AN EXPLORATION OF NONPROFIT BOARD EFFECTIVENESS

Abstract

Drawing from both the for-profit and nonprofit literature on organizational governance through boards of trustees, two studies were completed for this research linking financial performance to three board influences – 1) board member inputs such as resources and knowledge, 2) board structure through policy adherence, and 3) board dynamics such as engagement and cohesiveness. The first study is exploratory and combines publicly available performance data with survey results drawn from presidents and board members of nonprofit Associate’s Colleges; due to a disappointingly small sample size, the results are inconclusive but suggestive, leading to a different, resource-dependence-based approach to board effectiveness in a second study. The second study draws on a data base of nonprofit cultural institutions that includes measures of board members’ contributions of time and money. Results from the second study show relationships between financial self-sufficiency and the financial resources contributed by board members – relationships that likely reflect differences in size and structure and business models of the cultural organizations. The two studies combined suggest that the type and management of resources a board brings to a nonprofit organization relate to the financial performance of the organization. Based on this evidence, suggestions about how to improve an organization’s financial performance and financial self-sufficiency through the selection and practices expected of board members and their ability to contribute to the organization are presented. Further research may include a more qualitative exploration of the impact on nonprofit performance of the efforts, contributions and interpersonal dynamics of board members in nonprofit organizations.