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Executive Director vs. President/CEO Title

Benefits of the President/CEO vs. Executive Director Title: Is It Time to Change Your Title?

Over the last hundred years, senior managers of nonprofits typically have held the title of “executive director.” During the past thirty years, many nonprofits have changed the title to “president/CEO,” following a common business practice. Many more nonprofits need to consider the same change to obtain some subtle but useful organizational benefits.

A wide range of nonprofits use the executive director title: churches, human service agencies, trade associations, and medical facilities. An executive director can be organizations; hospitals became regional healthcare systems;the only manager in a church with an annual budget of $200,000, or be the head of a medical facility with a $10 million annual budget and 200 employees. These significant differences in responsibility levels can:

  • demean the contributions of many executive directors in the eyes of some important audiences
  • minimize people’s perceptions of the organizations’ contributions.

The Executive Director in Nonprofit Organizations

According to Wikipedia, nonprofit senior managers are called executive directors instead of chief executive officers “to avoid the business connotation which the latter name evokes.” It also distinguishes them from “members of the (volunteer) board of directors and from non-executive directors, who are not actively involved in running the corporation.” (Non-executive directors are volunteers who mentor or advise an operating division within the nonprofit, such as the development office.)

Using the title of executive director made sense during the early part of the 20th century when nonprofit organizations were modest ones with a handful of employees, and volunteers regularly filled managerial or service roles. As late as the 1960s, one occasionally witnessed volunteer board members having internal operational roles. Those who advocate the continued us of the executive director title argue that the title’s use is empirical evidence of the board’s involvement in the organization’s activities. However, the negative side of the argument is that continued use of the title leads to board micromanagement of operations, which stunts organizational growth.

Nonprofit organizations became larger and more complex in the latter part of the 20th century. Local professional societies became regional organizations; hospitals became regional healthcare systems; and so on. The proportion of volunteers involved in management operations and staff work declined. Consequently the trend to use the president/CEO title became more appealing to focus operational responsibility on management and staff. If properly structured, the title requires the chair and CEO to develop a more trusting professional relationship that assures stakeholders of higher levels of performance. Organization results become focused on outcomes, not process.

The president/CEO in Nonprofit Organizations

In the latter part of the 20th century, businesses began to add CEO to the title of either their president position or board chair position.* The objective was to clearly designate which of the two had final operational authority, except for those actions reserved by the firm’s bylaws for the board (usually acquisitions, pension plans, and long-term contracts). In the business environment, as contrasted to the nonprofit environment, both the chair and the president can be corporation employees.

In the 1980s, nonprofit organizations began to mirror business organizations managerially. Many developed marketing departments and installed complex information technology. A few hired experienced business executives to head their organizations. The older philosophy of “avoiding the businesses connotation” was quickly eroded. When hiring new senior managers, nonprofit boards offered titles of president/CEO and made bylaw provisions for others in the senior management teams to become vice presidents.**

Some president/CEOs even became voting members of their boards, if permitted by their state laws. It wasn’t unusual for some incumbent executive directors to seek the new title if it was politically expedient. However, many conservative boards still look upon the change as a managerial power grab, which has slowed the change process.

Three decades have passed since early adopters made the first changes. Yet thousands of complex nonprofits are still headed by managers holding the executive director title, although they may have substantial, complex operational duties.

Changing the title of the chief staff officer to president/CEO can positively influence three things:

1. Perceptions of the Organization

There’s little public understanding of the robust responsibilities of executive directors. Most people holding the title can relate stories of having to describe their jobs to those unfamiliar with nonprofits. But most people recognize that the president/CEO is the head of the organization with authority to lead its employees and to direct operations.

The senior manager from time to time may have opportunities to be interviewed by the media. This can be a critical responsibility when a rapid response to a crisis is needed or an unusual public relations opportunity arises. The president/CEO title enables the senior manager to move quickly and authoritatively; there is no ambiguity related to the leader’s authority.

How leaders and organizations are perceived by stakeholders are realities with which leaders must deal, whether or not the perceptions are accurate. Providing the chief staff officer with the president/CEO title can help develop more desirable internal and external perceptions of an organization’s strength and the responsibilities of the person leading it.

2. Organizational Culture

When organizations change the title, they often do so in connection with developing a structure that brings more formality and managerial professionalism to the culture. In the past, years of volunteer involvement in operations often developed a more family culture, which is a positive force when the nonprofit is in its early stages. But it’s hard to maintain a family environment as the number of employees grows. A new formality, brought about with the senior manager’s title change, along with a group of former managers now titled vice presidents, may be seen by older members of the staff as making the operation “uncaring” towards staff and clients.

As time progresses, with the president/CEO being the communications nexus between the board and staff, there will be less personal contact between the two groups. This requires the CEO to be concerned that a mistrusting atmosphere may develop. Under the CEO’s guidance, contact between board and staff can take place on ad hoc committees, on strategic planning projects, at various board orientations, and at organization celebrations. In these ways, the board can seek the participation and advice of all staff in establishing the major programs involved with missions, visions, and values.

The change in top titles and the greater formality it can bring may raise some trust issues with older staff. Management needs to convey a message to the staff that the change is a result of the board placing more trust for operations in the hands of management and staff.

3. Financial Growth

Some nonprofits take the position that fund development is the board’s responsibility, since board members have the broadest range of community and other outside contacts. With a president/CEO in the top management position, fund development becomes the joint responsibility of the president/CEO, the development person — if one is employed — and board members capable of fundraising. The new title gives the senior manager the immediate recognition necessary to credibly approach donors and, with the consent of the board, to make commitments on the organization’s behalf.

To involve the board more directly, the president/CEO can work collaboratively with board members to develop contacts opened by the board. (As one nonprofit executive person explained the situation, “Top people readily communicate with persons in similar positions.”) In seeking support funds, the new title can open doors and communications that might not be available to one holding an executive director title (which conveys such an unspecified range of responsibility). It might even raise an unarticulated question in the minds of some donors as to why the person hasn’t been given the title of president/CEO.

Which Title Will Work Best for You?

Compared to the duties of a president/CEO, the duties of an executive director range much more widely on a management activity scale. Some executive directors are simply clericals while others are sophisticated senior executives. Any organization that ignores this fact can leave a psychological gap in public perceptions relating to the group’s strategic posture and the senior manager as a substantial leader. Where warranted by higher responsibility levels, changing a senior manager’s title to president/CEO can help present a better public posture for the senior executive and a better strategic posture for an organization.

___________________

*In the nonprofit corporation, the board chair is usually an unpaid volunteer who also might hold the CEO title, indicating that person has final operational authority. A volunteer holding the CEO title may be subject to more personal liability than other board members.

**This also assumes that those directly reporting to the president/CEO are concurrently given vice president titles.

 

Dr. Eugene Fram

About the Contributor: Dr. Eugene Fram

Dr. Eugene Fram is Professor Emeritus, Saunders College of Business, Rochester Institute of Technology. A well-established nonprofit author, consultant, board chair and volunteer director, he has served on 12 nonprofit boards and a number of business boards. In addition, Fram is the author or co-author of more than 125 journal articles on marketing, nonprofit and corporate governance issues. He is also the author of the new third edition of Policy vs. Paper Clips, a book that describes a trust-based nonprofit governance model that has been adopted or adapted by thousands of nonprofit organizations. His book can be located at: http://amzn.to/eu7nQl.

11 Responses to Executive Director vs. President/CEO Title

  1. Richard Ambrosius April 15, 2016 at 3:13 pm #

    The time to make the change from Executive Director to CEO was about 25 years ago. Those that made the change are now reaping the benefits.

  2. Don G August 27, 2016 at 1:53 am #

    I reject the idea that a charity organization needs to be seen as a business. In fact, I believe it sends the inappropriate message that financial matters supersede the public benefit that the organization seeks to carry out. I am and have always been against this push to bring too many business practices into the non-profit sector. It is unnecessary and, based on my experience, does not provide any tangible improvement in operations or perception.

    • CharityChannel Editors
      Stephen C. Nill - CharityChannel December 24, 2016 at 7:34 am #

      Don, I’m of two minds. While I agree with you that the title “CEO” sends an unfortunate less-than-philanthropic message to the public, I do think that it sends the right message to the nonprofit sector, which tends to undercompensate its chief executives. If I were in that role, I would fight vigorously for the title “CEO” while also making darn sure that my board knows I’m worth every bit as much as would a person running a similarly-sized for-profit business.

  3. Tony Laycock December 24, 2016 at 5:32 am #

    I am creating a nonprofit animal rescue.

    I was wanting to know can I be the President / CEO and have an executive director as second in command that will report to the president and board?

    I have been trying to find in a lot of places on how to set up my nonprofit structure for success to better help fulfill my mission and purpose. Any advice on what positions I should have or create to better my mission and purpose?

    Our focus is to become a 501(c)(3) non profit organization that operates solely from fundraising, income derived from a variety of businesses, organizations, and dog training animal classes, as well as the goodwill of volunteers.

    The mission of Companion K9 Rescue, SPCA (CK9R-SPCA) is to improve the quality of life for all horses, dogs, and cats thereby improve the lives of people through their bond with horses, dogs, and cats.

    Our sole purpose is to rescue, rehabilitate, and help dogs, cats, and horses to become more adoptable. We will create a program to aid in the retirement of working dogs from police.

    Our goal is to have a Search and Rescue Team Program (SAR), Dog Therapy Program, and Animal Cruelty Investigation. We will save animals from euthanasia (from many sources) and foster them for as long as it takes to find a home.

    • CharityChannel Editors
      Stephen C. Nill - CharityChannel December 24, 2016 at 7:24 am #

      Tony, first of all, I commend you for your vision of creating a nonprofit animal rescue.

      As I understand your question, you plan to serve as President/CEO and have an executive director as second in command.

      Let’s start at the basics. Your organization will have a board of directors. The board sets policy and is the ultimate authority of the organization. The board will have board officers, including, minimally, the board chair, the board secretary, and the board treasurer. The role of the board president is to preside over the board, most typically at board meetings, and to speak for the board in interfacing with the staff. Most notably, the unpaid, volunteer board chair role does not contemplate running the organization’s day-to-day operations. Day-to-day operations are the responsibility of a paid staff member with the title of executive director or, as is increasingly popular, President/CEO. (For the sake of simplicity, I’ll just use “President/CEO.”)

      The President/CEO, the highest ranking staff member, is responsible for implementing board policy and, in a healthy relationship, will have good communication with the board chair while running the operations and supervising any staff. Sometimes an organization will have another staff member run operations, typically the COO (chief operating officer).

      While everything I just said is “textbook,” in new, struggling organizations, the foregoing is often more of a fantasy than a reality. Board members often are involved in the day-to-day operations and board chairs serve double duty not only as board chair, but as the defacto President/CEO. This is not a bad thing as long as the organization is striving to grow and eventually evolve to the ideal.

      Now, to address your question: No, it doesn’t make sense to have you serve as a President/CEO and have an “executive director” as a subordinate. The simple reason is that a President/CEO is just another title for executive director. Instead, if you’ve been following along, your role might better be as the volunteer board chair, working with your board to set policy, while the President/CEO implements it. Alternatively, you can serve as the President/CEO and also as a volunteer board member (maybe even the chair), but this route sets you up with so much power in the organization that it can lead to problems (think about avoiding founder’s syndrome).

      Before you make your decision, I recommend two books to you that we publish:

      I hope that this is helpful. Good luck with getting your organization up and running!

      • Tony Laycock December 24, 2016 at 8:05 pm #

        Thanks so much for your wisdom. I was hoping to make a career as a paid staff and also have influence on the board.

        I am not looking to be King Kong of the rescue I am founding but at the same time I don’t want to end up being fired or let go simply because of my experience.

        What position would be best for me as the founder and also be a paid staff member?

        It might be best to have someone with more experience then I do run the organization to it best potential.

        Do you know of anyone who can help me to layout a structure?

        People I have talked to said they would love to be apart but they want to see a form of structure before they join. I have been giving an example, Nobody want to get on a ship that they aren’t sure it will stay afloat or sink. They want to see a basic Form of structure and positions. Then it can be edit later.

        I understand I have a

        Board of Directors

        President, Secretary, and Treasure,

        These are positions I have but not sure how to set them up and was wondering if you a company who could help me?

        Senior Vice President, Chief Operations Officer (COO)
        Senior Vice President, Chief Financial Officer(CFO)
        Senior Vice President, Communications
        Senior Vice President, Development
        Senior Vice President, Animal Anti-Cruelty
        Senior Vice President, Chief Legal Officer
        Senior Vice President, Community Outreach
        Interim Senior Vice President, Animal Health Services
        Senior Vice President, Certification and Training

        Community Relations Director

        Senior Rescues Coordinator
        Youth Dog Trainers Challenge, Coordinator
        Youth Event Coordinator
        K9 Search and Rescue (SAR) Coordinator
        Volunteers Coordinator
        Therapy Coordinator
        Horse Rehabilitate / Adoption Coordinator
        Cats Rehabilitate / Adoption Coordinator
        K9 Rehabilitate / Adoption Coordinator

        Natural Disaster Response Team Coordinator

        Programs Manager
        Grant Writer

        Any clue how I can turn this into a structure people would be willing to be apart of?

        I am really seeking help because this is my dream, my vision, and I have a desire to provide aid to people and animals.

  4. Eugene Fram December 24, 2016 at 11:27 am #

    I take Stephen’s ‘two minds’ further. First a naive volunteer who has title president/ceo in some states may acquire personal liabilities not incumbent on other board members. Second, it also demeans the work of capable managers who deserve the VP title.

    May i also suggest a third book, recently published? “Going For Impact: The nonprofit director’s essential Guidebook” What to know, Do and Not Do (Amazon)

  5. CharityChannel Editors
    Stephen C. Nill - CharityChannel December 24, 2016 at 11:43 am #

    Eugene, interesting point about liability. And congratulations on your latest book, Going For Impact The Nonprofit Director’s Essential Guidebook: What to Know, Do and Not Do based on a veteran director’s ample field experience, available on Amazon here: http://amzn.to/2i5gWGzn

  6. Eugene Fram December 25, 2016 at 3:10 pm #

    Tony: I suggest Founder & Development Director. Your experienced operational Manager should be President/CEO, so that it is clear who has final operational authority, except for those powers still retained by the board. In addition to Going For Impact, listed above that may be appropriate, for all your new directors, my book, Policy vs. Paper Clips 3rd, should be of specific interest to you. Some of it will be appropriate for your start-up stage and moving forward.

    As they say in the venture capital world, it’s great that you recognized the need for an experienced “adult” to be your first CEO.

  7. Corrina T. January 31, 2017 at 4:26 pm #

    A disclaimer first, I’m fairly new to the inner-workings of non-profit management, so please bare with me here…

    I’m involved in a rapidly growing not-for-profit. I had a recent conversation with our President/CEO and she questioned that, as the organization continues to gain momentum, does it make sense for her to remain in her current role (as President/CEO). From there she asked for me to do a little research to help her make this decision one day.

    So here I am with a few questions of my own:

    Can a not-for-profit have a separate President and CEO? If so, what is the difference between the two? Or, are the terms President/CEO synonymous in the non-profit world?

    Is there a position on a non-profit’s staff that is more visionary compared to operational?

    And, what other thoughts, feedback or advice can you share to help in the decision-making process? FYI – there are no hard dates on any kind of transition; we’re just trying to do a little forward thinking with this.

    Thank you for your time and consideration!

  8. Jan Monroe February 25, 2017 at 3:31 pm #

    I have enjoyed reading this information and would like to add my own related questions. If they have already been covered fully in the information above please reference it for me. I am the co-founder of STEP VA, Inc. (Sensory + Theatre= Endless Possibilities) We are a 501(c)(3) and have been in operation for three years. My title is President/Co-founder. We have a board of three to include myself as essentially board chairman, a treasurer, and VP of Program Development and a fourth person that helps with marketing. We are a fully working board to support our periodic programming for children and adults with special needs. We have 0 paid staff other than pay for leader/teacher roles during work shops and camp sessions. My experience is as a pediatric therapist, however I want to grow into more of a leadership role in this non profit and not hinder its growth as well. Would it be best to look for a board chairman, so I can transition to a ED position, or look for others to take over both? Then CEO or ED? I shy away from titles myself but I see clearly how they can help with roles and responsibilities and accountability. Above all I want this organization to thrive. Thank you in advance for any suggestions.

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