WHY ARE BOARDS IMPORTANT?
Although we recognize that the board has a key responsibility in the governance of a nonprofit organization, some people question whether the board should play a consequential role in what a nonprofit organization is doing. During the first few years of the existence of a nonprofit organization, the role of the board is perceived more favorably. However, in many well-established nonprofit organizations, some people in management tend to perceive a board as more of a liability than an asset. At least, some people believe that the board should be involved only when requested by management to support a decision or an activity. On the other hand, other people believe that board members should be involved in daily activities of a nonprofit organization and perform tasks that fit better with the responsibilities of staff. If the board is expected to take on responsibilities that should be handled by staff, the board will never be effective in the organization. Briefly, the role of the board should not be underestimated or overestimated.
NONPROFIT GOVERNANCE: AN ECLECTIC PERSPECTIVE
Governance models or approaches are considered in an eclectic perspective that combines empirical observations and literature related to nonprofit and for-profit organizations as micro societies. There are no significant differences between nonprofit and for-profit governance, except for their nonmonetary (nonprofit) and monetary (for-profit) bottom lines. Nonprofit organizations are legal corporations. As corporations, they are business entities, except that they do not aim to maximize profit for shareholders (which they do not have), but to provide the highest quality and the greatest number of units of services possible. Further, as nonprofit entities, nonprofit organizations are not only part of the overall social organization in a society, but also are micro social structures. Therefore, an eclectic view of nonprofit governance is justifiable. Consequently, such eclectic perspective borrows concepts from sociology, and considers nonprofit board governance through functionalism, structuralism, structuro-functionalism, and symbolic perspectives. This eclectic perspective is not normative, but simply descriptive.
Functionalism focuses primarily on the influence of roles and functions of individuals in organizations and societies. The functionalism perspective envisions a controlling board in the light of the functionalist theory. In a functionalist perspective, board members are very protective of their specific roles and responsibilities. They want to control every inch of power that they possess and do not accept that others will step into their territory without their approval. It is good for accountability in a nonprofit organization. However, at times, this can paralyze the ability of an organization to make strategic decisions in a manner that is as quick as necessary.
Structuralism emphasizes the role of structures in organizations and societies. The structuralist perspective is concerned with a collaborative and empowering board. From a structuralist perspective, a board may focus a lot on procedures rather than purpose, which sometimes may hinder the ability to make outside-of-the-box decisions. A board operating from a structuralist perspective has the potential to become obsessed with rules, regulations, formality, and procedures, which may not be the smartest strategy at all times.
Structuro-functionalism combines aspects of functionalism and structuralism. The structuro-functionalist perspective operates in light of resource development theory, social network theory, which is a comprehensive approach that balances the function of the board as a servant for the organization. A board operating on a structuro-functionalist perspective is aware of the individual roles and responsibilities of the directors, but uses such functions as a way to help the system function properly. A structuro-functionalist board has the potential to maintain the right balance, if board members keep their eyes on the purpose of the organization.
The symbolic perspective refers to symbol as a mere gesture that is not meaningful beyond the gesture itself. The board plays a symbolic role. It is advisory in nature. The board is selected by the chief executive officer or in some cases the funder, and exists to approve the decisions of the funder. A symbolic board tends to exist to satisfy a legal, social, or community requirement, but does not really play a vital role in the governance of the organization.