Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar or practitioner to highlight current nonprofit research reports or studies and discuss how they can inform and improve day-to-day practice. We welcome your comments and feedback.
In April of 2011, a story broke regarding The Central Asia Institute, a nonprofit organization. Although it had been in existence for 13 years, the organization had no audited financial statements, had only three board members (including the executive director), was not clear about how donor money was being spent, and had a clear conflict of interest with the executive director promoting personal book sales through the nonprofit. The truth about the Central Asia Institute was revealed in several high-profile journals and newspapers such as the Harvard Business Review, The Chronicle of Philanthropy and the Wall Street Journal, with articles titled “Lessons from the ‘Three Cups of Tea’ Controversy,” “‘Three Cups of Tea’ Scandal Offers Lessons for Charities and Trustees,” and “Lessons for Donors from ‘Three Cups of Tea’,” respectively.
The Central Asia Institute is only one nonprofit organization that has fallen from grace due to poor nonprofit governance. The United Way and the American Red Cross are two well-known, large organizations that have also experienced controversy in recent years1.
Thankfully, a recent survey conducted by BoardSource in 2012 shows signs of increased governance among nonprofits2. Through surveying chief executive officers from all 50 states, BoardSource reported the following key findings: