Corporate Governance

The last chapter in this new book by four faculty from University of Virginia's Darden School of Business Administration asks an important question: How does corporate governance for nonprofits differ? The answer lies in the legal structure of nonprofits (corporations, foundations, trusts, and associations) as well as the nature of nonprofit boards, which are largely made up of volunteers. Because of the resulting lack of leverage, it becomes difficult for the board to control an organization's operating director, sometimes leading to the "inevitability of gradualism" effect whereby a charismatic organization leader receives sky-high compensation, unchecked by board members. The authors urge nonprofit boards to take a stronger and earlier hand in managing their companies, setting clear accountability measures, and to take an active role in public relations, getting the message out and ensuring support from donors—the ultimate stakeholders in a nonprofit.