Examining the tensions that frame nonprofit governance: The roles and responsibilities of nonprofit chief executives and board members

The complexity of executive director-governing board relationships, coupled with the rapid rate of change confronting the nonprofit sector invite an examination of the roles and responsibilities of these major actors.  The relationship between the chief executive of a nonprofit and its governing board members is multi-faceted and often shapes the organization’s effectiveness. The trust-control nexus, internal and external environmental forces, power, accountability and managerial-mission orientation capture a strong share of the factors that shape relationships between boards and executive directors.  Ongoing changes in the operating environments of nonprofits include a continuing imperative to obtain financial support, oversight and accountability by public grant-making and regulatory agencies, as well as increased demand for resources and services at the individual and community level (Bridgeland, McNaught, Reed, & Dunkelman, 2009) are now requiring executive directors and their governing boards to approach their responsibilities in new ways.

Nonprofit organization leaders daily face the task of achieving their institution’s mission-related goals while also maintaining a healthy financial portfolio and ensuring a working relationship with their entity’s governing board (Carroll & Stater, 2008).  Scholars have articulated the last named, the relationship between nonprofit chief executives and their boards, in several ways. Historically, many analysts have viewed the ties of these actors as hierarchical in character, in which the director is a subordinate who reports to the board (Heimovices, Herman, & Coughlin, 1993).  Other scholars have suggested the board and executive director should be seen as partners, equally engaged in and responsible for an organization’s successes and failures.  This description implies a, “resolution of the tension that often underscores the dynamic relationship [between the executive director and the board], rather than the complex shifting of power” from the board to the executive that is commonly noted by scholars and practitioners alike (Golensky, 1993, p. 179).

Heimovics, Herman, and Coughlin (1993) meanwhile, have asserted that the executive director is central to nonprofit governance:

We explain the psychological centrality by recognizing that the chief executive is often at the center of the organization’s information flow and can have an informational advantage over the board.  Professional expertise and experience that comes with special organizational knowledge and intelligence may give the chief executive the potential to influence the organization (p. 420).

This perspective, a variant of agency theory, which suggests that board monitoring activities must be separate from staff leader’s management efforts (Miller, 2002), is underpinned by the view that the executive director may have more at stake in career terms than individual board members do (Heimovics et al., 1993).  Furthermore, it is common for executives, with unlimited access to organizational information and professional expertise, to develop a broadly salient identity in their role while serving as a key ambassador of their nonprofit’s mission and services (Heimovics et al., 1993).

Given the relative autonomy and power of executive directors, tensions may arise with their boards, particularly when staff leaders emphasize a mission-orientation to organizational governance and their board members adopt a managerial focus. As Reid and Turbide (2014) have explained:

Boards may counterbalance such expert leadership perspectives by relying on external proxy assessments such as granting agencies’ peer juries or knowledgeable donors to substitute for their own lack of mission knowledge.  On the other hand, a strong managerial orientation by the board could divert the organization from its mission for a greater emphasis on efficiency.  The tensions between managerial and professional expertise can influence the board’s ability to assess risk for mission-orientated projects and decision-making (p. 165).

Applying agency theory to the executive director-board relationship and positing that, “the board’s role is to act on behalf of the owner(s) (principal) to control the manager’s (agents’) opportunism,” results in a clash of the managerial and professional expertise of board and staff members. This “trust-control nexus” must be examined as an influential force in nonprofit governance and as a significant factor shaping an organization’s capacity to learn (Reid & Turbide, 2014, p. 165). This endemic tension requires the development of trust between board members and their executive directors if it is to be ameliorated (Reid & Turbide, 2014, p. 165).

Norman et.al. have defined trust as a, “‘willingness to be vulnerable’ in one’s relationship with another person based on positive expectations regarding that person’s behavior” (Norman, Avolio, & Luthans, 2010, p. 351). Trust implies an expectation of predictability and dependability in another person’s actions (Norman et al., 2010).  BoardSource (2010) has highlighted the importance of trust for effective nonprofit organization governance observing:

Any collaborative effort relies on trust among team members, and building this trust is critical to the team’s ultimate success.  Board members must be able to rely on each other — as team members — openly and without reservation.  The chair, individual board members, and the board as a body must develop a trusting relationship with each other and with the chief executive to consolidate mutual efforts and objectives. In short, when trust is present, everyone is driven by a common goal and shares information openly, accepting positive interdependence (p. 318).

Creating a culture of trust poses a challenge for board chairs, executive directors and board members, as their relationships are shaped by loyalty, power and individual diversity (BoardSource, 2010). When a trusting culture can be developed, however, “board members feel free to debate, question, openly examine, and even argue with each other’s points of view… Respect for each other’s contributions is the true foundation for professional reliance and interdependence” (p. 318). Reid and Turbide (2014) have argued that trust, “… generates horizontal relationships that enable communication, collaboration, and learning but control ensures the relationships remain well structured” (p. 166).  Trust among board members and executive staff is essential for information sharing, communication and the development of shared conceptions of the board’s governance role.

In the absence of organizational trust, board members and staff leaders may find it difficult to navigate the various internal and external responsibilities necessary to ensure mission attainment. As Reid and Turbide (2014, p.167) have suggested:

The internal governance work of monitoring and coaching is closely linked with the executive leadership and involves knowledge of the mission, management, and financial structure of an organization’s business.  External governance work involves advocacy, influence and negotiation with an orientation to environmental players and networks.  Boards may find it difficult to maintain both an internal and an external regard when asked, for example to simultaneously critique management performance and advocate in the community for the organization’s mandate and needs.

Setting priorities and monitoring their internal and external governing tasks requires that board members carefully consider the organization’s mission, resource streams and strategy. In addition, any effort to balance these claims necessitates a discussion of power and accountability as constructs that span and link an organization’s internal and external governing environments (Reid & Turbide, 2014).

Obtaining a full understanding of the dynamics of power and accountability as these relate to nonprofit organizations requires that executives and board members alike understand the dependence of their entities on exchanges with actors in their external environments.  Heimovics et al. (1993) have asserted that nonprofit organizations, “are open to and particularly dependent upon the flow of resources from outside… [Therefore, learning to think and act politically] is an essential factor underlying both an organization’s viability and its leadership effectiveness” (p. 425).  These authors found that the most successful nonprofit executives, “exercise their personal and organizational power, and are sensitive to external factors that may influence internal decisions and politics.” This capacity or set of capabilities enhances their ability to mediate environmental dependencies and diminishes a key tension facing their organizations (Heimovics et al., 1993, p. 421).

A board, whether all or a share of its members, gains and loses power vís-a-vís its executive director as social structures, contexts and organizational resources change over time.  Thus, who possesses specific power and authority within a nonprofit entity is ever changing. The fact that nonprofit organizations cannot exist outside of a socio-political context implies the need for further research regarding the role of power and its influence on nonprofit organizational and governance effectiveness.

The complexity of power as a factor influencing governance processes must also be explored in the context of organizational roles and responsibilities, as staff members transition among management and leadership activities.  Chait et al. (2005) have argued strongly that board actors, especially, must shift the roles they play in nonprofit organizational leadership and governance if they are to navigate the tensions implicit in their ties with their organizations’ chief executive, “While nonprofit managers have gravitated toward the role of leadership, trustees have tilted more toward the role of management. The shift has occurred because… trusteeship, as a concept, has stalled while leadership, as a concept has accelerated” (p. 4).  Balancing this tension requires institutional leaders that “enable organizations to confront and move forward on complex, value-laden problems that defy a ‘right’ answer or ‘perfect’ solution” (Chait et al., 2005, p. 134).  Additionally, nonprofit executives must be committed to investing time to aid in board development efforts.  Herman and Heimovics (1990) suggested a correlation between the time an executive spends with board members individually and as a governing body, and the board’s overall effectiveness. Leadership, in this sense, becomes the responsibility of the collective, relationally expanding the process beyond the central figure of the executive director (Herman & Heimovics, 1990).

This brief review of insights from the academic literature addressing the nonprofit organization executive-board relationship suggests the usefulness of continued study of these questions and especially of more thoroughgoing board development initiatives.  As Heimovics et. al. (1993) have suggested, a “with and through” approach to board development requires the cultivation of trust and empowerment that has the power to reform board governance and oversight, resolve questions of accountability, and enhance mission-attainment throughout the sector. Overall, this brief survey of executive-board governance dynamics raises the question of under what conditions nonprofit board and executive leaders will finally widely embrace a view of this relationship as a form of shared leadership. That leadership, however useful or appropriate, is nonetheless itself characterized by several persisting tensions that must be successfully addressed if nonprofits are to be effective.
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References

BoardSource. (2010). The handbook of nonprofit governance. San Francisco, CA: Jossey-Bass.

Bridgeland, J. M., McNaught, M., Reed, B., & Dunkelman, M. (2009). The Quiet Crisis: The Impact of the Economic Downturn on the Nonprofit Sector. Civic Enterprises.

Brown, W. A. (2005). Exploring the association between board and organizational performance in nonprofit organizations. Nonprofit Management and Leadership, 15(3), 317-339.

Carroll, D. A., & Stater, K. J. (2008). Revenue diversification in nonprofit organizations:  Does it lead to financial stability? Journal of Public Administration Research and Theory, 19, 947–966.

Chait, R. P., Ryan, W. P., & Taylor, B. E. (2005). Governance as leadership:  Reframing the work of nonprofit boards. Wiley & Sons, Inc.

Ebrahim, A. (2005). Accountability myopia: Losing sight of organizational learning. Nonprofit and voluntary sector quarterly, 34(1), 56-87.

Golensky, M. (1993). The board‐executive relationship in nonprofit organizations: Partnership or power struggle? Nonprofit Management and Leadership, 4(2), 177-191.

Heimovics, R. D., Herman, R. D., & Coughlin, C. L. J. (1993). Executive leadership and resource dependence in nonprofit organizations: A frame analysis. Public Administration Review, 419-427.

Herman, R. D., & Heimovics, R. D. (1990). The effective nonprofit executive: Leader of the board. Nonprofit Management and Leadership, 1(2), 167-180.

Norman, S. M., Avolio, B. J., & Luthans, F. (2010). The impact of positivity and transparency on trust in leaders and their perceived effectiveness. The Leadership Quarterly, 21(3), 350-364.

Reid, W., & Turbide, J. (2014). Dilemmas in the board-staff dynamics of nonprofit governance In C. Cornforth & W. A. Brown (Eds.), Nonprofit governance: innovative perspectives and approaches. Routledge.

sarah-hanksSarah Hanks is a third year Ph.D. student in Agricultural & Extension Education and is the Graduate Assistant for the Residential Leadership Community. Her academic and research interests include leadership studies, problem solving, and nonprofit management.  Prior to returning to graduate school, Sarah enjoyed eight years as a leader within the YMCA movement, including four years as an executive director. In addition to her academic pursuits, Sarah serves as a member of the Community Voices team, a Court Appointed Special Advocate (CASA) for children in the New River Valley, and an active member of Northstar Church, as well as several professional organizations.

 

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