Non-profit organisations should establish a formal employment contract in all but the simplest employment relationships. A formal contract provides certainty to both the executive and the board of directors and makes the details of the compensation agreement and the mutual expectations of both parties absolutely clear. Make sure the promises made in the agreement are the ones the nonprofit believes it can fulfill. This section establishes a five-year base period that is the minimum – and it`s the kind of language you can rely on to explain in conversation that “Mary has a five-year contract.” However, the clause “unless terminated earlier, as provided for in the next section of this Agreement” is important because it creates a lead that HSC can follow to terminate Mary before the expiration of five years – but on balanced terms agreed in advance, as discussed below. Tim Wolfred, PsyD, developed CompassPoint Nonprofit Services` executive transition program in San Francisco in 1998 and led it for thirteen years. Wolfred currently provides research and succession planning services to non-profit organizations as an independent consultant. His most recent publication is Managing Executive Transitions: A Guide for Nonprofits (Fieldstone Alliance, 2009). Add a “notwithstanding clause” that indicates the circumstances under which the contract or parts thereof (for example. B the obligation to pay consultation fees) will be invalid.
For example, the nonprofit may have reasons to stop paying consulting fees to a former CEO if the outgoing CEO does not accept the successor`s instructions or is unwilling or unavailable to comply with the terms of the contract. Clients regularly ask us for help in drafting withdrawal agreements with outgoing executives. (For the purposes of this article, we use the terms “founder,” “CEO,” and “long-time executive” interchangeably to refer to an executive who has played an important role in the formation of an organization, whether during the founding and long term, or by leading for a long period of time.) A withdrawal agreement, as discussed in this article, differs in several respects from a separation agreement and a release agreement. (For more information on the latter type of contract, see the box below.) It is generally unclear how many outgoing executives receive a withdrawal agreement and what the conditions are. The terms of these agreements will be considered confidential, and unless one of the parties to the agreement intentionally or inadvertently violates the confidentiality provisions of a typical agreement, they will not be available for inspection. In our experience, only a small percentage of CEO departures are subject to the terms of a withdrawal agreement. The use of withdrawal agreements most often occurs in circumstances that we will describe below. Most are designed by a lawyer who works with an executive, some CEOs, and perhaps an accountant who specializes in compensation and charitable law.
In some cases, the CEO and the non-profit organization retain separate legal counsel when negotiating a withdrawal agreement. Each Executive Director (DE) needs an employment contract. All workers need better protection, but since ED is so central to the impact of the organization, we focus here only on the employment contract of the ED (non-profit CEO). Each nonprofit demeude contract may look different, but there are some basic elements that need to be included. (Disclaimer: I am not a lawyer. I do not give legal advice. Use common sense and check with your own lawyer to see if you rely on this information to protect yourself with a contract.) Below is a link to a model employment contract that you can purchase and use as a template with your own lawyer. True Story #2: “Your board just fired you? What did your contract say about termination? Mary`s contract is designed to prevent a recurrence of James Doe`s situation, and it does so with two parallel termination provisions that give HSC a way out of the contract – a termination of the “Reason” section (which would provide an “objective legal basis” for immediate termination); and a “No Reason” section (which would allow HSC to leave Mary without getting into a “he said she said she said” argument about who is to blame). .