Book review: Nonprofit Governance

Nonprofit gov

by David Williams

Nonprofit Governance, published last June, discusses governance in ‘nonprofit’ or ‘not-for-profit’ organisations. While sector boundaries are imprecise and can change, the focus is on ‘third sector’ organisations. There are no specific examples of higher education institutions in the book, but it does explore issues of governance that vice-chancellors and their governing bodies will find of interest.

The contributors to the book are largely academic staff working in Australia, North America and the United Kingdom. The book takes a research perspective, but includes case studies illustrating aspects of governance in a specific sector or organisational setting. Nonprofit Governance is a collection of 14 chapter length contributions, organised under five themes. Each theme explores a current area of research on governance.

The reader is reminded that governance is a function and a board is a structure. Further, there is a need to look beyond composition and structure and give attention to board behaviours. Questions about the groups most likely to be represented on Boards, and democratic participation through and beyond Boards are explored.

The behaviour of the board chairs, individual board members and the board as a collective form two of the book’s themes The chapter entitled ‘Board monitoring and judgement as processes of sense making’ considers issues of monitoring non-financial performance and explores ‘sense making’ by Board members. The idea of ‘failures’ of board monitoring being ‘good people struggling to make sense of their circumstances’, rather than ‘bad people making poor decisions’ is introduced.

A review of organisational crises experienced by two museums and two performing arts organisations forms one of the case studies in the book. The problems created by unchallenged trust by the Board of the chief executive and a failure to receive, or demand, adequate and regular information about financial performance are set out. Subsequent financial difficulties resulted in a pivot in the Board’s focus towards financial matters, and away from ‘mission orientated’ activities.

The balance of ‘trust’ and ‘control’ between the Board and the chief executive was changed by the crisis. A period of intensive Board control (i.e. the opposite polarization to the previous situation), during which the organisation’s problems were addressed, was followed by the emergence of a ‘negotiated balance’ to the relationship between the Board and the (and in some cases, a new) chief executive. For some organisations, a further element to post-crisis governance was the remaking of the Board to change the balance of members with business skills and those with professional, sector-specific, expertise.

Not all contributors to the book support a move towards more conventional board structures and membership, and the Community Engagement Model™, is put forward as an alternative approach for at least some nonprofit organisations.

The case of English housing associations illustrates the impact of context on governance. Many associations have assumed responsibilities for what was formerly a public service. As a consequence they have moved from operating as ‘a small-scale complementary service provider to the main provider of social housing over the past 30 years.’ As a result the changes to the scale and complexity of running these organisations has affected governance substantially. Board membership has moved from the inclusion of representative members (e.g. tenants and local authorities), working on a voluntary and unpaid basis, to boards of ‘professional’ independent non-executives now paid for their work. A change from representational to professional boards.

The book goes on to consider ‘multi-level governance’. Contributors distinguish, and discuss, ‘nested’ (intra-) and ‘network’ (inter-organisational) governance in the context of federations and collaborative structures.

Although this book contains many interesting observations and insights, and claims to be written in ‘an accessible manner’, it unlikely to be read by those who might benefit most from some of its contents. As one contributor acknowledges when discussing their own contribution to the book, research on nonprofit governance is frequently published in scholarly journals (or discussed at academic conferences?) and risks never reaching practitioner communities. This is a pity, and a timely reminder to academic researchers of what should be an important purpose of their work.

Nonprofit Governance: innovative perspectives and approaches, edited by Chris Cornforth and Wiillam A Brown.

David Williams is the Leadership Foundation’s governance web editor.