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Should we distinguish between nonprofit board officers and corporate officers?

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Should we distinguish between nonprofit board officers and corporate officers?

The Ready Reference Bylaws on your website (See Ready Reference Page: “Bylaws Function as ‘Constitution’ of Nonprofit Corporations”) contain traditional language regarding officers. With today’s more business-like nonprofit sector, is there a difference between officers of the board (the traditional President, Secretary and Treasurer) and the “officers of the corporation” (full time CEO and CFO)? Should the CEO and CFO position be officers that are described in the bylaws, or are they indeed a different type of officer?

Many commentators distinguish between officers of the board and officers of the corporation, although most nonprofit corporation laws talk only about “officers of the corporation.”  In business corporations, the chair of the board position is usually differentiated from that of the president or active chief executive officer of the corporation, but I think it is fair to say that both are officers of the corporation.

Our template form of bylaws follows the Pennsylvania nonprofit corporation law that requires a president, secretary and treasurer “or persons who shall act as such, regardless of the name or title by which they may be designated.”  The statute also allows the corporation to have “such other officers or assistant officers as it may authorize from time to time.”  In other words, you can call officers what you want and have as many as you want, as long as you have someone functioning as a president, secretary and treasurer. 

Larger nonprofits, particularly hospitals and universities, frequently have a chair of the board and a separate CEO who is called president.  Smaller ones with an Executive Director functioning as the chief executive officer frequently have a president who is president of the board as well top officer of the corporation.  In either case, it is important to state in the bylaws or in their appointing document of the “other officers” whether they will be members of the board of directors as well as officers.

It makes sense to tailor the bylaws to reflect the actual situation of the corporation and the expectations for people serving as officers.  A chair of the board definitely has a different role than the chief executive officer (by whatever title).  But ultimately, if they are officers, they are all officers of the corporation.

Tuesday, June 14, 2022

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