Inclusive Governance Practices in Nonprofit Organizations and Implications for Practice

An inclusive board seeks information from multiple sources, demonstrates an awareness of the community and constituents that benefit from and contribute to the organization's services, and establishes policies and structures to foster stakeholder contributions. This research investigated the prevalence of inclusive governance practices and its relationship to board composition, diversity attitudes, and recruitment practices. Fifty‐six executive directors and forty‐three board members representing sixty‐two nonprofit organizations returned a mailed survey (29 percent response rate). The study profiled two organizations that represented different styles of inclusive governance. The survey, part of a larger study, contained questions about inclusive practices, board composition, attitudes toward diversity, and recruitment practices. Most organizations indicated that they operate with inclusive governance practices. The organizational profiles provide a picture of boards that used different strategies to accomplish the goal of inclusivity. Boards that use more inclusive practices were not necessarily heterogeneous in board member composition. Inclusive boards were more inclined to be sensitive to diversity issues and used recommended board recruitment practices. The existence of a task force or committee on diversity was also significantly associated with a more inclusive board. Nonprofit organizations must consider their philosophy on stakeholder involvement, recognizing that different strategies lead to different levels of stakeholder involvement.     

Alternative Approaches to the Governance of Transnational Labor Recruitment

As globalization advances, the governance challenges relating to cross‐border labor recruitment have also grown. Transnational companies that manage the employment‐based migration process often take advantage of individuals seeking work abroad. While some states have implemented recruitment regulations, a combination of jurisdictional constraints and economic interests have limited states’ capacity and political will to take action. Supplemental strategies are emerging led by international organizations, non‐governmental organizations (NGOs), labor unions, and corporate trade groups. This paper reviews the strengths and weaknesses of strategies led by each of these different types of actors and explores potential synergies among them.     

Cooperative power relations between nonprofit board chairs and executive directors

Nonprofit organizations face increasing pressure to change their governance practices. Some scholars propose a check‐and‐balance relationship between the board chair and the executive director. However, empirical evidence for this proposition remains lacking. Employing actor‐centered institutionalism, this comparative case study analyzes the preferences and capabilities of the board chair and the executive director given environmental and organizational pressure. The article compares the results of two main and two replicated cases that underwent significant processes of governance change, which led to a replacement of the board chair and the executive director. After the replacement we observe in all cases a similar pattern in the governance power relation: This power relation is characterized by the actors' equivalent capabilities and complementary preferences. The article concludes by introducing a cooperative power relation model that specifies the concept of checks and balances between the board chair and the executive director.     

Reframing Board‐Staff Relations: Exploring the Governance Function Using a Storytelling Metaphor

This article attempts to reframe board‐staff relations by presenting an alternative perspective on governance, management, and leadership functions within nonprofit organizations. It draws on an interpretative view of organizations and suggests that we can understand nonprofits as socially constructed entities by using the metaphor of storytelling. Seeing the role of board and staff through this theoretical lens allows us to reconceptualize them. This in turn enables us to enhance the creative potential of the governance function and allows governance to support the goal of creating resilient, adaptive, learning organizations.     

Revisiting Agency and Stewardship Theories

Using principal–agent theories, this study examined differences in the perceptions of nonprofit chief executive officers (CEOs) and board chairs on key governance aspects, including board performance, leadership, satisfaction with diversity, and board meetings. Using data from the CEOs and board chairs of 474 nonprofit organizations, we found statistically significant differences in the governance perceptions of these leaders of nonprofit organizations. The findings provide support for an agency theory explanation about the differing interests of principals (board chairs) and agents (CEOs). The findings suggest that these two sets of nonprofit actors frequently operate from different perspectives, potentially affecting the governance of their organizations.     

The understanding of internal control principles by pastors

Although the concept of internal control is as relevant to churches as it is to profit‐seeking organizations, many authors have indicated that churches typically have weak systems of internal control. Pastors usually serve in the position of chief professional officer of their churches, and the implementation and maintenance of an adequate system of internal control is ultimately the responsibility of management. This study is a preliminary effort to determine whether pastors understand general principles of internal control and are able to recognize strengths and weaknesses in systems of internal control. The results show that pastors have a reasonable ability to recognize strengths and weaknesses in internal control systems in churches.     

The Governance of International Nongovernmental Organizations: How Funding and Volunteer Involvement Affect Board Nomination Modes and Stakeholder Representation in International Nongovernmental Organizations

The governance of civil society organizations (CSOs) is a crucial determinant of organizational legitimacy, accountability, and performance. International nongovernmental organizations (INGOs) are a subtype of CSOs and have received a lot of attention as actors in global governance. Research suggests that INGOs can follow a membership model, where the board is elected by the membership, or a board-managed model, where the board is appointed to represent major stakeholders. Following resource dependency theory, we argue that the choice between these two models depends on the INGOs different sources of funding and the degree of volunteer involvement: As donors and volunteers provide important resources, they are in turn granted the right to nominate board members or to sit on the board. In our quantitative study we show that individual members, regional member organizations, and governmental donors hold a stronger position in the governance of INGOs than philanthropists, foundations and volunteers. Our results inform research on CSO governance by highlighting the relevance of board nomination modes and by showing how CSOs can incorporate stakeholders into their governance mechanisms.     

Nonprofit versus corporate governance: An economic approach

This article proposes a new theoretical concept of nonprofit governance using transaction cost economics and the economic theory of contracts. After a short review of economic approaches to corporate governance, I clarify the specific nature of the governance problem in nonprofit organizations. Based on this analysis, I derive criteria for selecting an organization's relevant stakeholders. If stakeholders provide valuable specific resources without the protection of a comprehensive contract that details exactly how the organization is to use these resources, then such stakeholders seek decision and control rights in order to direct the use of the resources they have provided. I argue that the core problem of governance is how to enhance valuable specific contributions of the relevant stakeholders while keeping the costs of bargaining between stakeholders and the costs of collective decision making low. The theory developed is then applied in a discussion of practically relevant governance mechanisms, and the concept of governance is used to contribute to the discussion on the strengths and weaknesses of the nonprofit character of organizations from a governance perspective.     

Strengthening Board Performance

Many nonprofit boards have undertaken board development activities, yet there has been little empirical evidence of the impact on board performance. This article reports findings from organizations: ten participated in developmental interventions, and fourteen received no interventions but served as matched comparisons. The experimental group showed significant improvements in board performance, and the comparison group did not. Lessons from the study include a number of practical steps boards can take to reorganize governance procedures and structures to enhance board effectiveness.     

“Is it Our Job to Teach them to Read or to Act Appropriately?”: Teachers’ and Staff's Perceptions of an Alternative School

This study examines the strengths and weaknesses of an alternative school for at‐risk youth in an urban area in the United States. The data are based on in‐depth, semistructured interviews with the school's 23 full‐time employees. The data reveal that according to the teachers and staff of the alternative school, there are three main strengths of the school: developing positive teacher–student relationships, providing powerful pedagogy, and establishing a supportive environment; and three main weaknesses: responding inconsistently to behavior problems, creating poor transitions to adulthood, and producing a physically dangerous school environment. The findings of this study suggest a “culture of care” exists at the expense of consistent discipline—resulting in a “culture of danger.” The findings are presented and discussed, and subsequent program and policy recommendations are made in an effort to better understand the strengths and weaknesses of an alternative school and to contribute to the effectiveness schooling for at‐risk youth.     

Leader‐member exchanges and board performance of voluntary sport organizations

Using leader‐member exchange theory developed by Dansereau, Graen, and Haga (1975), this chapter analyzes the dyadic relationship between leaders (board chairs and paid executives) and members (volunteer board members) within the boards of Australian voluntary sport organizations. The chapter specifically examines the quality of leader‐member exchanges that exist within a sample of thirty‐four Queensland State Sporting Organizations and their relationship with board performance. It was found that board chairs and executives perceived the quality of their leader‐member exchanges to be higher than their respective relationships with board members, and that higher‐quality leader‐member exchanges among all three possible pairings of executives, board chairs, and board members were positively related to higher levels of board performance. The chapter discusses implications and directions for further research into leader‐member exchanges within voluntary sports organizations.     

Contracting and Patterns of Nonprofit Governance

Executive staff and board members in nonprofit organizations that operate with government grants and contracts often work together to perform important governance functions. This shared responsibility can be predicted by strong executive leadership of the board, a board with highly regarded members, and affiliation with an influential statewide or regional association. The results of our research suggest that the distribution of governance responsibility in nonprofit organizations with government revenues should command the attention of researchers and activists.     

Nonprofit governance during organizational transition in voluntary associations

This explorative field study examines the governance challenges that voluntary associations face in the transition from an internal focus on members to the provision of services to mainly nonmembers. This transition is an important stage in the life cycle of many associations. A qualitative research design was used to study five Swiss patient organizations. This article describes the transition process in terms of five main management challenges: different target groups, self‐help group versus competence center, cooperation, fundraising, and transparency. It then examines the implications for four governance aspects that confront managers and board members: recruitment and selection of board members, tasks of the board, relationship between the board and managing director, and the role of the general assembly of members.     

How does a board of directors influence within‐ and cross‐sector nonprofit collaboration?

Board members play a significant, yet largely unexamined, role in nonprofit collaboration. Processes, such as finding prospective partners, creating common ground with a partner, and establishing appropriate collaborative governance implicate nonprofit board members. In contrast to the scholarship of the role of interlocking directorates as potential networks for nonprofit collaboration, this paper examines the role of board members' social and human capital on nonprofit collaboration with other nonprofits, businesses, and government agencies. Drawing on online survey data from 636 nonprofit organizations, this paper finds that board social capital—but not board human capital—is positively related to the presence and number of within‐sector and cross‐sector nonprofit collaboration. However, board human capital enhances nonprofit‐government collaboration, when board social capital is also high. The results provide a novel perspective in nonprofit collaboration and board management research.     

Exploring the association between board and organizational performance in nonprofit organizations

Note: This study investigated six dimensions of effective board performance, as suggested by Chait, Holland, and Taylor (1991), in relation to three theoretical explanations (agency theory, resource dependency theory, and group/decision process theory) of how board governance activities potentially influence organizational performance. Survey research findings revealed that strategic contributions from the board are more robust in organizations with higher financial performance. In addition, organizations that are judged to be higher performing also reported having high‐performing boards across all dimensions. In particular, the interpersonal dimension provided a unique explanation of judgments of organizational performance.     

“Corporate” governance in nonprofit organizations

The economics‐based theoretical and related empirical literature on the governance of nonprofit organizations is brought together and integrated in a way easily accessible for noneconomists. This literature is scattered in academic journals covering economics, health economics, management, and accounting, and in the more nonprofit‐geared research publications. After defining corporate governance, I present in a nontechnical way the most appropriate economic framework for studying governance problems: the principal‐agent theory. Most of the economic literature deals with the role and influence of the board and its relation to the organization's management and performance. This is reflected in the article's structure. The board's functioning, composition, and committee structure are first discussed, followed by a review of the literature on incentive‐based remuneration schemes, disclosure of financial information, and the use of debt to mitigate agency problems between the board and management. The literature dealing with donors and subsidizing authorities in governance relations is then presented. The article concludes with a number of practical implications of the scholarly obtained results to date, as well as some suggestions for further theoretical and empirical research.     

Behavioral Determinants of Nonprofit Board Performance

There is an increased awareness that the performance of boards (good governance) is not only determined by structural determinants but by behavioral determinants as well. These behavioral determinants might be particularly important for public and nonprofit governance, where the role of the board is more diffuse and heterogeneous than in corporate governance. Here we investigate how social dynamics within boards in secondary education influence their performance. We follow a concise model that includes cognitive conflict, the use of expertise, effort norms, and social cohesion as determinants of board task performance. A survey among all secondary schools in the Netherlands serves as the empirical underpinning for this process‐oriented model of good governance. We show that the behavioral determinants have different effects on the control task and advice task of boards. Also, we find that cognitive conflicts in supervisory boards do not lead to less but rather to more social cohesion within boards. Building on these findings, we suggest a revised model of the behavioral determinants of nonprofit board performance.     

Governance and Economic Transformation in Taiwan: The Role of Politics

This article analyses the strengths and weaknesses of the developmental‐state approach as compared with a broader and more flexible developmental‐governance approach – in relation to economic transformation in a single case country, Taiwan. It argues that both approaches have strong and weak points, and comes down in favour of the view that it is only through a ‘thick’ study of political forces, processes and circumstances that the reasoning behind developmental policies and institutions can be understood and the processes of economic transformation explained.     

Board development practices and competent board members: Implications for performance

This study explores underlying assumptions about board development practices in nonprofit governance. Specifically, a model was developed to determine if using recommended recruitment, board member orientation, and evaluation practices resulted in more competent board members and if the presence of these board members led to better board performance. The sample consisted of 1,051 survey responses from CEOs and board chairs representing 713 credit unions. As member‐benefit nonprofit organizations, credit unions rely almost exclusively on voluntary board members in an oversight capacity. Results support the contention that board development practices lead to more capable board members, and the presence of these board members tends to explain board performance. The study advances the understanding of nonprofit board development practices by further defining the concept and proposing an empirically tested assessment strategy. Furthermore, the findings support using specific recruitment practices that should strengthen nonprofit boards.