Governance

FAQs > GOVERNANCE > ED

Is the executive director of a nonprofit an employee and an independent contractor?
Answered by: Ben Bullock

The distinction between an “employee” and an “independent contractor” is based on several criteria:

  • Behavioral Control
  • Financial Control
  • Understanding of the Relationship

Behavioral Control is how much the employer (this could be the board of directors of your nonprofit) has over your work. If they have the right to not only tell you what to do, but how to do it, then you’d be considered an employee. If they only get to have a say in the end product, and you have complete freedom to accomplish their goals as you see fit (perhaps even according to the terms of a contract), then you’d be more qualified as an independent contractor.

Financial Control is how much control over the business and financial aspects you have. If you are allowed to spend money and conduct business without extraordinary oversight, then you’d be considered an employee. If you have no authority over finances and the board has to approve every single transaction, then you’d be a contractor.

Understanding of the Relationship is exactly what it says. If you and the board think of you as an employee, then you are. If you and they see you as a contractor, then you are. If they see you as an employee, but pay you as a contractor, then there’s a problem.

Executive directors, by the very title, almost always have great discretion over the finances of the organization, which is why in 99.9 percent of cases, the executive director would be an employee.