Why Does Your Nonprofit Need Officers? How Much Power Should You Give Them?

As we noted in our last post, officers are the individuals elected by the board of directors to carry out its directives. In legal terms, officers are the agents of the board of directors; an agent is a person who performs a task on behalf of another (referred to as the “principal”).

State law dictates which officers are required. In Massachusetts, nonprofit corporations are required to have a president, treasurer, and secretary (formerly called “clerk,” a term still seen on most Massachusetts forms). The officers are subject to the same fiduciary duties as directors. Many nonprofits like to add a vice-president or other assistant officers, but this is not required by law.

The roles of the officers are subject to long-standing corporate tradition based in the common law. The nonprofit corporation’s bylaws generally give the basic parameters of the officers’ authority to act. The board can add additional tasks if it so chooses. More detailed task descriptions (officer “job descriptions”) are outside the scope of the bylaws, however, and are better set forth in a separate document that is adopted separately by the board.

In all cases, as the agents of the corporation, the officers should act only under the direction and supervision of the board of directors. This is often forgotten until a problem results.

We’ve all heard of the all-volunteer nonprofit whose board president—often the founder—runs the whole show, with the board coming together only occasionally to rubber-stamp the president’s acts. It happens in organizations with staff as well, when the executive director is allowed to be the sole organizational decision-maker. In these cases, the board has abdicated its responsibility to oversee and manage the entire nonprofit. But ultimately, the board is responsible, and the officers (volunteer as well as paid) are accountable to it. When things go wrong, the board—collectively and, in certain circumstances, individually—will be liable.

When the board of directors sits at the table for their meetings, each person in attendance wears one or two hats—a director hat and/or an officer hat. It should always be clear who is wearing which hat at any time. Officers who are not also directors should not vote; without the status of “director,” they have no power to vote. They attend the meeting only to receive the direction of the directors and to report to them about their activities. However, in many nonprofits, the board elects officers from among themselves; thus some of the directors will wear a second hat—their officer hat—and in this case, everyone votes. (The possible exception here is the executive director, who should usually be in attendance. In most nonprofits, the executive director is not a voting director.)

This clarification of officer roles also applies to the task of completing your annual report to the Secretary of the Commonwealth, due every year on November 1. Any individual who serves as both officer and director should have their name listed in each capacity.

In the next post, we’ll look at the individual officers’ roles.

The foregoing is provided for information and educational purposes only and does not constitute legal advice. Consult an attorney or accountant for advice regarding your organization’s specific situation.

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