibly managing these donations.
NPOs can include public universities, national or regional charities, local libraries, churches, foundations, and community hospitals. NPOs are sometimes called 501(c) organizations because of the tax code section that allows them to operate.
Donations made to an NPO are tax-deductible. The organization pays no tax on the contributions or any other money obtained through fundraising activities.
NPOs must state in their organizing papers that nobody will ever use the organization for personal gain. This means that nonprofit executive directors have salaries that are much lower than corporate CEOs.
Cooperative organizations
A cooperative organization is a company that’s owned by a group of individuals. All members take part equally in the business and are financially invested in the organization, and the business is democratically run.
In this type of company, the executive director is responsible for carrying out the group's decisions. The executive director’s role is voted on by all members, and candidates must be cooperative members. The position is term-based, and usually, there’s a limit on the number of terms any one person can serve.
Housing projects and cooperative farms are two of the most common types of examples of this organizational structure.
3 startups helping nonprofit organizations
Charityvest
Charityvest lets individuals create tax-deductible charitable giving accounts, which are known as Donor-Advised Funds (DAFs).
These allow a user to create their own charitable foundation. Users can make cash, stock, or cryptocurrency contributions to their fund and direct donations to over 1.4 million nonprofits in the US from their fund balance.
The platform allows zero-fee stock contributions, which are donations of appreciated publicly traded stock. Donating appreciated stock has significant tax advantages, primarily through avoiding capital gains taxes. This results in more substantial tax deductions and more funds available for charitable giving.
Users can send monetary gifts to family, friends, and acquaintances and keep track of their donations with a single consolidated receipt. The platform even helps enterprises automatically match their employees’ charitable giving with tools that make this easier.
DipJar
These days, collecting donations at charitable events can be challenging– many people no longer carry cash, and processing credit card payments can be awkward to do.
DipJar solves that problem in a fun way that also streamlines donation procedures for charitable organizations. This cylindrical device allows a giver to dip their debit or credit card into its reading slot to contribute, resulting in an enjoyable, interactive light and sound display.
This enhances the donor experience, giving them positive recognition while making monetary gift-giving fun.
Civic Champs
Civic Champs is a volunteer management platform for charities. Co-founder Geng Wang started the enterprise in 2019 because he wanted to help NPOs make recruiting volunteers easier.
Wang learned that one of the executive directors of an NPO living near him was spending more than 80 hours a year tracking volunteer hours, not including onboarding and follow-up. He thought this was ridiculous and a waste of staffing resources.
Many NPOs track volunteer activity with old-fashioned pen and paper. That requires laborious manual entry into spreadsheets, which takes up time that could be better used elsewhere. Civic Champ’s innovative platform reduces the time volunteer coordinators spend on paperwork.
Last year, the company closed its first major funding round that included a $130,000 investment from the IU Angel Network.
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