✏ Table of Content :
Governance for Non Profit Organizations
Governance is the process of providing strategic leadership to a nonprofit organization. It entails the functions of setting direction, making policy and strategy decisions, overseeing and monitoring organizational performance, and ensuring overall accountability. Nonprofit governance is a political and organizational process involving multiple functions and engaging multiple stakeholders.
The meaning of governance is relatively different for nonprofit and governmental settings. Public sector (government) governance refers to the political process of policy and decision making for communities and political jurisdictions, whereas nonprofit governance refers to the process of providing leadership, direction, and accountability for a specific nongovernmental, not-for-profit organization."
Nonprofit governance is primarily the province of an organization's governing board, often known as a board of directors or board of trustees. However, in larger organizations that employ staff, it is not unusual for others to be a part of the governance process, as well. In particular, it is common for the chief executive or staff officer of the organization to play a very active role,
Governance, Strategy, and Leadership
Effective governance is integral to the success of the nonprofit organization. Governance is essentially a decision process grounded in the assumption that organizations can cause desired results to occur by choosing appropriate courses of action. Fundamentally, governance and strategic leadership are about making informed organizational choices: choices about why we're here, what we want to accomplish, the best ways to achieve those results, the resources we'll need to do these things and how we will secure them, and how we will know whether we are making a difference. Strategy is the process of selecting among alternative courses of action, using the chosen goals and outcomes as the basis for the selection, and implementing these strategies to achieve these results and outcomes. The process involves gathering information and using it to inform the decision process, with the expectation that effective strategy choices will result in organizational success. Unlike the for- profit world, where these choices are largely grounded in options for making money for someone, nonprofits essentially always begin with a focus on doing good - and making choices about how best to have an impact.
Effective governance and strategy are integral to the sustainability and long-term effectiveness of a nonprofit operating in today's complex and competitive world. To succeed, nonprofits (like all organization's) must continuously renew the link between what they do and the needs and interests of the community they serve. They must ensure that they are providing the services needed and valued by their clients and constituents, and ways that are consistent with the organization's core values and principles. As the organization serves its clients and the community, governance involves making judgments about how well or poorly the organization is doing and then making choices about bow it can be more effective.
Requirement of Good Governance
Good governance for nonprofit organizations requires:
1) Participation of members, staff and other stakeholders.
2) The Board to create/maintain a positive culture that promotes openness and honesty.
3) The Board to develop a vision and strategic plan in consultation with relevant stakeholders.
4) That all Board members are duly elected or constitutionally co-opted.
5) That the Board makes valid decisions in the best interests of the organization taking into account members and other stakeholders.
6) Policies and activities be consistent with and further the constitution.
7) Processes for dealing with complaints by members, staff, or clients which cannot be resolved by staff and management.
8) A management structure which facilitates open communication between all parts of the organization, and co-operation with other organizations in the sector.
Purpose of Good Governance for Non Profit Organizations
Governance is the underlying framework in accordance with which a group of people makes and takes action for a shared purpose.
1) Good governance is primarily aimed at ensuring good outcomes in terms of the purposes for which the association was created.
2) Governance addresses issues such as how the organization communicates, is directed and makes decisions. It is important that organizations operate in a legal and ethical manner. Decisions need to be made in the interests of eligible stakeholders and the organization must behave as a good corporate citizen.
3) Good governance ensures clarity of roles and responsibilities; accountability through appropriate systems; and effective and open decision-making and management processes.
In the not-for-profit sector many organizations are now delivering social services that were previously delivered by government. As a result, governance issues are more important than ever. An owner organization's governance requirements are set out in a number of places including his organization's Constitution, Rules and legislation.
Boards of Directors
The board of directors (sometimes known as the board of trustees or governing board) is the primary group of people entrusted with and accountable for the leadership and governance of the non-profit corporation. Governance is a central responsibility of the hoard, yet the typical board's work goes beyond that of governance, alone. For example, it is common for boards and their members to also serve as:
- Ambassadors who build relationships and generate good will.
- Sponsors and representatives who advocate on behalf of the organization.
- Trusted advisors and consultants who offer guidance and serve as sounding boards for the chief executive and staff.
- Resource developers who help the organization secure essential resources.
In certain membership organizations, board members may also serve as representatives who advocate on behalf of particular constituencies or membership groups in the governance process. However, as we discuss in the next section, this is often a misunderstood and inappropriate role for a member of the board of a typical non- profit organization.
Legal Duties of the Board
From a legal perspective, the non-profit board and its members, individually, have three fundamental duties.
1) Duty of Care:
Which is taking the care and exercising the judgment that any reasonable and prudent person would exhibit in the process of making informed decisions, including acting in good faith consistent with what you as a member of the board truly believe is in the best interest of the organization. The law recognizes and accepts that board members may not always be correct in their choices or decisions, but it holds them accountable for being attentive, diligent, and thoughtful in considering and acting on a policy, course of action, or other decision. Active preparation for and participation in board meetings where important decisions are to be made is an integral element of the duty of care.
2) Duty of Loyalty:
Which calls upon the board and its members to consider and act in good faith to advance the interests of the organization. In other words, board members will not authorize or engage in transactions except those in which the best possible outcomes or terms for the organization can be achieved. This standard constrains a board member from participating in board discussions and decisions when they as an individual have a conflict of interest (i.e., their personal interests conflict with organizational interests, or they serve multiple organizations whose interest conflict).
3) Duty of Obedience:
Which requires obedience to the organization's mission, bylaws, and policies, as well as honoring the terms and conditions of other standards of appropriate behavior such as laws, rules, and regulations.
Board members are obligated to honor these standards with regard to all decisions and actions of the board, and those who do not may be subject to civil and even criminal sanctions.