CEO’s in Non-Profit Organizations

CEOs in non-profit organizations are different than for-profit corporations, as their mandate is not to make money for their shareholders. In fact, a non-profit has no shareholders. No-one can own a not-for-profit organization. And if such an organization dissolves, the assets are normally distributed to another non-profit organization and not to any one individual (it is illegal to give to individuals).

CEO's in Non-Profit Organizations

Like corporations, anybody can start a non-profit entity. The legal entities are charities, foundations, associations, organizations and clubs. Many people name them after themselves or in honor of someone who died. Their sole purpose is to support a particular cause in a positive way. They raise funds with the intention of providing programs to the stated cause.

 Because of the purpose of non-profit organizations, it is generally accepted that CEOs from large corporations are not necessarily made of the same traits. Where corporate CEOs make money for the shareholders by selling products and services, non-profit CEOs must be able to attract donors.

They also must be able to function within the framework of government agencies and larger charities in order to apply for funding. The particular thing about raising money for non-profits is the money must always be earmarked. That means that it must go somewhere specific, and must be used for a legitimate purpose pertaining to the work of the organization.

Additionally, CEOs must understand the funding process of each agency, as individually they have different rules, different deadlines, and different ways of doing things. For example, large charities may be deficit-funders. This means that once an organization exceeds the threshold for raised capital or donations, it cannot apply for funding from that particular charity. The CEO must be in tune with the subtleties of each funder in order to maximize that to which his/her organization is eligible.

CEOs of non-profit organizations are not viewed as sharks like the corporate world. Although not a necessity, they tend to be more humble and less outwardly aggressive. They must be compassionate people, otherwise they cannot identify with the cause. They need to support and mentor all people within the organization and guide the team to produce meaningful work.

While many have the misconception that CEOs of non-profits are volunteers, this is not the case. For new not-for-profits that individuals start, they may be working for nothing, but in large mainstream organizations, CEOs do earn a salary. And so do other employees of the organization. Which brings us to another aspect of the CEO’s job. He/she must ensure that the administrative costs of the organization are low. No-one wants to donate to a cause that squanders fifty percent of the raised funds to paid employees and other nefarious expenses.

Because of the balance between being an effective and competent leader, and being seen as using the money wisely and directly toward those earmarked projects, there has been a long running battle on how much a CEO of a non-profit should earn. Most people believe their salaries should be low, but if one looks at the extent of the CEO’s responsibilities, the salary should correspond. Also, to attract the right types of people, it does cost money. Generally speaking, however, their pay scales are significantly less than corporate CEOs.

Finally, for most people, CEOs at non-profits are held up to different standards than corporate CEOs. Once someone donates to a charity, they have “ownership” in the cause. A CEO’s personal life and indiscretions, whether personal or professional, directly impact the image of the organization. Thus, according to the general public, non-profit CEOs must always be seen as doing good.

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