Who Hires and Fires a Nonprofit CEO Explained

One of the most common questions new board members ask is: “Who exactly is in charge of the CEO?” The answer surprises many people. Unlike a business, a nonprofit doesn’t have owners who can make that call. By law, no one “owns” a nonprofit. Instead, the board of directors holds the ultimate authority, and that includes the power to hire and fire the chief executive officer (CEO) or executive director.

No Owners, Only a Board
Think about the difference. In a for-profit company, owners or shareholders set direction, elect directors, and can demand leadership changes if the CEO isn’t delivering. A nonprofit, by contrast, exists solely to serve its mission. There are no shareholders with equity stakes or profits to claim. The board of directors is the governing body that stands in for the public. They act as stewards of the mission and guardians of the organization’s resources.

Because of this structure, the board alone has the authority—and the responsibility—to decide who leads the nonprofit at the executive level.

The Board’s Role
The board’s relationship with the CEO is one of its most critical responsibilities. Boards don’t manage the nonprofit’s daily operations; that’s the CEO’s job. But boards do decide who holds that job, and they set the tone for accountability. A healthy board:

• Hires a CEO who has the skills, vision, and values to carry out the mission.
• Supports the CEO with clear goals, resources, and guidance.
• Evaluates the CEO regularly to ensure expectations are being met.
• Terminates the CEO when serious performance or ethical problems demand it, always with the mission and fiduciary duties in mind.

Why the CEO Matters
The CEO is the linchpin of nonprofit operations. They translate the board’s strategic decisions into programs, budgets, and day-to-day leadership. They supervise staff, oversee fundraising, manage risk, and keep the mission on track. A strong CEO can inspire confidence, attract resources, and keep the organization moving forward. A weak or misaligned CEO can drain morale, erode trust, and jeopardize the nonprofit’s sustainability.

How Boards Should Handle the Process
Handling executive transitions is one of the most consequential things a board will ever do. Best practice includes:

• Hiring – Appoint a search committee, define the position clearly, and follow a transparent process to attract diverse, qualified candidates.
• Evaluation – Conduct annual reviews tied to measurable goals. Use both quantitative data (like fundraising benchmarks) and qualitative feedback (such as staff climate and community reputation).
• Firing – When necessary, boards must make the hard call. Decisions should be based on documented performance issues, not personal conflicts. Follow the bylaws, review any employment contract, and comply with applicable employment laws.

Common Pitfalls

• A founder or board chair acts like they “own” the organization and tries to unilaterally control the CEO.
• Boards skip evaluations because they’re uncomfortable giving feedback.
• Directors blur lines by micromanaging the CEO’s day-to-day work instead of holding them accountable at the governance level.
• Boards wait too long to act when leadership issues are obvious, allowing damage to compound.

The Bottom Line
In a nonprofit, there are no owners pulling the strings. The board of directors collectively holds the authority to hire and fire the CEO. It’s one of the most serious duties directors take on, because the success—or failure—of the organization often hinges on the strength of its leadership.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.