Ask More of Business

Asking More Commentary: Perspectives from Mendoza College of Business

Commentary Post - Thomas Harvey

Member, Director, or Trustee?

December 1, 2009

Until his recent death, William Safire’s weekly "On Language" column in The New York Times Magazine reminded us that words do matter.

The same is certainly true for the words we use to describe those who serve on nonprofit governing boards, as well as the people who hold executive positions in nonprofit human service organizations. Common terminology for each has changed dramatically over the years.

These changes reflect, embody, and encourage new thinking about the role of nonprofit governance and management. They reinforce strength and significance, as well as position individuals who serve on boards of directors and as the heads of organizations for “leadership” rather than “followership.”

The ‘Members’ Versus ‘Directors’ Debate
Historically, in the nonprofit sector, members of the governance team—what we know as “the board of directors”—were not usually called “directors.” It’s somewhat peculiar because “board of directors” has almost always been used to describe the team, even as individuals retained the title of “member.”

Microsoft Word’s thesaurus provides three areas of definition for the word member: associate (associate, affiliate), part (part, constituent, element, portion), and limb (limb, appendage, organ). Yet, none of these options conveys a robust orientation or disposition to accomplish great service.

Recently, the concept of “director” has become more common; even this publication, the Nonprofit Director, borrows the term for its title. This trend began in the 1980s as President Ronald Reagan cut back government services and as nonprofits became more frontline. At least, that’s how it appeared to some; others, including us, believe that nonprofits have always been front line.

The use of the “director” nomenclature, a term that is also favored by the for-profit sector, began to take hold. “Director” conveys more leadership than followership. Indeed, it may well be that the past lackluster performance of many nonprofit board members, and the boards as a whole, was in part produced by mere association with the concept of member.

The Appeal of ‘Trustee’
Other governance terms are also used by the nonprofit sector, but none has taken off universally. We’re referring to terms such as “board of governors” or “board of regents,” designations frequently adopted in higher education, as well as “board of trustees,” a term which has come into favor more recently.

Trustees are the same as members, directors, regents, or governors, but the term trustee implies more of a custodial function that is appropriate for social-benefit, as opposed to investor-benefit, organizations.

Along those lines, another nomenclature discussion—one that probably warrants its own discussion in a future column—relates to the definition of social-benefit organizations.

Because most nonprofits are deemed to work for the community good, society—through its elected officials—authorizes tax exemptions for these organizations. We prefer, however, to use the term “tax expenditure,” because it better reflects how society invests in the mission of social-benefit organizations. In a sense, the exemptions are expenditures, or investments, in the work of these organizations. In return, nonprofits produce a value proposition that makes these investments worthwhile.

The same reasoning applies to explain why the term “trustee” has appeal. It connotes positive action, as well as action that’s “in trust” for a higher purpose.

Implications of ‘President and CEO’
The second area of the changing nomenclature within the nonprofit sector involves the name of organizations’ lead executives.

Early in the 20th century, the highest paid employee was called the “secretary” of the organization or “general secretary.” Later the title “executive secretary” emerged, followed by “executive director.”

These titles were distinct from the for-profit sector, which preferred titles such as “chief executive officer” (CEO) or “president.” In the nonprofit sector, “president” was typically reserved for the president of the board.

In time, nonprofit executives began thinking about their role in new terms. Many executives felt that since they often work with volunteer trustees who themselves are for-profit CEOs or presidents, nonprofit heads should have comparable titles. Thus, today many executives—perhaps the majority of the largest nonprofit organizations—go by president, CEO, or president and CEO.

As nonprofit executives began assuming this new title, the term “chair” or “board chair” began to be applied, almost universally, for the board leader.

A couple of implications are worth noting. One is that these changes embody a movement of status for the executive away from a subordinate role as “secretary” to at least an equal level as “president and CEO.” From numerous conversations with trustees, we believe that directors are expecting more leadership from the CEO. Whereas historically the “secretary” was the servant of the board, now that role is more dynamically called to lead the agency in fulfillment of its mission.

Second, the change in status for the nonprofit executive has also frequently led to the president and CEO becoming a voting member of the board. This goes beyond an issue of status. The CEO, as the facilitator of information sharing with the board, has an enormously influential role in the functioning of the board even without a vote.

Is there an additional value in the CEO having a vote? If there is a close vote in which there is barely a majority, does a CEO benefit by being on record? Success or failure of a policy’s implementation could, realistically, be attributed to the CEO’s deciding vote.

This is a serious implication of the shift in how the sector thinks about organization executives, and it’s one that should be considered thoughtfully. It certainly would be a good subject for one of our future columns.

About the Alliance:

The Alliance for Children and Families is a nonprofit membership association representing nonprofit child- and family-serving organizations, as well as agencies that support economic empowerment. Its more than 300 member organizations are based in the United States and Canada.

This article was originally published in the Issue 4, 2009, edition of the Alliance for Children and Families' Nonprofit Director as a regular column, "On Board with Nonprofit Governance." The column is co-authored by Thomas Harvey, the Luke McGuinness Director of Nonprofit Professional Development at the University of Notre Dame, and John Tropman, professor and associate dean for faculty affairs at the University of Michigan School of Social Work. View the article at: Member, Director, or Trustee?