CEO vs. the Board -- What’s the difference, and why we need both

Lately I’ve received lots of Anonymous Questions about the role of a board of directors in relationship with the Executive Director. There are many legal grey areas associated with this relationship, so for Season 3 Episode 6, I asked my favorite nonprofit attorney Rachel Schaffer Lawson of Schaffer Law Firm to come back to the show and answer all the questions you have submitted. Please keep in mind her answers to my questions do not constitute legal advice for your specific nonprofit organization or situation! If you have further questions, please reach out to Rachel directly--she does not charge for phone calls or emails.


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☑️ Figure out if you have an “ownership” mentality.

An individual can’t “own” a nonprofit organization or make all the decisions for the organization. If you feel uncomfortable putting decision making authority in the hands of a board of directors, you may want to start a charitable for-profit organization (such as a social enterprise or B corp) instead.

☑️ Make sure every board member and the Executive Director understands their duties.

Board members can be held responsible for the actions of the organization. Research “fiduciary duties” and “duties of care and loyalty” for more information. Additionally, board and staff members are responsible for upholding the other by-laws and Conflict of Interest policy. You can also listen to the full episode for more examples of board responsibilities.

☑️ Be sure an attorney with nonprofit experience has reviewed your by-laws.

I often see by-laws written by attorneys who have never worked with nonprofit entities before, or even on fill-in-the-blank websites like Legal Zoom, and these by-laws do not follow federal and/or state regulations over nonprofit organizations. It’s important to have an attorney experienced in the nonprofit sector review your by-laws.

☑️ Figure out if you prefer working in the day-to-day operations, or just making big decisions.

While the Executive Director should always be at the board meetings, they aren’t able to make big decisions about the direction of the organization. Executive Directors work on day-to-day decisions, including program development and management of staff, while the board members are responsible for the more long-term and strategic decisions, including hiring of a consultant and creating annual budgets. Listen to the full episode for more examples.

☑️ Clearly define the roles of the Executive Director and board members through contracts.

Your Executive Director (and other staff members) should have an employment contract outlining their authority to make decisions and responsibilities, and all board members should have a contract outlining their responsibilities and expectations.

And if you need more help...

☑️ Email me and tell me what's going on at your nonprofit.

What are your current goals? What issues are you facing? Give me some background information, and we'll go from there! I never charge for an initial consultation, and I'll be honest if I can't help you. I'll also be happy to connect you with the other resources in my network who may be able to provide better advice or services for your situation.

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