Episode 72: Nonprofit Governance - Board Titles
Are you both President and Executive Director (President/CEO)? If so, you could be costing your organization funding. Combined is a corporate title. Many Executive Directors use the combination not knowing the President is authorized to hire and fire the Executive Director and is a red flag for funders. Learn more about titles and why they matter in the nonprofit sector.
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NONPROFIT SPOTLIGHT: Every Body Dance LA
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Podcast Transcript
Speaker 1 (00:02):
Welcome to On Air with Amber Wynn, where nonprofit leaders learned to fuse passion and commitment with proven business strategies to create long-term funding impact and sustainability. And now here's your host and resident, Philanthrepreneur, Amber Wynn.
Speaker 2 (00:28):
Good morning fam. It is your girl, Amber Wynn. I'm so excited to be here. I'm always excited to be with you. We are continuing our series on the nonprofit board of directors nonprofit governance. In today's topic is board titles. Listen, it is important to understand the role of the board of directors and titles mean something. I want you to think of it how I would think of it. For those of you who don't know, I'm a big football fan. Football was my first love, right? And if you look at it in that space, you have a quarterback, right? So the quarterback is responsible for navigating the plays on the field. Would you put your tight end in the quarterback's position? You wouldn't because the tight end has specific roles. Would you switch defense for offense and have them you deliver those plays? You would not, because everyone who's watching football understands the role of each one of those positions.
(01:45):
The tied in the center, the quarterback, it's the same for the nonprofit sector. And so today we're going to talk about board titles, why they matter. We're going to even dive into what those titles are according to the IRS, because at the end of the day, you can make up whatever title you want, but in the nonprofit sector, the titles mean something according to the IRS. And it could be one of the reasons why you're stunted in your organization's growth, why you're stunted in fundraising. We're going to dive into all of that later. But let's pause and when we come back, we're going to jump into board titles.
Speaker 3 (02:28):
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Speaker 2 (03:40):
Welcome back. You're on air with Amber Wynn, your resident, Philanthrepreneur, and your biggest cheerleader. Today we are continuing the series on the nonprofit board of directors, and we're talking about board titles. Let me ask you if you are the founder, or even if you're just in the position, is your title President and CEO or president and executive director? If it is, then this session is especially for you in the nonprofit sector, you should not have the title of President and executive director or President and CEO. That title, President/CEO is reserved for corporate America for a for-profit company. Let me explain why. According to the IRS, the purpose of the board of directors is to govern it is to hire support, and ultimately if needed, fire the executive director. So if you have the title of President/CEO, are you going to fire yourself?
(04:53):
You are not. So it is important to understand that sometimes in this sector, we've borrowed terms from the for-profit sector and it doesn't work. It doesn't work because titles have meaning. In the corporate world, you have a president slash CEO that is the person typically who runs the company. Then you have the chairman of the board. That is the person who runs the trust, right? So you may hear the board of trustees, the trust trustees, they are responsible for a certain part of the company, whereas in the nonprofit sector, the board is responsible for the whole company. So the president and CEO of a corporation can have that title because they have the function of running just the organization, whereas the board of directors for the corporation is responsible for a trust. So I'm telling you all of this because I get into it all the time.
(06:00):
What generally happens when people start their nonprofit is they come up with all of these titles and they come up with all of these leadership roles that don't exist in the nonprofit sector. They don't exist. So they're like, oh, we have a president, we have a board chair, we have a vice chair, we have a vice president. And the reality is nine times out of 10, they probably don't even have a staff, but you've got all of these board roles and titles, and realistically it's generally because you can't pay them. So you're trying to give them these lofty titles so they feel special. And what it's probably doing is a disservice to your organization because funders typically ask you for a board roster, right? When you're submitting grants, you're going to give them this board roster. It's going to have president, vice chair, chair, vice president, all of these titles.
(06:54):
And what it says to a funder is you don't know what you're doing. That's what it says. That's why they ask for it. They're looking to see what is your board structure. Because the board of directors is responsible for guiding, the organization is responsible for funding, the organization is responsible for hiring and supporting the executive director. So if you have your executive director on the board, which they should not be, why? Because they are responsible for running the day-to-Day, and they report to the board. So they shouldn't be on the board. Do you work hand in hand with the board as executive director or chief executive officer? Yes, but you are not on the board because you report to the board. So they're looking at your board roster to see if you know what you're doing. If you understand the importance of the governing entity, which is the board of directors, all it takes is a quick glance.
(07:52):
If you've got your executive director also as the president, then they know you don't understand how to run your organization. Why is that important? There's always going to be more applicants than there is money. And so as a funder, we're looking for ways to eliminate organizations. So you take a quick glance at your board roster and you see, okay, they don't know what they're doing. No pile, no pile. It's important for you to understand the red flags that are preventing you from getting that big money. You may be able to get 500,000, a thousand even up to $10,000 with your titles not really being the right titles because that's not a big investment. They can write it off whatever. But if you are trying to sustain your organization and you're trying to get that big money, it's these little things and they're not really little, but it's these things that may be preventing you from actually accomplishing your goals.
(08:53):
So I want you to think about your titles, look at them. If it has the executive director or the chief executive officer also serving as the president, then you're misrepresenting your organization and you could be hindering it from getting the funding that it deserves. So in my DM, I'm going to put a link so that you can have a copy of the board roster and it explains specifically which titles you're supposed to have. I can simplify it for you. You have to have a president, a treasurer, and the secretary that is your executive board. That is the board that can make decisions outside of your regular board meeting that is determined by the IRS. You have to have a president, a treasurer, and a secretary. The rest of your board members are board members. Can you have a vice president? Absolutely. When you start getting into the chairs and the vice chairs, do you even have committees?
(09:54):
Because you can't have a chair and a vice chair, but typically it's because you have such a large board that you want to give your president support. So then you'll have a chair and they're responsible for managing the committees. But if you don't even have committees and you've got chairs and vice chairs and nothing's really even going on in your nonprofit, why have all of that to convolute and create confusion on your board, right? So I want you to think about that because as we move forward into strengthening your infrastructure, into creating an organization that's sustainable, those things are really important. That is why funders ask you for a board roster. People just shoot out these board rosters not knowing that they really mean something, but they do. So as we talk about nonprofit governance, board titles really, really do mean something. We're going to pause now for another break, but when we come back, it is your opportunity to ask me whatever question that you have burning in your brain that I haven't already answered. So ask Amber, when we come back.
Speaker 4 (11:12):
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Speaker 2 (12:33):
Welcome back to On Air with Amber Wynn, Philanthrepreneur. Today we're talking about nonprofit governance in our series on the nonprofit board of directors, and we're talking about titles. And now is the part of the episode where you get to ask me your burning questions. It's time for Ask Amber. This question comes from Latonya. Latonya, hit me up on Instagram. Thank you, LaTonya. And it says, Hi, Amber. My name is Latonya. I am reaching out from Century City. I just started a nonprofit and I'm confused about titles. I know I'm the founder, but I'm not sure if I should take the title of executive director or CEO or if that even matters how appropriate for today's topic. Latonya, here's the thing, you will always be the founder. So you can always include that in your title. Even if you decide to have a succession plan, bring in somebody else.
(13:35):
You'll always be the founder. So that's one thing. But the nonprofits highest ranking person is the executive director. In about 2003, 2004, there was a shift to start using the title of CEO because nonprofit executive directors felt like they weren't getting the same type of respect that the CEOs getting corporate America, and they felt like it was a hindrance. And the reality is executive directors do the same type of work in their organizations as CEOs do in their companies. So they started to adopt the title of CEO because they felt, again, it would elevate the role. So then what happened is you start getting these nonprofits calling themselves CEOs. The problem with that, as I mentioned earlier in the episode is then if you have a chief executive officer for continuity, then you end up having a chief financial officer, a chief administrative officer, and then it starts to mirror corporate America.
(14:52):
So if you have all of these chiefs there, you're going to have an executive director and a chief financial officer. So then you start taking on all of this infrastructure, like the corporate world. And so it gets a little bit dicey, but the reality is if you are chief executive officer or executive director, they mean the same thing. It just starts to get a little bit messy when you start filling in the rest of your leadership cabinet. I myself prefer to keep things simple because at the end of the day, it starts to tie to funding and the IRS created these titles, executive director, it's the highest director role in the nonprofit. I would stick with it, but if you have CEO, it's perfectly fine. It's just, again, when you start hiring other people, you want continuity in the titles. Otherwise it gets wonky. But if you don't know what you're doing, you end up making stuff up and you end up making mistakes that may cost you.
(15:53):
So I would advise that you use the title of executive director, but it's perfectly fine for you to use CEO. So LaTonya, thank you so much for your question. And if you have a question for me, you can reach me on any of my social media handles. I'm on Instagram, Facebook, Twitter. You can hit me up on my website, www.amberwynn.net. You can even email me amber@amberwynn.net. I'd love to get your questions because I want to make sure that I am responsive to you and your personal needs. Next up is my favorite time of the episode when I get to put the spotlight on you. Nonprofits do the work that needs to be done in this country, in this world, and you do the work. And so I'd like to take just time out to spotlight. Let everybody know that you exist, the work that you're doing, the change that you're making in this world. So for this episode, we're going to highlight everybody. Dance LA everybody. Dance LA offers high quality dance education and low income areas of LA County for youth ages four to 19, instilling high expectations and cultivating the lifelong skills of collaboration, discipline, and self-expression. Let's take a look at everybody. Dance la,
Speaker 5 (17:17):
Having dance has always been a huge release. It's always been the thing that I run to when I'm struggling with something on my block. Specifically, we had a lot of gang activity.
Speaker 6 (17:50):
I think without our program, they would be out on the streets or in the parks. There just isn't that much available for kids to do.
Speaker 5 (17:59):
I took jazz, lyrical, modern tap, hip hop, everything in between. I'm here every day. I dance every day on my hardly at home anymore. So I just felt very uprooted. What I wanted, my goals didn't matter because my parents value as human beings in this country did not matter. They are actively and willingly breaking up their family unit so that we can have a better life. Oh my God, I felt like I could finally breathe again. She
Speaker 6 (18:49):
Came back with a vengeance. I mean, she just was on fire in all of her dance classes. It was as if no time has passed,
Speaker 5 (19:03):
Five, six all together, good. Coming back to teach at everybody. Dance is my dream come true. Wow. For them to have given me the opportunity to do exactly what changed my life is such a humbling thing for me. These teachers taught me respect. They taught me dignity. They gave me a good work ethic.
Speaker 6 (19:29):
She really has a bright light about her. She's smart, she's focused, she's going to do great things.
Speaker 5 (19:34):
If I can do what Carol and all of these people did for me, for someone else, I'm happy and I can dive happy.
Speaker 2 (19:49):
Yes, that's what we do at nonprofits. I'm so excited. If you want to support everybody, dance la. Are you interested in some of the programs? Check them out. You can find them@everybodydance.org. All right. Today we're talking about nonprofit governance, specifically board titles, and the next section, which is Mindset Minute. I want to pause and I really want you to listen to what I have to say because my question is, for those of you who listen to this about titles, and you know that your titles are all over the board, you know that your titles don't represent what the IRS has determined to be an acceptable title, and you decide, well, I'm going to keep it that way because I've been doing it for years and my people have their titles. So in this mindset minute, I'm going to ask you to think about this. Do you do what you want to do or do you do what's right?
(21:00):
Do you do what you want to do or do you do what's right? Here's the thing, right? Is not what Amber says is right, right, is what's going to powerfully position your organization for funding. Because at the end of the day, you want to be able to impact your community. But if you are doing what you want to do, if you're making stuff up, if you're making titles up, if that's what you want to do, but doing what's right is going to allow you to bring your mission into life, is that going to take work? Yes. But you have the conversation with your board. You say, listen, when I know better, I do better. And I know now that titles have meaning. And so we've got to get our board titles in alignment with the IRS because funders are looking at that and they're making decisions. And you're not in the room with the funder, so you don't know why they're not giving you the money. You just think, oh, we're not getting funded.
(22:07):
Your role as executive director, as the founder is when you know better to do better. And this is one of those times you've learned that the titles mean something. So you have a choice. Do you do what you want to do or do you do what's right? I'm going to implore you to do what's right. I get pushed back on this all the time. Well, why does it matter and it matters? Well, what am I going to tell my board? Tell your board that you know better. Now, tell your board that these titles have meaning, and if they're committed to your mission and if they're committed to your community, they're going to do what's right. And if not, they're going to say, well, this is the title that I've had. And then you know where they stand. So at the end of the day, if you're going to do what's right, fix the titles so that you can powerfully position your organization for success.
(23:07):
That's really what it comes down to. I don't argue with people anymore. I say this, listen, all I can do is tell you what the IRS expects. All I can do is tell you what a funder expects. You have no idea why they're asking you for your board roster. I'm telling you why they're asking, and I'm telling you that what you have won't cut the muster show. You can either do what you want or you can fix it. All right? So that's it for this week's episode on Nonprofit Governance Board titles. We're going to continue this series because the board is extremely important. You may not have known that when you started your nonprofit, but they are super-duper important, and I want you to have a really clear understanding of their roles, their responsibilities, not only from the funder's perspective or the IRS perspective, but for yourself as the founder and executive director. We're going to talk a little bit more about that relationship in upcoming episodes, but we're going to really just dive in because I want you to be supported, and that is the purpose of the Board of directors. So thank you for hanging out with me this week. If you enjoyed the episode, be sure to like, subscribe or pass it on to another nonprofit who you think may be able to benefit from it. I'm always here, always in your corner. We'll see you next week.
Speaker 1 (24:42):
Thanks for listening. If you enjoyed this episode, subscribe and leave a review on iTunes. Head over to www.amberwynn.net/podcast for the links and resources mentioned in today's podcast. See you next time.
