Are charity CEOs too powerful?

By John Copps 22 February 2010

Just over a week ago, I wrote a post commenting on top funder manager Anthony Bolton’s observation that the CEOs of charities are more important to the success of their organisations than the CEOs of companies. This was provoked by our publication of NPC’s guide to analysing charities, The little blue book.

We received a great response to the post and it was featured by Tactical Philanthropy and The Chronicle of Philanthropy. But the last week has led me to reflect on it in a more critical light.

I still think that charity CEOs are more important than the bosses of companies. But, I wonder, is this a good thing? Do charities depend too much on their chief executive? And are there are times when their position can lead CEOs to go too far?

Relying on a single person for a large number of important tasks carries an obvious risk, particularly when it comes to replacing them. One of the questions that NPC always asks when analysing a charity is the ‘what happens when the CEO goes under a bus?’ (although we tend to phrase it a little more delicately). Over the years, it has been a cautionary tale to see many charities fall by the wayside after the departure of their influential leaders.

The importance and stature of charity CEOs can also pose risks to the day-to-day running of an organisation. The most effective charities have a strong board that supports the chief executive. However, as we noted in our trusteeship report last year, governance in charities is often weak. Where this occurs, it risks a situation where the CEO is the undisputed top dog and doesn’t receive enough challenge to his or her decisions.

Where this is allowed to happen, there are no winners. Thankfully this is the rare exception rather than the rule. But NPC has seen examples of all-powerful CEOs, we’ve seen tussles between the board and CEO which end in the resignation of the whole board, and we’ve seen CEOs running their charities into the ground.

A leader that is too important, too powerful or relied on for too many things is not healthy for any organisation. Of course the problems noted here are also a risk to companies. But the relative importance of charity CEOs means that those of us who worry about charities should be even more alert to them.