The nonprofit sector is distinguished by a wide variety of organizational forms, a wide range of socially significant goals and objectives for which they are created. In this article, we will consider the structure of nonprofit board positions.
The governance structure of the nonprofit organization
The governance structure of nonprofit organizations resembles the governance structure of conventional organizations whose goal is to maximize profits, although the terms used to describe certain bodies and officials may differ slightly.
Limited liability companies have a board of directors made up of executive and non-executive directors, and many not-for-profit organizations are governed by a board or board whose role is to ensure that the organization’s activities are consistent with its main objectives. Recently, there has been some convergence in approaches to the management of for-profit and non-profit organizations, including the growing use of non-executive officers (especially about to control or oversight) and the hiring of “career” managers to run the business on a day-to-day basis.
In nonprofit organizations, for which profit-making is not the main goal, and whose mission is based on the not always clearly defined principle of service to society, internal planning is a rather complicated procedure. Hence, the complexity of clear regulation of the activities of non-profit organizations, their regulation, and management.
The composition of the management of a nonprofit organization includes the supreme and executive management bodies. The main function of the supreme management body of a nonprofit organization is to ensure strict observance of the goals for which the organization was created.
The structure of the board of directors in the nonprofit organization
Today, many nonprofit organizations have what is still uncharacteristic of business – a functional board of directors. In addition, they have an even rarer element – an executive director who is accountable to the board and whose performance is annually evaluated by one of the committees of the board.
The competence of the board of directors of a nonprofit organization includes the resolution of such issues as:
- amending the charter of a non-profit organization, determining priority areas of activity, principles for the formation and use of the property of a nonprofit organization,
- formation of executive bodies of a non-profit organization and, if necessary, early termination of their powers,
- approving the annual accounting report and balance sheet, approving the financial plan of a non-profit organization and making changes to it,
- creation of branches,
- opening of representative offices of a nonprofit organization, participation in other organizations, reorganization, and liquidation of the organization (except for the liquidation of a fund).
The interests of the boards of directors of nonprofit organizations differ from each other. Because many board members are not deeply knowledgeable about the nonprofit plan, management and employees often take on the responsibility of developing and implementing the plan. This becomes a stamping process that can be completed quickly and the plan remains on the shelf as operational priorities arise for other employees. The benefits of anticipatory critical thinking are lost. Maintaining a viable strategic plan is the responsibility of the board of directors, and the staff must be used in its development. The ideal process is to develop collaboration between the two groups, with the CEO representing the staff and calling on their expertise when needed. Only in crises should the board of directors develop strategic plans independently. True, there are times when the board of directors develops a plan, and then refuses to share it with the new CEO, whom they hired.