Nonprofit CEO vs Executive Director – What’s the Difference?
Nonprofit CEO or Executive Director?
Should the top role of a nonprofit be called an “executive director” or “chief executive officer (CEO)?” Is there any difference when it comes to role, salary, or responsibilities?
The nonprofit CEO vs. executive director question is surprisingly common, especially for those looking to become or hire a top leader at their organization.
There are some nuances, but luckily it isn’t that divisive. For the most part, the title comes down to culture and bylaws.
What Is a Nonprofit Executive Director?
Let’s start by getting it out there that nonprofits are corporations are corporations. This may sound like nails on a chalkboard for folks in the nonprofit sector, but it’s true.
Every official nonprofit starts its journey by incorporating in a state or district.
Most for-profit and nonprofit entities have a single staff member at the top of the corporation who answers to the board. In nonprofit organizations, that person is often called the executive director. In some cases, organizations choose to hire co-executive directors. I have yet to hear the term “co-CEO” in the nonprofit world.
A nonprofit executive director reports directly to the board and has broad latitude in decision-making about the organization’s day-to-day operations. In this aspect, a nonprofit CEO and executive director are virtually the same.
This top nonprofit leader (whether called a CEO or executive director) has a wide range of responsibilities that touch every aspect of the organization. This includes leadership, fund development, financial management, board support and development, and more. Check out my full article on what a nonprofit executive director really does.
When an organization grows larger, it becomes more difficult for a single leader to make big decisions that are implemented quickly while also satisfying stakeholders and possibly regulators and attorneys.
This is when organizations build out senior leadership roles that report to the executive director (rather than the board) and have decision-making authority over their part of the organization (such as communications, development, or specific programs).
What Is a Nonprofit CEO vs an Executive Director?
A nonprofit CEO is in most cases the same as an executive director—including the same set of core responsibilities.
There is no fundamental clear distinction or definition that exists at the federal level that explains the difference between a CEO and an executive director.
“Executive director” usually connotes that someone is leading a nonprofit, but the title CEO could be a business or a nonprofit.
Thus, the title choice often comes down to two overall reasons:
The nonprofit’ bylaws may dictate the use a CEO vs executive director
In some cases, the decision to call a nonprofit leader a CEO vs executive director comes down to the organization’s bylaws. Specifically:
The state the nonprofit is incorporated in may use terms like director or officer in a way that shapes a nonprofit’s bylaws.
The nonprofit’s bylaws may give the CEO powers that an executive director doesn’t have, like having a seat and vote on the board. In these cases, the role is typically called President and CEO.
When the bylaws were created, the individuals creating them may have used the term CEO vs executive director either intentionally or unintentionally.
The organization or individuals may prefer a CEO title vs executive director
The choice to call a nonprofit leader a CEO vs an executive director may also come down to personal preference. For example:
The board may prefer the sound or connotation of having a CEO for their not-for-profit corporation instead of an executive director. This could be for many reasons, such as he wanting the organization and/or its top leader to be seen as having business and finance sophistication or acumen. It could also be because board leaders come from a business background and the term CEO sounds more familiar.
The individual who has the top leadership job may have asked to be called CEO instead of executive director because they prefer that title. Often, this may be because they come from a business background or because that was their title at their last organization.
Prior board members or staff leaders may have preferred the title CEO, and so it is simply a holdover from prior leadership.
Considerations for Using “Nonprofit CEO” vs “Executive Director”
The main factor here is your organization’s bylaws, which may or may not derive from guidelines or laws in your state. Most likely, your state doesn’t really care.
But there are other factors to consider:
Number of leaders. Will your organization have one leader or more than one? There is the example of co-executive directors as well as some organizations that may have a CEO who has an executive director serving as their right-hand in leadership.
Agreements and contracts. Your organization’s attorney may have a strong opinion about whether the tile for your top executive should be CEO or executive director. Your organization may have contracts, agreements or other public-facing filings that must be considered.
Connotations. The two titles - CEO vs executive director - carry different meanings to different people. Choosing the title CEO carries with it a connotation of a more corporate or business culture. Your organization must decide if your members, board, stakeholder, funders and others will bristle at a more corporate sounding name or wither they welcome it. Some may assume the CEO of your nonprofit is paid more, as if they came from the private sector. This may send the wrong message to grass roots supporters. Some may prefer to use a title that communicates that you are not “just” a run-of-the-mill charity, but instead a business that should be taken seriously because it has a CEO. These are real things to contend with.
Does It Matter to the CEO or Executive Director What Their Title Is?
If your organization is willing to negotiate the title with your top executive, then you can sort this out between the board and the executive. Just be sure to consider your bylaws and any revisions those may need.
Is Nonprofit CEO Pay Higher than Executive Director Pay?
In my extensive work with nonprofit leaders, I have not seen any evidence showing that either role carries with it higher pay. This data may exist and could probably be found with nonprofit industry groups like Candid, Chronicle of Philanthropy, Independent Sector or through payroll firms like ADP or Intuit.
Conclusion: Not Much Difference Between a Nonprofit CEO vs Executive Director
There are not federal requirements for what nonprofit executives should be called. It is up to each nonprofit to follow the law of their state and their own bylaws when determining titles for officers, directors, or trustees.
Although the title CEO carries a connotation of business and being a larger organization, it is not universally true. Nonprofit executive directors can have identical or even more power than a CEO in their nonprofit.
