Current nonprofit sector research and recommendations for effective day-to-day practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.
Nonprofit organizations are among the strongest bridges that connect global problems with solutions. The world needs effective organizations to carry out programs that are beneficial to society.
While devotion to a cause will lift the wings of a solution, an organization must guide and oversee its growth if it is to ever take flight. In other words, the effectiveness of the charitable work ultimately falls to how the nonprofit is governed.
The question then turns to this: how can nonprofits structure their governance based on their organizational and lifecycle needs? Research has shown that organizational competence, or lack thereof, is linked to board of director performance (Brown & Iverson, 2004, p. 378) (Brown, 2005, p. 330) (Bradshaw, 2009, p. 62). Challenging as it may seem, the payoff that comes from structuring governance according to organizational and lifecycle needs is well worth the time and effort.
The strength of the nonprofit sector lies within the ability to channel passion into effective action and the ability to use governance as a tool to ensure long-lasting change.
In their study of organizational strategy, Miles and Snow (1978) identify several different types of organizations (defenders; prospectors; analyzers; and reactors), and each one has a unique strategy for achieving its organizational mission. The structure of governance will depend on the way in which each nonprofit meets entrepreneurial, engineering, and administrative needs. These inside variables must be taken into account as well as external contingencies such as the funding environment and the organization’s stakeholders (Bradshaw, 2009, p. 66). Thus, when we ask how nonprofits should structure their governance based on organizational needs, we can first conclude that the needs of a nonprofit differ depending on its strategic setup and on the internal and external variables that influence it. To suggest one single fix to such a varying community of organizations is improbable and impractical.
Another contributing factor to the complicated nature of nonprofit governance structure is that of an organization’s lifecycle. Nonprofits naturally go through periods of growth and development which reflect heavily in the structure of their boards of directors. The oversimplified but general consensus from the research is that nonprofit governance gradually becomes more sophisticated as it grows (Mathiasen, 1990) (Brown & Iverson, 2004) (Dart et al., 1996). What is considered to be a natural flow of development spells out a few general assumptions about governance: over time, the board will cease to focus on operational roles and have less involvement with volunteers in favor of focusing on governance and fundraising; and the board will become larger, more formally organized, and have “a more elaborate committee structure” (Dart et al., 1996, 370-73).
We can draw many recommendations for nonprofit leaders from the research about strong governance:
- Assess the organization to determine strengths; weaknesses; opportunities; and threats (a SWOT analysis) as well as both short- and long-term objectives.
- Engage the organization’s current board in dialogue about the nonprofit’s current needs.
- Develop a timeline for switching gears and, if necessary, cultivating relationships with new potential board members.
- Create contracts with board members that include individual and board expectations.
- Clarify the requirements of a board of directors: to set direction; ensure resources; and provide oversight.
- Continuously inform the board of current events and ensure they feel relevant and needed.
- Expect 100% monetary giving from board members as well as their time and talent.
- Understand the lifecycle phases of a nonprofit (founding, administrative, entrepreneurial, and bureaucratic) and their accompanying governing stages.
- Accept that the most difficult periods are the transition phases.
- Establish a collaborative, constructive partnership between the CEO and board.
- Cultivate the relationship you have with each board member.
- Value your organization’s mission above everything else.
Governance should be structured according to the way in which nonprofits serve their respective communities – how they react to their entrepreneurial; engineering; and administrative challenges – and depending on the many internal and external variables that influence their actions including lifecycle phases.
Hope for the nonprofit sector lies in an ability to rise to its presented challenges. In an age where nonprofits are continuously relied upon for a wide range of services, ensuring that the solutions come from competent organizations is crucial. The survival of the sector depends on the strength of nonprofit leadership and management, for they are the bridges between problems and their solutions and must remain strong; organized; and persistent.
Bradshaw, P. (2009). A contingency approach to nonprofit governance. Nonprofit Management
and Leadership,20(1), 61-81. doi:10.1002/nml.241
Brown, W. A. (2005). Exploring the association between board and organizational performance
in nonprofit organizations. Nonprofit Management and Leadership,15(3), 317-339. doi:10.1002/nml.71
Brown, W. A., & Iverson, J. O. (2004). Exploring strategy and board structure in nonprofit
organizations. Nonprofit and Voluntary Sector Quarterly, 33(3), 377-400. doi:10.1177/0899764004265428
Dart, R., Bradshaw, P., Murray, V., & Wolpin, J. (1996). Boards of directors in nonprofit
organizations do they follow a life-cycle model? Nonprofit Management and Leadership,6(4), 367-379. doi:10.1002/nml.4130060406
Mathiasen, K. (1990). Board passages: three key stages in a nonprofit board's life cycle.
Washington, DC: National Center for Nonprofit Boards.
Miles, R. E., & Snow, C. C. (1978). Organizational Strategy, Structure, and
Process. Administrative Science Quarterly,23(4), 652. doi:10.2307/2392589
Alexis stumbled into the nonprofit sector at seventeen after choosing to volunteer at a nonprofit horse sanctuary for her high school senior project. Nearly eight years later, she is that ranch’s executive director and is building a career that wields the resources of the nonprofit sector to save horses from the slaughter pipeline. Alexis is a graduate of ASU Master of Nonprofit Leadership & Management .