There’s a difference between officers and directors in a nonprofit. However, most smaller nonprofits have some overlap between the two roles. If you’re forming a North Carolina Nonprofit, you need to know the difference.
Let’s dive right in.
In North Carolina, the board of directors has all authority to run a nonprofit. They may delegate most of that power to employees and officers of the organization. However, there are certain things that the board of directors cannot delegate to any employee, even officers. For example, directors cannot allow an officer to shut down the organization. That’s a duty that belongs solely to the board of directors.
Similarly, directors have responsibilities that fall only on them. They’re required to be knowledgeable about the operations and approve the budget and general direction of the organization.
Under North Carolina law, you actually only need one director in a nonprofit. However, if you want 501c3 recognition, you need at least 3.
Officers are the day-to-day management of a nonprofit. You can give them whatever title you want. However, most often, people call the chief officer the executive director or president of the organization. There’s no legal requirement to keep these labels, but I tend to advise people to keep the terms everyone is familiar with.
You only need one officer appointed by the board of directors. After that, you can have as many managers as you’d like. However, the board defines how much power what responsibilities they have.
Why the Difference Matters
In most cases, the difference is inconsequential. However, you can run into troubles with conflicts of interest or other unintended consequences. For example, the IRS wants there to be a certain number of unrelated board members. You have to disclose this overlap when you apply for 501c3 status.
If any officer sits on the board of directors, they’ll have to abstain from any vote that directly impacts their employment. That includes the budget and hiring decisions. Those are big things to have to abstain from. In my opinion, officers should not be directors, but they should attend board meetings.