Nonprofit Governance

This article from the Nonprofit Quarterly describes a reality long evident within public administration and addressed in previous works such as the book by Goldsmith and Eggers (2004) Governing by Network: The New Shape of the Public Sector.

An excerpt from the Nonprofit Quarterly article.

“Many members of the nonprofit world have expressed concern that the sector has not developed new forms of governance. We have not, they complain, seen anything more than a minor variation on current designs and practices. For some time, I shared this perspective. But then I realized that this is not exactly true. We have created the “new nonprofit governance” at a new level within our communities. But we have not identified this shift because we’re so focused on the artifact that we know as “the board.”

“It used to be that boards and governance were substantially the same: the two concepts overlapped. But with time and a radically changing environment (e.g., changes in complexity, pace, scale, and nature of community problems and needs), the domain of “governance” has moved beyond the domain of “the board.” Though never stated in this way, governance and boards have greatly diverged in many of the settings where we address our most complex and demanding community needs. But in these complex environments, boards of individual organizations serve the functions of governance less and less well.

“In these environs, governance truly is leadership. And in this new generation of governance, which has most actively evolved in segments of the nonprofit sector where agencies strive to address these complex challenges, nonprofit boards are merely one element and no longer the primary “home” of the governance processes by which we address our most critical community issues.

“The scale of these complex problems has outgrown the capacity of our existing free¬standing organizations to respond—sometimes in terms of size, but especially, and more important, in terms of complexity and dynamism. Therefore, we’ve organized or developed our response at yet another level: the interorganizational alliance.

“In the new mode, the organization may well be the unit from which services are delivered, but such service delivery is designed, organized, resourced, and coordinated (in other words, governed) by the overarching network of relationships (among organizational leaders) that crosses and links all participating organizations and entities. Similar dynamics have emerged in some parts of the nonprofit policy and advocacy domain, where different organizations’ actions are orchestrated by a coordinated governance process that operates largely beyond the scope of any particular board, even as it deploys lobbying resources from various individual organizations.

“THE NEW NONPROFIT GOVERNANCE MODEL

“Governance is a function, and a board is a structure—and, as it turns out, a decreasingly central structure in the issue of new or alternative forms of governance. Don’t get me wrong; boards are still important in nonprofit governance. But, for many key community problems and issues, they’re not always appropriate as the unit of focus.

“Governance processes—processes of decision making concerning action based on and grounded in a shared sense of mission, vision, and purpose—include the functions of setting strategic direction and setting priorities; developing and allocating resources; adopting and applying rules of interunit engagement and relationships; and implementing an ongoing system of quality assurance that applies to all constituent organizations.

“In many key areas, these processes have moved above and beyond any individual nonprofit organization. If organizations do not work as an integral part of this larger whole, they don’t get to join or stay in the game.”