What Does a Nonprofit Executive Director Do?
Keep the plates spinning
Have you ever thought about starting and running a nonprofit? Are you considering applying for or accepting a role as a nonprofit executive director (ED) or CEO?
If you have ever been curious about nonprofit leadership, you probably have wondered what a nonprofit executive or CEO does.
Running a nonprofit can be both intimidating and rewarding. One of the most common worries emerging nonprofit leaders have is that they don’t fully know what the executive director role entails.
There are many moving parts in a nonprofit organization, and the division of labor can be a mystery. There are also many kinds of nonprofits.
“Nonprofits are like snowflakes – no two are identical. It’s no wonder the nonprofit executive director role can be confusing and intimidating! ”
What Is the Executive Director or CEO Role?
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 or CEO.
This individual reports directly to the board and has broad latitude in decision-making about the organization’s day-to-day operations. However, the larger the organization, the harder it is to make big decisions that are implemented quickly while also satisfying stakeholders and possibly regulators and attorneys.
Why leading a nonprofit is different than leading a company
When mapping out leadership roles, it’s worth delving into the fundamental differences between nonprofits and for-profits. This is especially important as many professionals increasingly move between the two sectors.
The main difference between for-profit and nonprofit corporations is that, in a nonprofit, revenue cannot be distributed to shareholders. Instead, the revenue must be put back into the organization (e.g., savings, programs, or staff).
Nonprofit organizations are motivated by impact (mission attainment), not profit. This is a critical distinction that impacts the motivations of nonprofit leaders. Sure, nonprofits have staff and contractors who are paid, but excess revenue isn’t just handed out to staff and certainly not the board. That would warp the incentive and the public trust.
Nonprofits are different from businesses because the incentives, tax structures, and motives are different. It is understood in business that in order for the company to be successful, it needs to make a profit for owners and investors. Running a company is complex, but the goal is clear: generate more money than you spend.
Nonprofits can benefit from revenue and don’t have to pay income tax on that revenue, but these perks come with strings attached and more public accountability. Being a serial entrepreneur and starting many companies, even if they fail, still is seen by many as laudable. But starting many nonprofits and watching them fail, would be seen by many as wasteful and an irresponsible way to run a nonprofit. In business, things are transactional. People or companies buy services or products. In nonprofits, you accept grants or gifts and you will ruin that “currency” of public trust if you don’t act more strategically.
Despite these differences, I am a huge believer that nonprofit executives need to get an employment contract, just like private sector executives do. You can grab my executive director employment contract template and learn about why an employment contract is important for organizations and nonprofit leaders.
Why leading in nonprofits is different than leading in government
If you have spent your life in the public sector, you know that to become the CEO or executive director of a government body often requires being elected or appointed. When public dollars are involved, there can be heightened scrutiny and requirements for process and transparency.
In public service, you are accountable to a wide range of stakeholders. In government, this includes at a minimum constituents. But sometimes you are also beholden to other communities, major employers, and others.
Leading in government also tends to mean more bureaucracy. Government bodies move slower because they are trying to represent everyone. In government, speed, efficiency, and rapid executive decision-making are rare.
The Key Responsibilities of a Nonprofit Executive Director
For about 95% of public charities in the US (not foundations), the primary responsibilities of a nonprofit leader can be summarized in 10 key areas:
Leadership
Fund development
Board support and development
Financial management
Human resources
Operations and technology
Diversity, equity, and inclusion
Compliance and best practices
Community relations and communication
Programs and advocacy
I cover these areas more in-depth in my infographic about the top 10 responsibilities of an executive director.
Each executive director role will look slightly different.
While these core responsibilities will remain consistent, each organization will expect something slightly different from its executive director. This could mean different day-to-day work, skills requirements, areas of expertise, approaches to challenges, etc.
There are a few areas where you can find the nuances of an executive director’s role specific to the organization:
Original executive director job posting: If an executive director applied for the job, there was probably a formal job posting with a list of position requirements or job responsibilities. Any executive director should look at this to understand the goals of the board and the hiring committee in writing the job posting.
Executive director job description: After accepting the executive director position, the job posting should be converted to a job description that lays out the broad, and sometimes specific, job responsibilities. Job descriptions tend to cover ongoing year-over-year responsibilities. These are all the tasks the board has delegated through a division of labor. Grab my infographic laying this out as part of my free executive director toolkit.
Strategic plan: The strategic plan is typically created with the board and the nonprofit’s executive leadership (and others). Any executive director will be expected to fold strategic plan elements into their job description even if it isn’t mentioned up front. If your organization doesn’t have a strategic plan, hopefully, you have annual goals. If not, you will be expected to create them.
Annual goals: Executive directors are typically expected to set annual goals. This helps focus the energy of the board, staff, volunteers, and others on what matters instead of being reactive and working on less strategic tasks.
Other tasks as needed: The last major area of executive director responsibilities falls under “other tasks as needed.” Essentially, the executive director is running the entire organization. As the executive director, things happen that aren’t in your plans, goals, or job description and you will be expected to handle them. Sometimes an executive director spends 20% of their time on nebulous or seemingly random things that come up that are hard to group into other categories. Organizations experiencing change see even more work in the “other” category. For example, a nonprofit in your community may suddenly be at risk of closing, and your organization may be asked to merge or “acquire” that organization. This could be a distraction or a real opportunity. It is up to the executive director and the board to evaluate these surprises throughout the year.
Check out my Top 10 Responsibilities of a Nonprofit Executive Director to create a framework for the executive director role.
What a Nonprofit Executive Director Does Day-to-Day (Beyond the Job Description)
In addition to the more concrete roles and responsibilities of running an organization, there are also requirements of an executive director that may not be neatly summarized in a job description.
To succeed as an executive director, you will need to:
1. Be prepared to lead more than you thought
In countless nonprofits, the board doesn’t operate optimally. Larger, older, and more mature nonprofits tend to have better functioning boards, but most nonprofits are not there yet! This means that, unfortunately, the executive director is often leading the board informally. Most executive directors do not sign up for this but absorb the responsibility because they care a lot about the organization’s success.
As a result, the executive director is frequently counted on to create board agendas, prepare board reports and dashboards, and even remind board members of their responsibilities. Executive directors also take on a lot of the responsibilities of board recruitment and retention. This gives the executive director more power, influence, and control, but it also puts a lot of additional work on their shoulders and creates a weird “here’s how things work around here” dynamic.
Nonprofit leaders can get imposter syndrome just like other leaders, especially earlier in their careers as executive directors. But usually, after 1-2 years in the role, most executive directors have had to do a little of everything and have become much more confident in nonprofit executive leadership.
The Nonprofit Fixer offers free and paid courses for executive directors to help them navigate imposter syndrome and many of the other challenges executive directors face.
2. Executive Directors create the conditions for success
The unspoken magic of excellent nonprofit management is that executive directors don’t just execute plans. They don’t only create programs, keep the organization compliant and achieve goals.
Executive directors help create the conditions for success. This is not a simple metric you can measure or task you can check off a list. This is the ongoing work of positioning the organization for the future and making it more resilient and successful.
Creating the conditions for success is time-consuming and emotionally laborious work that requires balancing many egos, personalities, and competing interests in the service of mission attainment. Executive directors try to create as much goodwill as possible, reducing friction in organizational relationships and laying the foundation for later fundraising and coalitions.
Unfortunately, many nonprofits don’t fully value this work until a solid executive director has left. That is when the staff or the board will begin realizing all the work that was being accomplished but went unspoken and uncredited.
I am a huge believer that every executive director needs to keep a success journal. Executive directors accomplish a lot that isn’t tracked in the job description. When it comes time for your annual review, it helps to stand in your confidence for all that you achieved - and prevented from happening!
3. Smooth the bumps
One of the most important things executive directors do is reduce drama and boost morale. It is not uncommon for nonprofits to have their share of drama.
Nonprofits are filled with passionate people with strong opinions. The reason they work at or volunteer with the organization may be deeply personal. Whenever you put a lot of people together who feel passionate about the organization and its work, you will have the recipe for friction. Sometimes board members and staff bring dysfunctional personal conflict to the organization, and the executive director is the main person absorbing and massaging those issues in a way that keeps everyone aligned and feeling respected and included.
I often talk about how the executive director must be the CEO of a nonprofit – the Chief of Enthusiasm and Optimism. People are counting on the executive director to set the tone. But in addition to enthusiasm and optimism, the executive director also needs to spot where people are struggling with motivation, energy, or more severe challenges like depression, discrimination, or simply navigating a global pandemic.
Executive directors also quietly ensure (or should ensure) that vendors are paid on time, that all deadlines are met for state or federal compliance, and that expense reports are reviewed and processed. But even doing basic compliance tasks can lead to lots of back and forth with CPAs, bookkeepers, and regulators. Executive directors have all sorts of messes come to their desks and they are expected to handle it all, despite how much it may distract from their main duties.
“The sign of a well-run organization is that the management, administrative, and finance operations are boring. ”
That’s right, no panicked year-end email that the organization is broke. No screaming matches at board or staff meetings. No drama at all.
Conclusion: Executive Directors Do Whatever Is Necessary
When people ask what nonprofit executive directors do, it depends on the organization. Still, executive directors of nearly all public charities focus on 10 main areas of responsibility.
Executive directors are the glue that connects the board, the staff, and stakeholders. They focus on their job description, goals, long-term plans, and anything else that deserves their time. Executive directors are motivated more by impact and mission attainment than they are by profit because that is the DNA of the role.
