What Nonprofit Executives Want and What They Get from Board Members

In theory, nonprofit boards of directors exist to perform mission‐setting and oversight functions that help to ensure organizational accountability. Yet there is evidence that board behavior often falls short of this ideal. Using survey data from a sample of 241 executive directors of nonprofit agencies, we investigated whether nonprofit boards are meeting executive directors’ expectations, and if not, what factors explain this? We find that although board behavior tends to align closely with executive directors’ preferences for involvement in administration and management tasks, there is a greater disconnect between board behavior and executive directors’ preferences for involvement in mission‐setting and oversight duties. Factors that mitigate this gap include organizational professionalization and stability, whereas more extensive reliance on government funding exacerbates it. Female executive directors experience a greater disconnect in their preferences for board involvement and actual board involvement than male executive directors. We conclude by discussing the implications of our findings for both theory and practice.     

Scarce as hen's teeth: Women CEOs in large nonprofit organizations

This study examines an underlying mechanism behind the gender gap in nonprofit executive leadership, focusing on the link between the representation of women on governing boards and the hiring of female CEOs. The analysis of 340 human services organizations with gross receipts greater than $10 million in GuideStar's database reveals that organizations where women make up between one third and half of the board are more likely to have a female CEO compared to organizations where women account for less than one third or a majority of the board. The findings suggest that nonprofit organizations are more likely to hire a female CEO when women constitute a “substantial minority” of the governing board.     

Board members' influence on the government-nonprofit relationship

This study examines whether, how, and under what conditions nonprofit boards of directors influence the government and voluntary sector relationship. The survey responses of executive directors and board presidents in a randomly selected sample of 400 nonprofit organizations indicate that boards are not bystanders in the contracting relationship with government. Rather, many boards play multiple roles, simultaneously enhancing interdependence and maintaining the boundary between state government and nonprofits.     

Effective boards: how executive directors define and develop them

There is growing recognition in the nonprofit field that the executive director has a key role in determining whether the board of directors will function effectively. To aid executives in this vital role, two recent studies defined a "good board" from the point of view of two samples of executive directors of community agencies, then sought factors related to board performance as measured by this definition. In interviews, executives whose boards scored higher than their peers on this performance measurement related how they work with their boards in such areas as recruitment of new members, financial management, fundraising, and leadership development.     

The Embeddedness of Nonprofit Leadership in Civic Governance

VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations - This study examined how board chairs and executive directors of nonprofit civic engagement organizations interpreted their...     

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.     

Funding source,board involvement techniques,and financial vulnerability in nonprofit organizations: A test of resource dependence

The study examined here tested a resource dependence view of the organization on a sample of nonprofit social service agencies. Results indicated that CEOs of privately funded nonprofit agencies were more likely to use board involvement techniques than CEOs of government‐funded or commercially supported organizations. In addition, privately funded agencies were less vulnerable to economic shock than government or commercially funded agencies, and funding source explained incremental variance in board involvement and vulnerability beyond characteristics of the organization and board. These results provide support for assertions of resource dependence theory and suggest that a CEO's strategic engagement with an organization's board depends in part on the nature and concentration of the organization's resources.     

Into the Fire: Boards and Executive Transitions

Managing the transition an organization undergoes when one chief executive leaves and another is hired is both a defining responsibility and one of the most critical jobs a governing board faces. CompassPoint Nonprofit Services, which consulted to twenty‐eight organizations going through such transitions, found that three characteristic threats to successful transitions for nonprofit boards emerged: (1) boards underestimate the risks and costs of bad hires; (2) boards are typically unprepared for the task; and (3) boards too often focuson the problems in hiring new CEOs and fail to make full use of the opportunities in CEO transitions. This article describes the development of services to help organizations in transition, gives results from the first two years of work, and offers suggestions for support to boards and for future research.     

Leadership in faith‐based nonprofits

This case study illustrates the unique challenges of leading a faith‐based nonprofit organization within a multifaith constituency in Asia. The core themes of the case are based on research conducted with the staff, executive team, and board members of an international faith‐based nonprofit organization in Asia. Specifically, the case focuses on three identity‐based leadership dilemmas in relation to (1) creating a shared sense of organizational identity, (2) talent management, and (3) board governance. By describing the challenges faced by the CEO, the case shows how a strong faith‐based identification can positively bind an organization together, but also result in organizational blind spots with unintended consequences.     

Principals and Agents: An Investigation of Executive Compensation in Human Service Nonprofits

This study proposes a revised agency theory for the nonprofit sector, distinguishes between the extent of agency and the extent of monitoring, and compares the magnitudes of the two impacts. Using panel data for 1998–2003, the paper tests whether monitoring by principal-stakeholders such as donors, clients, the government, and the board reduces the opportunity for executive misconduct such as extravagant spending on compensation and perquisites. Given the theory, the findings show that two effects influence CEO salaries. First, while nonprofit endowments provide a fiscal cushion in tough financial situations, by offering “organizational slack” they also increase the CEO’s opportunity to steal or raise her compensation (i.e., agency effect). Second, donors utilize monitoring mechanisms such as auditing or direct observations, which limit the opportunity for misconduct and reduce executive pay (i.e., monitoring effect). In the final analysis, the monitoring effect is greater than the agency effect, which implies that even if agency problems are present, the monitoring that donors provide offsets them.     

The Board as a Monitor of Organizational Activity: The Applicability of Agency Theory to Nonprofit Boards

Monitoring, as an important function for boards of directors in both the private and nonprofit sectors, receives widespread attention throughout the empirical (Chait, Holland, and Taylor, 1996; Eisenhardt, 1989; Golden‐Biddle and Rao, 1997; Kosnik, 1987) and normative literature (Axelrod, 1994; Block, 1998; Carver, 1997; Houle, 1997; Ingram, 1989). Despite the consensus about the significance of this crucial board responsibility, scholars know little about the ways in which a nonprofit board actually performs its monitoring function. In this article I report on an empirical study of the monitoring behavior of twelve nonprofit boards of directors. Agency theory provides the framework for this analysis. I show that the way in which individual board members define their relationship with the chief executive and understand the scope of the monitoring function influences how, or if, they monitor agency action. The findings also show that, given ambiguous rules of accountability and unclear measures of performance, nonprofit board members tend to monitor in ways that reflect their professional or personal competencies rather than paying attention to measures that would indicate progress toward mission‐related goals and initiatives.     

Organizational Change-Too Much,Too Soon?

ABSTRACT

Recent changes in government policies and practices, especially managed care, have led many nonprofit organizations to embrace collaboration as a competitive strategy. This article presents a case study of a large human service agency that has adopted a management service organization (MSO) model, a type of collaboration particularly suited to handling third-party contracts, at the urging of the founding CEO. A new governance model was also adopted. Using chronology as an analytical approach, the case examines key decisions made by professional and lay leaders during four distinct stages of organizational development. The actions taken by the board of directors to restore financial stability and protect the organization's reputation after learning from the CEO of the existence of a significant deficit demonstrate the need for strategic planning and better communication among all relevant parties involved in a collaboration.     

Female participation in association governance and political representation: Women as executive directors,board members,lobbyists, and political action committee directors

This analysis of more than eleven hundred business, trade, and professional nonprofit associations identifies several internal organizational barriers to leadership for women. In addition, the analysis highlights the importance of female representation in governance positions, such as executive directors and board members, and of the selection of women as the political representatives of associations in roles such as lobbyists and political action committee directors.     

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.     

Board performance and organizational effectiveness in nonprofit social services organizations

This article examines the tasks and responsibilities of nonprofit boards of directors and explores the relationship between board performance and organizational effectiveness. Thirty-three activities in nine areas of board responsibility were examined through questionnaires and interviews with board members and chief executive officers of sixteen nonprofit organizations serving developmentally disabled adults. Rankings of organizational effectiveness were determined using external evaluators and accreditation surveys. A significant relationship between board performance and organizational effectiveness was found, and the board activities most strongly correlated with organizational effectiveness are reported, including policy formation, strategic planning, program monitoring, financial planning and control, resource development, board development, and dispute resolution.     

What you don't know can hurt your community: Lessons from a local United Way

This paper describes how a controversial executive compensation package approved by a local United Way agency eclipsed the agency's long‐standing record and reputation of being a top fundraiser and pillar of the community. Using the framework developed by P. Connelly and York (2003), this case study illustrates how the lack of leadership and adaptive capacity within the board of directors, coupled with questions and speculation about managerial capacity, contributed to a highly visible scandal that resulted in the loss of the agency's chief executive officer, the resignation of the chairman of the board of directors, an internal investigation, and ultimately, a federal investigation. Not only did these events hurt the agency, which was forced to eliminate programs and cut staff, but these events hurt the annual campaign, which declined by more than 30 percent, resulting in substantial cuts in funding to dozens of nonprofit organizations. The findings from this study illustrate the importance of building strong governing boards that focus on both organizational processes and performance outcomes. They also highlight how important it is for the flagship charitable institutions to model best practices and invest in their own capacity.     

Succession planning in nonprofit organizations

Executive leadership is a critical component in the success of nonprofit organizations. An upcoming period of leadership transition is anticipated as substantial numbers of baby boomers, now at the peak of their careers, reach retirement age. With nonprofit organizations growing in both size and number, an impending leadership deficit is a concern. To help prepare for these important transition events, this study focuses on planning for executive succession. A survey exploring details of succession planning was undertaken of executive directors of 501(c)(3) charitable nonprofits and CEOs of 501(c)(4) cooperative organizations—the more business‐oriented user‐owned and controlled nonprofit organizations prominent in agricultural, utility, and finance sectors. We found that planning and preparation do not match the level of interest and concern for executive succession. Although the replacement of long‐serving leaders is acknowledged as difficult, few proactive steps are undertaken.     

Effective nonprofit board members as seen by executives and board chairs

This article examines the personal and professional attributes of nonprofit board members-their values, behaviors, and skills-as seen through the eyes of chief executives and board chairs. In the study reported here, an inductive research methodology was employed in order to bring to the surface the underlying assumptions of executive directors and chairs regarding their expectations of board members.     

Responsibilities and roles of boards in nonprofit organizations: The Israeli case

In this study, nine roles and responsibilities of boards of directors in nonprofit organizations in Israel are examined and perceptions of these roles and responsibilities by chairpersons of the boards and the executive directors are compared. Four groupings of board roles were found: senior human resource management, maintenance of relationships with the task environment, policymaking, and fiscal management and fundraising. The findings show that in most organizations boards fulfill all these roles and play a significant role in decision making. A significant consensus exists between chairpersons and executive directors in respect to most of the boards' roles, whereas significant differences in perceptions were found in respect to financial matters and maintenance of relationships with the task environment.