BoardSource, a professional governance organization, reports that this question is one of the most frequently asked. Google reports five million citations related to the issue or related issues. A LinkedIn Group group, managed by The Chronicle of Philanthropy, recently had 191 responses to the question. Another LinkedIn group, Non-Profit Management Professionals, last week generated 40 (and counting) comments. The question continues to be debated, and the need for comment and opinion seems insatiable.
Here are the issues as I see them:
State Legislation: Most nonprofit charters are issued by states, and it appears that the vast majority of American nonprofits are governed by these regulations. California does not permit the CEO to be a voting member. Until a recent change, New York did allow the CEO to become a board member. The motivations behind the legislation center on preventing a CEO developing conflicts-of interest, especially as they relate to salary decisions. Also, there is a feeling among some nonprofit directors that the board must be the "boss." This attitude can even go as far as one nonprofit board member's comment: "We tell the CEO exactly what to do."
It appears that the restriction is considered a "best practice." Some nonprofits move around it by naming the CEO an ex-official member of the board, a member without a vote. However, there is a "better practice," available where permitted by legislation.
Developing An Even Better Practice in a Nonprofit
Start At The Top: Allow the CEO to hold the title of President/CEO and allow the senior volunteer to become board chair. This signals to staff and public that the board has full faith in the CEO as a professional manager. In addition, the change absolves the senior volunteer of potential financial liability, not unlike the volunteer who unwittingly received a $200,000 bill from the IRS because it appeared he had strong control of a bankrupt nonprofit's finances and operations.
Ask The CEO: Make certain the CEO is willing and able to accept full responsibility for operations. Not all CEOs, designated as Executive Directors, want the increased responsibilities attached to such a title and to become a board member. These managers only feel comfortable with having the board micromanage operations and often openly discuss their reservations.
The CEO Becomes A Communications Nexus: Under the CEO's guidance, board-staff contact takes place on task forces, strategic planning projects, at board orientations and at organization celebrations. It openly discourages the staff making "end runs" to board members, not a small problem in community-focused nonprofits
Brand Image: As a board director, the CEO can be more active in fund development. The board position and the title can easily help the CEO to build the organization's public brand image through the clear public perceptions of the board's choice to lead the organization. This provides leverage to make greater use of the board-CEO relationship required to develop funds. It can allow the CEO to be the spokesperson for the organization's mission.
Peer Not Powerhouse: Probably descending from early religious nonprofits, its personnel may be seen by part of the public as not being "worldly." They must be over-viewed by a group of laypersons that encounters the real world daily. The CEO, as a voting member and a team peer, takes on increasing importance to reducing these attitudes. As long as the CEO works successfully as a peer not a powerhouse, there should be substantial benefits to the organization.
A Successful Voting Nonprofit CEO's 7-Year Tenure:
I had voting power from the start inception of the organization. I was very hands-on and took the mission to heart. The board respected my active engagement, my diligence and opinion. They realized at the end of the day, I was their boots on the ground and the one responsible for implementing our decisions. I saw my vote as an honor and my duty. I wanted to guide my board in making the best informed decisions and to be a part of decision. I saw my vote requiring full disclosure and my taking full responsibility for the outcomes.
Beth Gillette, Comment on Non-Profit Management Professionals, December 2013.