Non-Profit Directors Vs. Officers

Non-Profit Directors Vs. Officers

When working with non-profits, a question often arises about the difference between non-profit directors vs. officers. Both directors and officers have their distinct roles within a non-profit organization. According to a report by the Office of the New York State Comptroller, New York accounted for the second-highest number of non-profit organizations in the United States. As of 2019, the number of non-profits in New York was over 33,700. Often, the smooth and efficient operation of a non-profit organization depends on both directors and officers. However, it is important to understand the difference between the two roles because each has its distinct duties and responsibilities. At Jennifer V. Abelaj Law Firm, we assist non-profit organizations with various legal needs. Whether you need help setting up a non-profit organization or counsel for your existing organization, consider calling 212-328-9568 to schedule a consultation.

Who Are Non-Profit Directors?

The board of directors is the governing body of the non-profit organization. Non-profit directors make high-level decisions that affect the organization and focus on its accountability. The primary duty of directors is the financial management of the non-profit organization. Key decisions that non-profit directors make include but are not limited to:

• Determining the organization’s mission
• Approving the organization’s annual budget
• Providing proper financial oversight
• Ensuring legal and ethical integrity
• Establishing governance policies
• Interviewing and electing officers and other managerial positions
• Maintaining the organization’s accountability

The non-profit organization’s bylaws usually govern how and when the board of directors will vote on issues affecting the organization. New members can join the board of directors if a designated individual or entity appoints them or the board of directors elects them. A non-profit director cannot make any key decisions on behalf of the non-profit organization unless the board votes on the issue or he or she has permission from the board.

Who Are Non-Profit Officers?

The board of directors can interview and elect non-profit officers. The primary duty of non-profit officers is to run the organization’s day-to-day operations within the limits of the authority that was delegated by the non-profit directors. Usually, the organization’s bylaws will indicate whether or not the elected officer must be a member of the board of directors. The most common positions for non-profit officers are secretary, president, and treasurer. However, the organization may also require officers to serve in the capacity of:

• Executive Director (Chief Executive Officer)
• Chief Financial Officer
• Chief Operating Officer

The duties and responsibilities of these non-profit officers include recruiting and retaining, paying the organization’s bills, keeping records, and more.

What Is the Difference Between Non-Profit Directors vs. Officers?  

Unlike non-profit officers, directors do not run the day-to-day operations of the organization. The duties and responsibilities of non-profit directors include delegating authorities related to the management of the organization to non-profit officers. The main comparison of non-profit directors vs. officers is that directors control and monitor the day-to-date operations of the non-profit organization while officers are the ones who run the daily operations in a way that aligns with the vision and mission of the organization. The success of the non-profit organization depends on the good management and leadership skills of directors and the officers’ ability to fulfill key objectives when running the day-to-day operations. Without non-profit officers, directors would have to hold meetings and vote on every daily decision that must be made on behalf of the organization.

Can Non-Profit Directors Also Serve as Officers?

Yes, non-profit directors can also be officers. However, doing so can cause a conflict of interest. For this reason, most non-profit organizations choose to have separate people to serve as non-profit directors and officers to avoid unnecessary disagreements and conflicts. However, it is not uncommon for non-profit directors to also serve as officers. When one individual serves as both a non-profit director and officer, the organization usually pays that person as an independent contractor for serving as the director and as an employee for performing the duties of the officer.

However, if a non-profit organization appoints a director to also serve as the officer, it is critical to have a conflict-of-interest policy in place to address situations when a director/officer may benefit from personal or financial interests. At Jennifer V. Abelaj Law Firm, we assist non-profits with resolving their conflicts of interest and helping them with a wide range of other legal issues.

Non-Profit Directors and Officers: Avoiding Conflict of Interest

When a non-profit director also serves as the organization’s officer, there may be the potential for a conflict of interest. Many states, therefore, require non-profit organizations to adopt a conflict-of-interest policy. New York is one of those states. Under the New York Non-Profit Revitalization Act of 2013, all non-profits must have a conflict-of-interest policy. The Act also offers guidelines for drafting the policy and requires that non-profit directors, officers, and employees act in the best interest of the non-profit organization.

A well-drafted and valid conflict-of-interest policy must contain a provision requiring parties in conflict to disclose the details of the conflict. The policy must also prohibit members of the board of directors from voting on a matter in which they may have a potential conflict of interest. The policy must also contain the mechanisms for resolving and managing potential conflicts. In fact, IRS Form 990 specifically asks whether or not the non-profit organization has a conflict-of-interest policy and whether the policy establishes mechanisms for managing conflicts within the organization.

Non-Profit Attorneys Can Help

Directors and officers serve crucial roles in a non-profit organization, which is why it is essential to understand non-profit directors vs. officers to ensure efficient management of the organization. Jennifer V. Abelaj Law Firm provides non-profits in New York with personalized legal representation in various legal matters, including forming the organization, managing conflicts of interests, drafting bylaws and governing documents, and many more. Consider calling 212-328-9568 to schedule a case review with our experienced non-profit attorneys.