Nonprofit organizations in the United States often form committees to carry out or monitor organizational tasks efficiently and effectively. Some committees act on behalf of the Board of Directors in fulfilling corporate governance responsibilities, while others help the organization function at the ground level, performing day-to-day tasks such as fundraising, financial planning, or managing the independent audit process. State law determines how committees must be formed and what powers and responsibilities can be delegated to committees. Moreover, depending on the size of an organization, its Board and its operations, some nonprofits may find committees more useful than others. This article will provide a frame of reference for 501(c)(3) public charities in the United States as they navigate decisions about committees.
What is a nonprofit committee?
A nonprofit committee is a group of individuals selected by a nonprofit or its Board for the purpose of accomplishing a task or ongoing set of tasks. Some committees are “standing” committees, meaning they exist indefinitely to carry out a continuous or yearly set of tasks or responsibilities. A finance committee is an example of a standing committee, explained further below. Others are “ad hoc” committees, put together solely to accomplish a single task or definite set of tasks, with the understanding that the committee will be dissolved once that task or set of tasks is complete. An executive director search committee is an example of an ad hoc committee. Some nonprofits might use a label such as “task force” or “working group” rather than ad hoc committee.
What is a Board committee versus a non-Board committee?
A nonprofit committee can be either a Board committee or non-Board committee. Many organizations have both.
In forming a Board committee, the nonprofit’s Board will delegate some of its powers to the committee such that the committee can make corporate governance decisions without the approval of the full Board. Typically, a Board committee can only be made up of members of the nonprofit’s Board. Some states allow non-Board members to serve on Board committees, but only in a non-voting capacity
A non-Board committee, sometimes referred to as an advisory committee, is made up in whole or in part of people who are not on the Board, and does not have the governance authority of a Board committee. Instead, non-Board committees exist mainly to execute tasks assigned to them by the Board or to advise the Board on certain topics. Non-Board committees can be valuable as they can increase the knowledge and productivity of the Board and increase participation of the organization’s constituents. It is common for a non-Board committee to be chaired by a Board member, or to designate a Board liaison to stay coordinated with the Board.
How does a nonprofit form a committee?
Nonprofits can create a committee by passing a Board resolution that specifies the purpose and responsibilities of the committee in question as well as the extent to which the Board is delegating its powers to the committee, if at all. Although it is not required, many nonprofits choose to create a charter for each Board committee that outlines the committee’s purpose, responsibilities, and powers in greater detail. State law does not generally require nonprofits to identify committees in their bylaws, but some do. An organization that includes committee provisions in its bylaws must remember to amend its bylaws if it wishes to change that committee structure in the future.
Short of creating a committee, a nonprofit might choose to create a less formal task force or a working group for a specific purpose. For example, a performing arts nonprofit might set up a working group to explore the idea of creating a children’s theater program. Depending upon the outcome of the exploratory phase, the working group might either dissolve or be elevated to a standing committee to help run that program.
Which Board powers can be delegated to a Board committee?
The exact powers which the Board can and cannot delegate to Board committees differ by state. Typically, the Board can choose to delegate almost any of its powers except for powers that deal with the composition of the Board or major decisions affecting the nonprofit. For example, many states do not allow the Board to delegate the power to appoint or remove directors to or from the Board, to approve amendments to the charter or bylaws, to approve change-in-control events such as mergers or acquisitions, or to approve the dissolution of the nonprofit. Every nonprofit should consult with its legal advisors and check the laws of the state in which it formed to determine which powers it can and cannot delegate to Board committees.
What types of committees do nonprofits commonly create?
Except as noted below, there is no requirement for a nonprofit to create committees at all. There is also no limit on the number or types of committees that nonprofits can choose to create. Here is a list of some of the most common nonprofit committees:
- Executive Committee. An executive committee is a smaller version of the Board that can act on behalf of the Board in between Board meetings and in urgent situations. It may also act as a “steering committee” for the Board, prioritizing issues for the Board to address and overseeing Board governance. The executive committee often consists of the chairperson of the Board and other executive officers. Large boards often benefit from an Executive Committee, which is more agile and easier to convene than the entire Board.
- Finance Committee. A finance committee is a standing committee that helps the Board monitor and control the financials of the nonprofit. It may perform tasks such as preparing or reviewing the annual budget, overseeing cash flow and expenditures, ensuring financial reporting requirements are fulfilled, and providing guidance on financial practices. While the nonprofit’s annual Form 990 tax return is typically prepared by an accountant, the finance committee often works with the accountants to assist in that process and provide relevant information. The finance committee is often chaired by the Board treasurer and can often include non-Board members, especially those with financial expertise, so long as the committee is not granted Board authority.
- Audit Committee. An audit committee handles responsibilities surrounding the independent audit of the nonprofit conducted by an external auditor. It may help select the independent auditor, work with the nonprofit’s staff to prepare for the audit, present the auditor’s findings to the Board, and evaluate the auditor’s performance. In California, audit committees are required for charitable corporations with gross revenues that exceed certain limits. Other states—including Illinois, Massachusetts, New Jersey, New York, Virginia, and Washington, among others—do not explicitly require an audit committee but have audit requirements in certain circumstances.
- Other Committees. Other commonly used committees include fundraising committees, event planning committees, governance committees, communications committees, social media committees, and any number of ad hoc committees created to lead initiatives or evaluate or address issues faced by the nonprofit.
What are the benefits provided by committees?
While they may not be necessary for every nonprofit, committees can benefit nonprofits in myriad ways:
- Efficient Decision-Making. If a nonprofit’s Board is large, then Board committees can make decision-making more efficient and allow the full Board to focus on the most important issues.
- Reduced Burden on the Board. If the Board is required to meet frequently or to take constant, repetitive actions, these matters can often be handled by a committee with delegated authority from the Board rather than by the full Board.
- Focused Attention. Committees may help ensure ancillary matters get the attention they deserve. Especially for all-volunteer organizations, Board members often pull a laboring oar in getting the nonprofit’s work accomplished, and a sensible committee structure can bring efficiency and clarity to volunteer efforts. Relatedly, organizations with a variety of different programmatic offerings sometimes find it useful to divide responsibility. For example, an educational nonprofit might have committees focused on different age ranges, and these committees can make progress on these areas in parallel.
- Geographic Priorities. If the organization’s operations are geographically spread out, it may be easier for a smaller committee to meet in person or to focus on the needs of a particular community.
- External Signaling. For external constituencies including donors, community members, and other supporters, a roster of active committees can demonstrate the breadth of the organization’s impact and the level of commitment of its volunteers.
What are common problems with nonprofit committees?
Everyone wants to avoid “death by committee,” a term that describes how good ideas can be stifled by an overly bureaucratic system. Here are some common problems with committees that can lead to such administrative issues and some ways to avoid them:
- Unclear Authority. If an organization serving people experiencing homelessness creates a committee to work with local schools, is the committee expected to take the project and run with it, or to explore options and bring them back for the Board’s decision? Can the committee set up its own events and approach potential sponsors? To avoid such ambiguities, nonprofits should be clear about a committee’s mandate when it is formed, and the Board should be proactive in adjusting the scope of committee authority as necessary.
- Overlapping Responsibilities. For an organization with both a fundraising committee and a fall festival committee, who oversees fundraising for the fall festival? Does a social media post about an upcoming book drive get written by the volunteerism committee, or the communications committee? Here too, it is important that any given committee’s mandate is clear from the outset, and that the Board can resolve questions of which committee is in charge of what.
- Administrative Complications. The more committees an organization has, the more complex the organization’s internal communications become. Often, the Board has designated time to review committee reports. Nonprofits should consider, too, the reverse—conveying major Board decisions and strategic priorities to relevant committees, through liaisons or written communications. Nonprofit boards should also be careful not to set up so many committees that it leads to administrative overload.
- “Zombie” Committees. Organizations sometimes perpetuate a committee simply because the nonprofit “always had the committee.” If committee meetings are frequently cancelled because they are unnecessary, or if the committee members’ time is primarily used to passively receive information, it may be time to reexamine whether a particular committee is still needed. Circumstances change. It is important for a nonprofit to retain and motivate strong volunteers by using their time well. Nonprofit boards should regularly consider which committees are still necessary to the nonprofit’s mission and dissolve committees when appropriate.
In summary, nonprofits in the United States are not legally required to form committees in most cases, but they may benefit greatly from doing so, provided they are thoughtful about setting them up and managing them over time. Nonprofits should consult with legal advisors when structuring their committees, as laws regarding nonprofit governance vary state by state. With the assistance of well-structured committees, nonprofits can build strong leadership communities and successfully accomplish their organizational goals.
With special thanks to Erin Walczewski for her contributions
Last reviewed: June 22, 2023