The Power of Titles: Being an Executive Director versus CEO in the Nonprofit Sector

What’s in a name? Leaders in nonprofit organizations are expected to hold labels that reflect their authority and responsibility, but with a handful of terms to choose from, how much weight does a particular title really hold? Specifically, what is the significance of being Executive Director versus CEO?

Executive Director versus CEO

Both refer to the highest-ranking executive of an organization or corporation, holding many of the same responsibilities. An observable difference, however, is that the title “Executive Director” is most commonly used in nonprofit organizations, while CEO is a well-known term for the head of a for-profit company.

It is not uncommon for the two titles to be referred to as equivalents in different sectors. “An Executive Director is the nonprofit version of a CEO and vice versa,” is a frequent explanation. This is not necessarily true, of course, as plenty of nonprofit leaders go by the title of CEO.

That is where much of the confusion lies. What exactly is the difference between an Executive Director and a CEO? And why would a nonprofit choose to have one over the other?

Breaking down the roles: Executive Director versus CEO

As mentioned, the titles of Executive Director and CEO both usually go to the team member that holds the highest-ranking position in a nonprofit organization. Overseen by a Board of Directors, they both are responsible for staffing decisions, planning, and key decisions regarding how to carry forward the organization’s mission.

One of the biggest distinctions between an Executive Director and CEO is the size of the organization that they head. Smaller nonprofits will most likely have an Executive Director, while the CEO title is more often used by mid- to large-sized organizations.

One of the biggest distinctions between an Executive Director and CEO is the size of the organization that they head.

When you consider the hierarchy of most top-level management (CEO > C-Suite > VPs > Directors > Managers > Individual Contributors), the title change makes sense. Smaller organizations have fewer team members or volunteers, meaning a steep hierarchy is rare. Because Executive Directors are “closer” to the lower-level operations, they also tend to be more connected with the day-to-day workings of an organization.

Contrarily, as a nonprofit gets bigger, it may need more top-level management positions to handle the growth in team members, operations, and resources. Expanding the hierarchy to have a CEO at the top would allow for this expansion. As such, compared to an Executive Director, a CEO is typically less hands-on operationally and focuses more on strategic decisions.

This effect can also be brought on by the culture and involvement of the Board of Directors. According to Scion Staffing, “the more strategic and visionary the needs of the role are, the more likely the role will be named as a nonprofit CEO.” If the Board is already setting the “full mission, vision, values, and strategy” though, then the title of Executive Director may better reflect the role’s focus on how to carry out the strategy.

What are the benefits of each title? It’s mostly about perception.

As an industry norm, most nonprofits start out having an Executive Director, with the title sometimes changing over time as the organization grows in revenue and team size. But the expansion of the managerial hierarchy is not the only reason to switch to having a CEO. There is a benefit to the title that has less to do with the responsibilities of the role itself and more to do with the reputation of a “CEO.”

Though there isn’t a drastic difference in responsibilities, the title of CEO does come with greater perceived clout. The CEO is the public face of an organization and, with that, comes added pressure, including being seen as the main person responsible for organizational failures and successes.

The title of CEO comes with greater perceived clout than the title of Executive Director, which may allow for more leverage in external dealings.

Still, there is power in perception. The added significance of the title allows CEOs to have more leverage in external dealings, such as aiding in strategic partnerships or fundraising efforts. A nonprofit with a CEO may be perceived to be more established or organized, for example, just because it is led by someone with a “higher-ranking” title. This view can be used to the organization’s advantage.

On the flip side, Executive Directors can enjoy relatively greater privacy and less pressure from their title. In some instances, an Executive Director may not even want the “upgrade in status” that comes with being a CEO. It may be better for them to be more hands-on with operations or to focus on execution rather than developing the vision of the organization. Having a leader that is closer to the rest of the organization’s team members can also promote a more egalitarian and clan-like organizational culture.

Ultimately, neither title is objectively better than the other. Nonprofits should assess their unique situation to determine whether the organization should be headed by an Executive Director versus a CEO. The size of the organization is a factor but, with no set standard for categorizing a nonprofit’s size, the decision is ultimately a subjective one.

Photo by wocintechchat

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