For-Profit and Nonprofit Boards: More Similarities Than Differences?

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    The Corporate Secretaries International Association recently released a report, “Twenty Practical Steps to Better Corporate Governance.” It struck me that almost all of the steps applied to nonprofit Boards as well.

    (The Report refers to “corporate” governance, the phrase commonly used for for-profit Boards, which is a misnomer I believe because Boards are required for nonprofit corporations, too).

    It also struck me how much for-profit and nonprofit Boards could learn from each other, but the continued misperception that they’re totally different continues to hamper that synergy from happening. (I’ve spent 15 years maintaining a massive website, in part, to show the similarities and to help the two types learn from each other, in the Free Management Library.)

    The report suggests that following 20 practices:
    1. Recognize that good corporate governance is about the effectiveness of the governing body — not about
    compliance with codes
    2. Confirm the leadership role of the board chairman
    3. Check that non-executive directors have the necessary skills, experience, and courage
    4. Consider the calibre of the non-executive directors
    5. Review the role and contribution of non-executive directors
    6. Ensure that all directors have a sound understanding of the company
    7. Confirm that the board’s relationship with executive management is sound
    8. Check that directors can access all the information they need
    9. Consider whether the board is responsible for formulating strategy
    10. Recognize that the governance of risk is a board responsibility
    11. Monitor board performance and pursue opportunities for improvement
    12. Review relations with shareholders — particularly institutional investors
    13. Emphasise that the company does not belong to the directors
    14. Ensure that directors’ remuneration packages are justifiable and justified
    15. Review relations between external auditors and the company
    16. Consider relations with the corporate regulators
    17. Develop written board-level policies covering relations between the company and the societies it affects
    18. Review the company’s attitudes to ethical behaviour
    19. Ensure that company secretary’s function is providing value
    20. Consider how corporate secretary’s function might be developed

    The full report can be found at http://www.csiaorg.com/pdf/research_paper.pdf .

    What do you think?

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    Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
    Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.