Pros and Cons of Nonprofit Executive Committees
Nonprofits need a strong organizational structure to ensure optimal functioning and adherence to legal rules and requirements. Two critical components of this structure are the board of directors and the executive committee.
While a nonprofit’s board of directors is responsible for overseeing the organization’s activities, there can be times when large, geographically dispersed boards can’t convene quickly enough to address an emergency or don’t have the time to address particular issues in depth. A nonprofit’s executive committee can help in these situations. Whereas a full board typically provides high-level strategic planning and decision-making, an executive committee of a few members can more nimbly or expertly address issues that are impractical for a full board or when the board isn’t in session.
Ideally, these two groups coordinate and communicate clearly and regularly with each other for maximum effectiveness. But if they don’t work in concert, problems can arise.
The Benefits of an Executive Committee
Executive committees can help streamline issues the board needs to address and move the board’s work forward between board meetings when a full board meeting is not feasible or an issue can’t wait.
Executive committees are especially helpful when:
- The large size of a board makes it difficult to call a meeting and obtain a quorum on short notice.
- The board members are located 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.
- The organization benefits from the executive committee helping review the agenda to ensure critical issues are addressed or researched futher.
Since executive committees typically meet more frequently than the board, this group can better understand how the organization works, delve deeper into issues before sharing them with the board and provide the board with a clearer picture of issues. This approach can increase the board’s efficiency and understanding of the issues, facilitating better decisions.
Does Your Nonprofit Even Need an Executive Committee?
Executive committees can help large boards or organizations where members are spread out and can’t meet under short notice, but they aren’t required. Some nonprofits may find they don’t need a sanctioned executive committee.
When determining whether your nonprofit needs an executive committee, consider whether:
- Your board of directors’ size is so small that an official executive committee doesn’t make sense.
- Your board can respond when an emergency or time-sensitive issue arises, or emergencies are unlikely.
- Your board is local.
- Your board holds frequent board meetings.
Executive Committee Downsides
Unfortunately, some executive committees end up acting like mini-boards and leave the full board out of important discussions. Some even stop informing or updating the entire board. This type of situation can prove dangerous for the organization and its board members.
Particular problems can include the executive committee:
- Overreaching the scope of it’s role by predetermining outcomes and impeding the board’s engagement on topics.
- Not keeping the board fully informed on the actions of the executive committee.
- Leaving board members out of the decision-making process.
When an executive committee overreaches its intended role, it can lead to board members becoming disengaged and feeling left out. Board members not on the executive committee may end up making decisions and choices that are based on an complete understanding of the issue, leading to potential liability issues.
For example, board members not on the executive committee may think the committee is handling a situation. Yet board members may lack the information needed to make an informed decision or judgment to protect themselves or the organization. Unfortunately, board members still share the board’s responsibility and potential liability for the organization’s actions, which the Arizona Fiesta Bowl case in 2011 highlighted.
Signs of an Executive Committee Gone Awry
Sometimes nonprofit executive committees become so autonomous that they start to exclude board members who are not on the executive committee from decision-making. The risk is that executive committee members may begin to view their committee as having the ultimate authority. They may see other board members as advisors instead of decision-makers.
Other signs of an executive committee that may be exceeding its intended role include:
- Holding executive committee meetings right before or after a full board meeting.
- Resisting updating and fully informing the full board of the executive committee’s actions and decisions.
- Forming a closed group or appearance of a clique, creating divisive feelings among board members, reducing feelings of trust, and leading to separate groups within the board.
Keeping Your Executive Committee In-Step
Carefully drafted bylaws and committee charters can help ensure that the nonprofit executive committee serves its intended purpose and doesn’t exceed its authority. The bylaws should also consider state laws, which often limit the decisions that can be delegated to committees.
The board also could require the executive committee to report any actions taken at each board meeting. This approach keeps the communication channels clear and provides board members an opportunity to ask questions. Additionally, the full board can ratify any actions taken by the executive committee, ensuring the executive committee doesn’t exceed its authority.
Executive Committees Can Help Some Nonprofits When Structured Effectively
A nonprofit executive committee can be an effective governance tool, especially for large boards, but not every board needs one. When forming an executive committee, you’ll want to clearly define the committee’s scope, the type of work it will do, draft appropriate bylaws and committee charters defining the scope, purpose authority of your committees, and require the committee to report at each board meeting.
Incorporating these systems and best practices will help ensure that your executive committee is functioning effectively and not exceeding its authority or replacing the full board. If your nonprofit needs help reviewing your executive committee functions, the Caritas Law Group can help.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, 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.