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Non-Profit Board Governance Models

Non-Profit Board Governance Models



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Boards of directors must constantly assess priorities in keeping with corporate ethics. Charitable organizations must insist upon a transparent governance model that keeps donors informed and recipients needs confidential.
Boards of directors must constantly assess priorities in keeping with corporate ethics. Charitable organizations must insist upon a transparent governance model that keeps donors informed and recipients needs confidential.

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Published by: Dr. Earl R. Smith II on Nov 12, 2008
Copyright:Attribution Non-commercial


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Non-Profit Board Governance Models
By Dr. Earl R. Smith IIDrSmith@Dr-Smith.comwww.Dr-Smith.comDemands on non-profit boards are greater today thanat any time in recent history. Scandals at venerableorganizations coupled with apathy and difficulteconomic times make fundraising and fundingstreams uncertain. Boards of directors mustconstantly assess priorities in keeping with corporateethics. Charitable organizations must insist upon atransparent governance model that keeps donorsinformed and recipients needs confidential.Successful fund raising charitable organizations conduct their activitiestransparently. The directors must be credible, competent, anddedicated to the issues the organization is addressing for the fundraising activities to be successful. Leadership and leadershipdevelopment is a key to sustaining non-profit organizations, becauseturnover on non-profit, volunteer boards is very high. The high turnoveramong directors requires the succession committee to conductfrequent leadership assessments. Leadership development shouldfocus on the mission of the organization and the difference theorganization is making in addressing its constituency.Non-profit boards have adapted over the years as issues regardingconfidentiality have changed. Regulations have tightened the rulesprotecting recipient’s identity and requiring organizations to conductthorough assessments of policies and practices surrounding the issueof confidentiality. Even pictures of anyone entering a building for freehealthcare screenings require a signed release statement by thesubjects in the picture. The governance models of non-profit boards are increasingly similar tothe for-profit models. Boards delegate decisions further down the chainof command. With greater demands on time, management has greaterauthority to make decisions within the strategic plan parameters.Directors act more as ambassadors and focus energies on fund raisingand gaining good will for the organization. Audit committees are calledon to exert greater efforts to ensure finances are managed fairly andreported accurately- most often with the assistance of outside auditors.A frequently occurring model involves the establishment of an umbrellaorganization to act as a fundraising arm for several smaller serviceproviders. The umbrella organization carries out the fiduciary
responsibilities for the service providers, meets regulatory andreporting requirements, and files the necessary forms for donors toreceive the maximum tax benefit of their donation. The serviceorganizations gain more time to focus on serving the needs of theirclients, and the umbrella organization’s board of directors becomescompliance management experts on issues surrounding tax reporting,and record keeping for 501(c)(3) organizations.Good corporate governance requires directors to enhance shareholdervalue. Non-profit directors are working to increase the impact on theissues or activities that the non-profit was formed to address. Inuncertain economic times and with budgets stretched, corporatemanagement is pressured to justify their donations more than everbefore. Non-profits, depending on corporate donations to reach theirbudget targets, must clearly demonstrate the value the corporatedonor will receive from a donation. For instance, a non-profitaddressing the issue of illiteracy may assess the number of newpotential employees a corporate donor may have to choose from if illiteracy rates dropped by 10 percent. Fact-based statistics corporatemanagement can quote to their board of directors can work to theadvantage of the non-profit and their corporate management donors.Corporate boards meet ten to twelve times per year and expect theirCEO and corporate management to carry out established policy.Professional governance requires the directors to hold the CEOaccountable for the performance of the company toward enhancingshareholder value. Non-profits are often community based. Thedirectors, the staff, and the recipients often interacting on a number of critical community based issues. The governance of one non-profit isoften coordinated with the governance of another non-profit. Transparency, communication, and coordination become critical fornon-profit community directors to assess priorities to allow the non-profits to carry out their mission and allow corporate management tocontinue to donate and receive value for their donation dollars.If you are a board member of a non-profit organization and want tolearn more about effective board governance,send me an e-mail and we will arrange a time to talk.~~~~~~~~~~Related Articles:

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