Non-Profit Governance

Non-Profit Governance and Responsibilities of Non-Profit Boards

In 2003, the Center for Effective Philanthropy conducted a survey of CEOs from top US foundations to gather information about non-profit governance practices.

In their shared findings, financial accountability, appropriate committee structures, conflict of interest guidelines, ethics and fiduciary responsibility were recognized as important policy concepts. As important to healthy non-profit governance was involving foundation trustees in activities related to the essential work of the foundation. In other words, the days of purely ceremonial board positions should be a thing of the past.

Corporate Governance Definition - Is Non-Profit Governance Different?

While corporate boards are accountable to shareholders, non-profit boards are accountable to donors; foundations may only be accountable to the board itself, depending on the foundation's governing rules.

Though the principles of a corporate governance definition also hold true for non-profit governance, media scrutiny of non-profits in recent years have prompted increased transparency in order to guard against abuse, perceived or real. Audit committees, requiring board review on income tax filings, and appointing compliance officers have become best practices to reduce the risk of such issues.

Policy Governance - Some Basic Principles

Although there is no single model for non-profit governance, some guiding principles include:

  • Crafting a clear mission statement expressing your non-profit's core values and purpose
  • Establishing standards to ensure the organization is well managed, including a Code of Ethics, as well as management structures defining relationships between board and staff
  • Formulating a fundraising strategy to raise the resources necessary to fulfill your mission

If your family business supports a non-profit foundation, contact us for more information about non-profit governance. We also invite you to learn more about the wide range of programs and services offered to family business members.