Governance Challenges in Nonprofit Organizations
By Martha Golensky, Grand Valley State University

Based on research conducted by ARNOVA member Martha Golensky of Grand Valley State University, Grand Rapids, Michigan. More detailed information on this research is available online at www.nonprofitbasics.org.

Compared to management, governance is a much broader concept, a combination of decisions and actions stemming from an organization’s mission that serve as a mechanism for establishing policies and the controls the organization will use to allocate power, make decisions, and set up procedures for carrying out specific tasks (Wood, 1996). Although it was once common to suggest a sharp distinction between the board as policy makers and the staff as policy implementers, today, most observers agree the board of directors and the chief professional officer (CPO) tend to share the governance function.

Unfortunately, the relationship between the board and the CPO is often complicated by differing viewpoints on the most desirable use of board members’ time and energies as well as divergent opinions on the appropriate division of responsibility between them (Green & Griesinger, 1996). Even though much of the literature on governance is normative in nature, with lists of varying lengths defining the board’s duties, the available empirical data lead to the conclusion that in fact, there is a discrepancy between what the board actually does and what it is supposed to do. Moreover, the debate continues over the connection between board effectiveness and organizational effectiveness, and a full understanding of the specific behaviors and characteristics required to produce an effective board still alludes us (Herman & Renz, 1999).

For more than 10 years, the issues just identified concerning governance have been a major research interest of mine. This piece draws on the two most recent studies. In 2000, a survey on board practices and procedures was sent to executive directors and board members of a sample of nonprofit organizations located in West Michigan. This resulted in 558 usable questionnaires; 58 interviews were then conducted with respondents, chosen from over 180 individuals who volunteered to discuss governance concerns in more depth.

One part of the survey dealt directly with the issue of what board members should do by presenting the activities listed in the prescriptive literature, such as selecting and supporting the CPO and approving and monitoring the organization’s programs and services, and asking the respondents to rate each one for appropriateness in reference to their own board. Although there was general agreement between the two groups that the board ought to be engaged in these tasks, the CPOs tended to feel more strongly that the board members should fulfill these responsibilities. Some of the differences were pronounced:

To an open-ended question on the biggest challenges in governance facing not-for-profit organizations today, the CPOs and the board members again were remarkably similar in their answers, but with an interesting twist. While they identified the same six categories, they differed in the priority assigned to them:

A conference on governance was subsequently held at Grand Valley State University to address these six challenges. Follow-up telephone calls after the conference identified 17 organizations that anticipated making a change in governance as a result of what had been gleaned from the conference or felt that changes recently made in their practices had been reinforced. A little over a year later, a qualitative study of 11 of these organizations was conducted to explore the issues that had prompted them to attend the conference, the aspect(s) of the conference that had been most helpful, and the actual governance changes, in terms of both success stories and obstacles encountered.

The changes were classified as “best practices,” which were self-defined by the study participants as representing better ways to address the work of the board. Their responses are summarized below:

From these two research projects, it is evident the issue of clarifying board roles and responsibilities remains an ongoing concern, even within those organizations that have made progress toward building a more effective board, however defined. This, of course, leads to a second, related conclusion derived from the data, the need for a clearer understanding of what board effectiveness is and how to attain it. Board training and development on a regular basis is certainly one proven route. If nonprofits truly wish to be more successful in meeting their organizational mission, and view the board as an important component in achieving such a worthwhile goal, then it may be time to fully embrace this idea. One benefit of a better-trained board would be less reliance on the CPO for direction in making decisions more properly the responsibility of the board. As another positive outcome, the pool of board members capable of assuming leadership roles would be greatly increased.

References

Green, J. C., & Griesinger, D. W. (1996). Board performance and organizational effectiveness in nonprofit social service organizations. Nonprofit Management and Leadership, 6, 381-402.

Herman, R. D., & Renz, D. O. (1999). Theses on nonprofit organizational effectiveness. Nonprofit and Voluntary Sector Quarterly, 28(2), 107-126.

Wood, M. M. (Ed.). (1996). Nonprofit boards and leadership: Cases on governance, change, and board-staff dynamics. San Francisco: Jossey-Bass.

Martha Golensky is an associate professor of social work at Grand Valley State University in Grand Rapids, Mich. She can be reached at GolenskM@gvsu.edu.