Why Every Nonprofit Board Should Conduct an Annual Executive Director Performance Review

Nonprofit boards carry the important responsibility of stewarding their organization’s mission, vision, and resources. But, among their most critical duties is overseeing the Executive Director (ED) - the person entrusted with day-to-day leadership and execution of the board’s strategic direction. Yet, despite this responsibility, many nonprofit boards do not conduct a formal, annual performance review of their Executive Director.

Skipping this step, and many non profits skip this important tasks either intentionally or unintentionally, might feel harmless in the short term, but over time it can undermine both leadership effectiveness and organizational health. Here’s why an annual performance review is so important:

1. Accountability Strengthens Leadership

Just as staff members expect feedback and evaluation, so too should the ED. A clear review process ensures the ED is accountable for meeting the goals and expectations set by the board. Without it, assumptions can build, and communication gaps may grow. Regular reviews reinforce trust and mutual responsibility.

2. Encourages Growth and Development

An annual review is not simply about identifying weaknesses. It’s an opportunity to affirm strengths, celebrate achievements, and discuss areas for professional growth. Constructive feedback helps the ED continue developing as a leader, which directly benefits the entire organization.

3. Aligns Priorities With Mission and Strategy

Nonprofits operate in rapidly changing environments. An annual review creates space to evaluate whether the ED’s focus and decisions remain aligned with the board’s strategic goals and the organization’s mission. This alignment ensures the nonprofit is consistently moving in the right direction.

4. Prevents Burnout and Isolation

Executive Directors often juggle heavy responsibilities with little peer support. A review process—done thoughtfully—provides a structured time for two-way dialogue. It allows the ED to raise challenges, share resource needs, and receive affirmation. This reduces isolation and helps prevent burnout.

5. Strengthens the Board–ED Relationship

When boards neglect to review their ED, it can signal a lack of care, oversight, or professionalism. Conversely, a consistent review process fosters trust, clarifies expectations, and strengthens the partnership between governance and management.

Why Many Nonprofits Skip This Step

Despite its importance, many boards don’t carry out ED performance reviews. Common reasons include:

• Uncertainty about how to conduct the review.

• Discomfort with providing feedback to a leader they respect.

• Time constraints or competing priorities.

• Assumptions that “no news is good news.”

Unfortunately, skipping the review doesn’t eliminate the need—it only increases the risks of miscommunication, stagnation, or even conflict.

Making Reviews a Healthy Habit

A strong review process doesn’t need to be complicated. Boards can:

• Develop a clear evaluation tool aligned with strategic goals.

• Incorporate both qualitative and quantitative feedback.

• Engage in open, two-way dialogue with the ED.

• Follow up with written documentation and agreed-upon goals for the coming year.

When done consistently, the annual ED review becomes a cornerstone of healthy governance, strong leadership, and mission success. If you need help moving forward on this important task, we can help from providing review templates to conducting the review for you.

Bottom line: An Executive Director is the nonprofit’s most valuable asset. For boards committed to excellence, an annual performance review is not optional—it’s essential.