Typically, nonprofit executive committees are empowered to exercise the authority of the full board when the board is not in session. Nonprofit executive committees can also act in an emergency whenever quick and decisive action is called for. The board may also delegate specific tasks to the nonprofit executive committee such as governance or recruitment.
Nonprofit Executive committees can serve a useful and valuable purpose for nonprofit boards. Judicious use of an executive committee can help to move the board’s work forward in between board meetings by acting on the board’s behalf whenever a full board meeting is not feasible. For example, a nonprofit executive committee makes sense when:
- The board is largely making it difficult to call a meeting and obtain a quorum on short notice.
- The board members are dispersed over a wide geographic area, are difficult to reach, or travel frequently making it difficult to convene a meeting in an emergency.
- The board regularly needs to take action or make frequent decisions.
On the other hand, a nonprofit executive committee may not make sense when:
- The board is small and local.
- The organization holds frequent board meetings.
- The organization is the type of organization that is unlikely to have frequent emergencies.
Unfortunately, it is not unusual for nonprofit executive committees to overstep their authority by taking action without informing the full board. All of the board members must fulfill their fiduciary duties of good faith, due care, and loyalty. When board members are not even aware of the action taken, it is difficult to argue that they are fulfilling their duty of care. Leaving a board member out of the decision-making process can put the board members who are not on the executive committee in the unenviable position of being liable for the organization’s actions and decisions without having the information they need to properly exercise their fiduciary duties.
The Ugly and Out of Control
Occasionally, we see nonprofit executive committees that have become so autonomous that they begin to exclude board members who are not on the nonprofit executive committee from decision-making. In these cases, the executive committee members may begin to view the executive committee as the ultimate seat of authority and the remaining board members as merely advisory. A sign of an out-of-control executive committee is one that holds meetings immediately before or after the full board meeting. Clearly, if the board meeting is scheduled for the same day, there is likely no emergency that requires action by the executive committee.
Executive committees that operate in this manner often resist informing the rest of the board of their actions and decisions, putting the board members who are not on the committee at risk of incurring liability for decisions they are excluded from. In such cases, thoughtful board members should consider making a motion reform or dissolve the executive committee and should consider resigning if the motion is unsuccessful.
Bylaws and Committee Charters
Carefully drafted bylaws and committee charters can help to ensure that the nonprofit executive committee serves its intended purpose and does not exceed its authority. The bylaws should also take into consideration state laws which often limit the decisions that can be delegated to committees. Requiring the nonprofit executive committee to make a report at each board meeting of any action it has taken since the last board meeting so that the actions can be ratified by the full board is an effective method to ensure that the executive committee does not exceed its authority.
A nonprofit executive committee can be an effective governance tool, but not every board needs one. Executive committees should never ever replace the full board.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations. Ellis is licensed to practice in Washington and Arizona and advises nonprofits on federal tax and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.