Home The Quarterly 2014 Book Review: Nonprofit Governance


Book Review: Nonprofit Governance. Innovative perspectives and approaches. Print E-mail
The Quarterly 2014

There are a number of reasons this book1 is relevant to those involved in leadership and management in health services. We are seeing a huge increase in the involvement of not-for-profit (NFP) organisations in the delivery of public human services. There is growing recognition that complex social problems cannot be tackled by governments alone.  NFPs in cross-sector partnerships are more versatile and effective.  There is an increasing emphasis on development of social capital in response to unrelenting social problems such as homelessness, trans-generational violence and antisocial behaviour. In this context traditional models of corporate governance are being challenged. There is an increasing realisation that a unitary, hierarchical concept of governance centred in the role of the board is much too narrow. Organisational governance is better conceptualised as a wider system that includes the framework of responsibilities, requirements and accountabilities within which an organisation operates including regulatory, audit and reporting requirements and relations with key stakeholders. Other actors in an organisation including managers, members and advisory groups contribute to governance functions.

Chris Cornforth, Professor of Organisational Governance and Management in the Centre for Public Leadership and Social Enterprise at the Open University Business School (UK) and William A Brown, Associate Professor at The Bush School of Government and Public Service at Texas A&M University, have edited this authoritative and extremely well referenced book on non-profit governance and contemporary research in this field. The book is part of the Routledge Contemporary Corporate Governance Series. In a series of chapters by invited experts, the book systematically examines contemporary evidence in relation to a range of governance areas. The book is set out in five parts: The State of the Field; Understanding Board Member Behaviour; Board Processes and Behaviour, Changing Governance Structures and Relationships and Multi-level Governance.

Cornforth discusses the context of NFP evolution in the opening Chapter. From the 1980s a series of government reforms to introduce private sector management practices into the public sector, ‘the new public management’ began to change the relationship between public and NFP sectors. Three reforms were particularly important. The first was disaggregation of parts of the public sector by government through devolving certain powers and creating semi-autonomous organisations, such as executive agencies to deliver public services. The second was the creation of quasi-markets through separating the role of public authorities as ‘purchasers’ of services, from ‘provider’ agencies. This enabled private and NFP providers to compete for contracts. The third was the reliance of government on arm’s-length forms of control through the use of performance management systems, such as top-down target-setting, service level agreements and strengthened regulatory inspection and audit regimes to ensure targets and standards were met. As a result of these changes the boundaries between private, government and NFP sectors have become increasingly blurred. Many NFPs have become direct service providers of what were previously regarded as core public services. New hybrid organisations such as social enterprises now pursue both social and commercial goals. These changes have led researchers to question how independent NFPs are that are heavily dependent on government contracts. The desire of many NFPs to develop new sources of income has led to an increasing number of non-profit organisations developing more complex, multi-level governance arrangements with the establishment of commercial subsidiaries.

Several chapters examine board roles, processes and behaviours with good summaries of what has been learnt from research. Theory and research are elaborated in relation to board group dynamics and effectiveness of board member behaviours. The cognitive limitations of board members’ decision making (bounded rationality, satisficing, and selective attention) and Weick’s theory of ‘sensemaking’ are discussed. The phasic nature of board ‘lifecycles’ may define the context for board member behaviour.  Board - management relations may have significantly different requirements during a crisis compared with a period of “mission-embedded managerial hegemony “. Models of community engagement governance, ‘nested’ governance and governance networks are discussed with examples in the later chapters.

This book is beautifully edited so that each chapter, though by a different author(s) sets out propositions or theory, maps the evidence in support and summarises the take-home learnings or practical implications. It is highly recommended.

Dr Nick O’Connor

1 Cornforth C Brown W A (2014). Nonprofit Governance. Innovative perspectives and approaches. London, New York, Routledge.

The Royal Australasian College of Medical Administrators
Nick O’Connor, , p704
www.racma.edu.au /index.php?option=com_content&view=article&id=704&Itemid=407