If you have spent any time around nonprofit board tables, you have seen this scene play out. The board is forty minutes into a debate about whether the new logo should be teal or navy. The CEO is checking her watch. The treasurer wants to revisit the office supply vendor. The audit report has not yet been opened.
This is what happens when a board does not know what it is supposed to vote on, and it is one of the more common sources of organizational dysfunction I encounter in my law practice. Boards drift into management because they are uncertain about their own authority, because no one has drawn the lines clearly, and because debating operational details often feels easier than tackling the strategic questions that make people uncomfortable.
It is also one of the most damaging things a board can do.
Governance Is Not Management
The bedrock principle of nonprofit governance is the distinction between governing and managing. A board governs. Staff, led by the chief executive, manages. The board decides where the organization is going. The chief executive decides how to get there.
That distinction sounds simple, but in practice it gets blurred constantly, particularly in smaller organizations where directors may have started as volunteer doers. The instinct to roll up sleeves does not switch off at the moment of election to the board. Many directors also come from for-profit backgrounds and assume nonprofit operations would benefit from their hands-on direction. Often they would not. They benefit from the board doing its actual job.
The board’s actual job, in broad strokes, is mission, goals, policy, strategy, and oversight. That is plenty. A board genuinely engaged with mission focus, strategic direction, financial stewardship, executive evaluation, and risk oversight will not have time to pick logo colors, and will not want to.
You Cannot Hold a CEO Accountable Without Giving One Authority
This is the argument I find most persuasive when working with boards that have crept into management. If you have hired a chief executive and you expect to hold that person accountable for organizational results, you have to give that person the authority to operate the organization. You cannot have it both ways.
When the board picks the marketing vendor, the CEO is no longer responsible for marketing outcomes. When the board sets staff salaries one position at a time, the CEO can no longer be held accountable for retention. When the board second-guesses every program decision, the CEO is reduced to a meeting coordinator, and the organization is effectively being run by a committee that meets four times a year.
That is a recipe for poor results. It is also a recipe for losing your chief executive. Capable executives do not stay in jobs where they have responsibility without authority, and the boards that complain most loudly about CEO turnover are very often the boards that made the job impossible to do. Board members who cross the line into micromanagement undermine the very person they have charged with running the organization, and they do so to their own detriment.
State law backs this up. Most state nonprofit corporation acts vest management of the affairs of the corporation in the board and then expressly authorize the board to delegate operational responsibility to officers and staff. What boards may not delegate is oversight. The two functions are different, and conflating them is what gets boards into trouble.
What Boards Must Vote On
Some board votes are non-negotiable. State law and well-drafted bylaws reserve certain decisions to the board itself, and these cannot be pushed down to staff no matter how nimble the organization wants to be. Common reserved matters include amending the articles or bylaws, electing or removing directors and officers, approving mergers or dissolution, authorizing transactions involving a substantial portion of the organization’s assets, and approving conflict of interest transactions under the safe harbor rules.
Beyond what the law requires, well-run boards also reserve a defined set of strategic and oversight decisions. These include approving the annual budget and audited financial statements, hiring and evaluating the chief executive, approving the strategic plan, setting major fundraising goals, approving significant contracts and capital expenditures above a defined threshold, adopting major governance policies, and approving the Form 990 before filing.
Almost everything else can and should be delegated to the chief executive, who delegates further down through staff.
A Quick Reference: Board Vs Staff
The table below is not a substitute for your bylaws and delegation policies, which should be the controlling documents in any specific case. But it captures the consensus of BoardSource, the National Council of Nonprofits, and most state nonprofit corporation acts on where the lines typically fall.
| Decision area | Board decides (vote required) | CEO and staff decide |
| Governance structure | Amend articles of incorporation or bylawsElect, remove, and replace directors and officersApprove mergers, dissolution, or sale of a substantial portion of assetsApprove conflict of interest transactions under the safe harbor | Not applicable. These are non-delegable board functions. |
| Chief executive | Hire, evaluate, set compensation for, and if necessary terminate the CEOApprove the CEO position description and performance goalsConduct the annual CEO performance review | All recommendations on, and execution of, hire, fire, supervision, and compensation of all non-CEO staffInternal organizational structure and reporting lines below the CEO |
| Strategy and mission | Approve and periodically review the mission and visionApprove the strategic plan and major changes to itAuthorize launch or termination of major program linesApprove significant collaborations, joint ventures, and affiliations | Day to day program design, delivery, and evaluationTactical adjustments within the approved strategic planOperational partnerships and contractor relationships |
| Finance and audit | Approve the annual operating and capital budgetApprove audited financial statements and management letter responseReview and approve the Form 990 before filingAuthorize incurring or guaranteeing debt and pledging assetsSet financial reserves and investment policiesApprove material expenditures or contracts above a board defined threshold | Day to day cash management and accounts payableRoutine purchasing and contracting within the approved budget and policiesSelection of vendors, banks, and service providers within authority limitsInternal financial controls and accounting practices |
| Fundraising | Approve annual fundraising goalsAuthorize capital and major endowment campaignsAdopt the gift acceptance policyAttend fundraising events | Donor cultivation, solicitation strategy, and stewardshipEvent planning and executionGrant identification, applications, and reportingFundraising messaging and communications |
| Policy | Adopt or amend governance policies, including conflict of interest, whistleblower, document retention and destruction, executive compensation, and code of ethicsApprove major risk management and crisis response policies | Adopt and maintain operating procedures, employee handbook content (within board approved frameworks), IT and security procedures, and internal protocols |
| Operations | Generally not a board matter beyond oversight reports | Vendor and contractor selection within authorityOffice space, equipment, technology, and softwareMarketing and brand execution within approved strategyDay to day staffing assignments and workflow |
A Few Operating Principles
A few rules of thumb help boards stay on the right side of the line.
First, if the decision is about direction, it probably belongs to the board. If it is about execution, it probably belongs to staff. The board approves the destination and the budget for the trip. The CEO chooses the route, the vehicle, and the playlist.
Second, if the question is about a single staff member other than the CEO, it almost certainly does not belong on the board agenda. Staff report to the chief executive, and the chief executive reports to the board. Skipping that chain of command undermines the executive in front of the very people the executive is supposed to lead.
Third, when a board member feels the urge to dive into operations, the right move is usually to ask the CEO a question, not to make a decision. Boards govern through policies, questions, and the annual evaluation of the chief executive. They do not govern by stepping into the CEO’s chair.
Finally, a board that is bored is a board that will micromanage. If your meetings consist of receiving reports and approving consent agendas, your members will go looking for something to do, and they will find it in the operational weeds. The fix is not to expand the agenda into management territory. The fix is to elevate the agenda to the strategic and oversight questions that actually require collective wisdom: where is the field going, what risks are we carrying, how is the chief executive performing, and is the mission still served by what we are doing?
Get those questions right, and the logo color will sort itself out.
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 federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form. This post is for general informational purposes and does not constitute legal advice.