Document Type
Article
Publication Date
5-17-2002
Abstract
This is a study of the differing perspectives of business-oriented board members and a nonprofit CEO, providing insight into their relationships and into board governance practices. The study illuminates reasons why boards and CEOs find it difficult to fully use and leverage their joint skills. Nonprofit organizations are facing increased pressure and new challenges. They must contend with a shrinking resource base, greater competition for donor dollars and a donor market focused on the events of 9/11. Additionally, nonprofits are being asked to deliver more services, with fewer resources, to meet increased need. Adding to this mix is a generation of younger, more demanding donors with significant funds. They want to involve themselves with nonprofits that demonstrate operational effectiveness and generate a ‘return on investment.’ Consider Bill Gates. There are several Gates backed health initiatives “that are bringing the software mogul’s famously hardball business tactics to a philanthropic arena that has been hobbled by inefficiency and lack of funds.”The economic downturn and the resulting erosion in stock values compound these challenges and have clearly impacted charitable giving. Addressing these realities, George Guimaraes, an executive at Save the Children says, “We have to be accountable to our donors and to deliver on our commitment. Donors want defined, pragmatic outcomes.” And, nonprofit governance is being challenged in the wake of the Enron debacle. Examples of management negligence and incompetence are surfacing. The negative impact of these stories is compounded by the seeming lack of board awareness or action in the face of these disclosures. The resulting wave of publicity has shocked organizations most affected including the national Red Cross. In a recent expose’ by 60 Minutes of its San Diego chapter an interviewee said on national TV, based on what went on, she “would never consider donating to the Red Cross ever again.” Regina Herzlinger, wrote, “as a result of such revelations about some nonprofits, all nonprofits face increased scrutiny from both benefactors and regulators.” All of this has forced new, mostly unfamiliar demands on nonprofit management and boards. These demands may include more efficient management, an increased use of metrics to measure performance and the need to adhere to a clear strategy. For the board, there are implications relating to governance, responsibility and involvement with the respective nonprofit organization as Herzlinger describes. As a businessman, it appears the market is demanding greater accountability from nonprofit boards and management. Yet, according to Warren McFarlan, the typical nonprofit board is often a treasure trove of skills and ability that can well serve any organization in meeting the demands of the market. He cites a study showing that four-fifths of Harvard Business School students are involved in some way with nonprofits.
Keywords
nonprofit organizations -- management
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Mandato, Joe, "The Nonprofit Board of Trustees: Maximizing Its Effectiveness in a Brave New World" (2002). Student Scholarship. 467.
https://commons.case.edu/studentworks/467