Who’s in charge here? By: Charles Whipple
As general counsel to a significant non-profit organization, I get asked this question by both the chief executive officer and by members of the Board. Each of which is expecting a different answer. What is the correct answer? Is it the Board or the CEO? Well, it depends on the circumstances and situation at hand. I know you’re thinking, just like a lawyer to answer a question with a question. Specific events and situations aside at the end of the day, the Board is the ultimate responsible body for the entity.
A quick primer for people, the Board of Directors oversees the company, gives direction, leadership and advice, and ensures the company makes sound decisions. Directors must be aware of activities of their organization, ensure its mission is carried out, and steward its resources. They must assure sustainability and long-term success. They must avoid actual and perceived conflicts of interest, and excessive risk-taking. They must ensure the organization meets legal requirements. And with most non-profit organizations, they must do this on a part-time volunteer basis. How does a part-time volunteer board member accomplish these daunting requirements and avoid personal liability and even potential jail time? By hiring a competent chief executive officer. This is the number one function of a non-profit board as it is the CEO who is going to run the day to day functions of the company. And once the Board has hired the CEO, the Board needs to oversee and evaluate her performance. It is the non-so simple distinction between oversight and management. So who’s in charge? Strategic Planning – Board. Light fixtures in conference rooms – CEO. Location of new satellite facility with the goal of expanding the company’s service area? The simple answer is Board, but can a volunteer board really make this decision? Not without a tremendous amount of professional support from the CEO and her team.
This first blog entry has just scratched the surface the responsibilities that a member of a non-profit board has and the relationship between a Board and its CEO. Each future entry will pull apart and review the topics imbedded in the paragraph above. I am going to try to give you perspectives from both the non-profit board side and from the management side. Future posts will cover how to be a good board member, how do you deal with conflict of interests, how do you assess the performance of individual directors and the board as a whole and how does a board evaluate its CEO.
In my next post, I will review the attributes of a valuable board member.