Due to their tax-exempt status, non-profit organizations are strictly governed with special regulations decreeing how they operate. These regulations do not generally apply to regular corporations.
To retain their status as non-profits, these organizations much create certain positions and use various business structures. Individual states and territories may impose additional regulations for non-profits, such as the number of directors or board members.
The Internal Revenue Service (IRS) has its own regulations that all US non-profits need to meet. The non-profit needs to meet both state and federal guidelines in order to maintain the non-profit status in their state, and their tax-exempt status.
As these extra rules and regulations can be different to other industries and impact the way that a non-profit is structured, an organizational chart is very useful for these organizations.
The chart serves to help organize the non-profit internally, and also document the people involved, clearly labeling members, which may be necessary for filing and tax status.
Types of Non-Profit Organizations
Non-profits exist for a variety of reasons. These include public charities, trade organizations (such as unions), peak bodies, advocacy groups and foundations.
Charitable foundations may be established to support specific causes, such as a type of illness or a group of people. They might be religious charities, educational charities, and charities to help support the arts or sports.
Other non-profits include fraternal orders, trade associations that exist to support their specific industry professionals (such as real estate or health professionals or miners), and social or recreational clubs.
Major Functions in a Non-Profit
There are three major functions within the non-profit structure. They are:
1. Governance
'Governance' refers to the organization's responsibilities and business behavior, and is ultimately presided over by the board of directors. The board oversees the mission of the non-profit and the higher-level strategy. In some organizations, governance may also be the realm of the CEO and other members of the executive team.
The board ensures the right matters are attended to, boxes are ticked, questions are asked and answered and the proper activities are carried out.
2. Programs
'Programs' refer to the activities that the organization was created to carry out. For example, an organization created to support education may run programs to raise funds for scholarship recipients, have programs in place to award scholarships and support those scholars.
The program raises the required resources and then schedules and carries the program out.
3. Central Administration
The central administration would be in control of hiring staff and volunteers and organizing all the main office functions of the organization, much like the central admin hub of any organization.
Types of Non-Profit Organizational Charts
The most common organizational chart for a non-profit is the traditional hierarchy structure. Non-profits need to have a board that oversees their activities. There may also be stipulations on the number of board members in order to maintain the non-profit status.
The board will often name a Chief Executive Officer (CEO) to head the organization. This position can also be called the Chief Executive or Executive Director. The CEO is positioned at the head of the chart.
Beneath the CEO would be the directors or managers who answer directly to the CEO. Beneath those executives would be the employees answerable to them.
The CEO in this model would have the most authority but would ultimately answer to the board of directors. In most cases, the CEO would make decisions on day-to-day activities and may have authority over most budgetary and other considerations without consulting the board.
However, the CEO would report to the board at regular board meetings, and from the board's perspective, the CEO is their main link to the organization itself.
The success (or otherwise) of the non-profit can hinge on how well the board and CEO work together, as well as a clear understanding of where each other's jurisdiction starts and ends.
Broadly speaking, the board charts the overall strategy (where the organization is going), and the CEO and executive team are in charge of tactics (how to get there).
A larger non-profit might use a more complicated organizational chart. This would give them a means to organize the different talent and volunteers in their organization.
A functional organizational chart could be a good choice to divide staff by departments. Employees and volunteers would be placed into specific departments to work under individual managers or directors, who would then answer directly to the CEO.
Alternately, they may use a matrix model so that different members from these departments could work together on projects to help propel the organization's mission.
Interactive Org Chart - use tools to zoom, view job details, etc... © Functionly
When Do You Need a Non-Profit Organizational Chart?
A non-profit should develop its organizational chart immediately.
The chart should be used to organize the way the business is structured internally. It's also a good tool for the organization to use when working with the legal forms and filing requirements to maintain the tax-exempt status.
Non-profits often grow over time. They may use volunteers who work without pay, which can mean their structure and culture is different from for-profit businesses.
For employees, it can also mean accepting lower pay than in the private sector. Many people work in this field because they are passionate about the organization and the difference it makes for the people they serve.
What Are the Positions in a Non-Profit Organization?
The positions in the non-profit may change over time.
Some non-profits can grow at a rapid pace, but they may start with just a few members. At the outset, some board members may have to work in other capacities in the non-profit until positions are filled.
The basic positions in a non-profit include:
- Board members (Non-Executive Directors)
- The Board Chair
- CEO (or Executive Director or Chief Officer)
- Committees
- Staff
- Volunteers
The Board
The board functions as the main governing body of the organization. Members are treated as of equal importance, with decisions made by majority vote. The board oversees and defines the mission of the organization and works to provide the resources that the organization needs. This includes staff and any equipment needed to carry out the organization's goals.
The board appoints, and reviews the performance of, the CEO. The board should not (normally) be involved in the day-to-day running of the organization, unless there is a crisis and everyone is there to help out.
Board Chair
The Chairperson or Board Chair heads up the work of the board of directors, setting direction and chairing regular board meetings.
This position may carry no more weight than any other member, but it can also be a high-profile role in larger non-profits. If board members are paid, then the Chair is likely to be paid the most.
The Chair's role is one of general leadership, but in some cases they have the power to appoint people to specific positions. Otherwise, those decisions are made by the entire board.
CEO
This position can also be known as the Executive Director or Chief Executive. The CEO is hired to run the day-to-day dealings of the non-profit. They implement the board's rules, hire staff, oversee operations, and report directly to the board of directors.
They would work closely with the executive team to carry out the mission of the organization. Their performance would be judged mainly on this basis.
Committees
Many non-profits have different committees that oversee specific projects, programs, or functions. These committees report back to the board, and may consist of a mix of board members, invited experts and executive team members.
Committees might include the marketing committee, committees for specific events or fundraisers, the fundraising committee, or committees that are specific to the mission of the organization.
They may be drawn up with one purpose in mind, and disbanded after they have completed their job.
Staff
The staff is made up of permanent, part-time and casual employees who report to the CEO, or their managers.
Staff may work with individual committees, but they may also work supporting a wide variety of projects for the main office. Staff members will work in specific departments, such as membership, community engagement, or fundraising. They also might work in an administrative capacity as support for any department or certain departments.
For example, staff members for a trade association will usually all be tasked with extra responsibilities surrounding annual conferences and conventions.
Volunteers
Most non-profits use volunteers to help them complete projects and serve their community. Volunteers are not paid monetarily. Their time is donated. These people could be students collecting service hours, or citizens who are interested in serving the non-profit's cause.
Working in a non-profit can be very satisfying, and many high-level executives may look to "give back" by becoming unpaid non-executive directors of several boards towards the end of their careers.
: Use Functionly to Organize Your Non-Profit Structure
Whatever structure you think is right for your non-profit, you can run various options using Functionly's intelligent org chart creation tools. Either on your own, or with the entire team, you can test out and organize the best way forward.
Get started free, and start creating your org today.
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Sources
- The Typical Non-Profit Organizational Structure, Small Business, L. Magloff, 6 Feb 2019
- Basic Overview of Nonprofit Organizations, C. McNamara
