Innovation and Inertia: Assessing the Prospects for Changing Nonprofit Governance Practices

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It’s customary to introduce a set of cases ever so briefly, insisting that they really speak for themselves. But the cases we present here don’t speak for themselves. They’re like archeological finds. Without context, they’re more baffling than illuminating. Were they meant as examples of best practice in governance—or worst? Innovations or mutations? Since our goal in presenting these cases is to provoke a constructive conversation about the current practice of nonprofit governance, presenting the cases as artifacts won’t do. So we offer in this piece some context about why we went hunting for these cases, what we didn’t find, what we did find, and questions provoked by the cases that might inform our thinking about—and the practice of—governance.

The cases were developed as part of the Boardsource Governance Futures project — in collaboration with the Hauser Center for Nonprofit Organizations at Harvard University1—to discover, invent or inspire alternative approaches to governance. The aim was not to critique and retire prevalent approaches to board design and practice, but to respond to the growing sentiment that best practice is not—always and everywhere—good enough.

For many practitioners, the familiar board prescriptions and practices—although they may work well for lots of nonprofits—were not producing the type of engaged, thoughtful governance that would add value to their organizations while holding them accountable. Perhaps even more worrying, a good many seemed to be losing interest in improving governance. They seemed resigned to the unsatisfying but familiar realities of business-as-usual, rubber-stamp boards, fractious deliberations, and governance-by-back-channel deal-making.

The project aimed to offer some alternative realities. On one track, we set out to reframe both the problems and potential of nonprofit boards, to invent an alternative reality (See NPQ, “Problem Boards or Board Problem?,” Summer 2003). On a second track, we set out to discover alternative realities. Instead of doing what we often do as students of nonprofit boards (focus on what boards have in common so we can offer them generic advice), we decided to focus on where boards differed from each other. Hence these case studies. We hope they will offer nonprofit leaders a wider range of options for governance structures, and assist in thoughtful decision-making about how to best organize the work of the board.

Although we didn’t imagine we would unearth a governance Atlantis with an abundance of unimagined governing forms and practices, we thought it plausible that we would find a good number of interesting variations—in terms of how we defined standard governance. Our early queries at conferences, in casual conversations, and on Web sites and list-serves made us hopeful. Dozens of people had leads—about large-scale collectives, de-minimus boards of three trustees who governed by phone, self-organizing staff-board hybrids, and strong assurance that religious, radical or cultural-minority groups were governing with different forms and practices. In most cases, however, these amounted to short-lived experiments that tinkered around the governance edges, or potentially interesting examples that were impossible to verify. There were simply very few alternatives to document and, of those we explored carefully, even fewer that varied radically from conventional governance.

What does this mean? If the nonprofit sector, as we often tell each other, is a space for innovation and self-expression, if the law makes very few demands on the specifics of our governing arrangements, if our society is a diverse one, and if so many practitioners are frustrated with their boards and governance, then why are there so few attempts to change anything? We offer a few tentative hypotheses about the unwritten rules and unnoted forces that might be inhibiting innovation in our governance forms and practices:

If it ain’t broken, don’t fix it. Surely this is true for many nonprofits that are satisfied with their governance.
If it is broken, don’t fix it. Both boards and executives might find their governing situation dissatisfying, even dysfunctional, but also get something out of it. Disengaged board members, for example, give executive directors plenty of latitude. And tacit approval of board-member disengagement spares board members the burden of hands-on governing. In a way, what’s broken works.

One size does fit all. Perhaps boards provide more legitimacy and symbolic value than governing value. And if they’re more like lapel pins that signal this legitimacy than high-tech athletic wear designed to enable performance, it’s not surprising that a variety of organizations wear the same governance system.

Necessity is the mother of invention. Even nonprofits with low-performing boards face relatively little pressure to experiment with more effective governance approaches. Though hardly perfect, the sector has not seen the wide-scale governance failures that have led to the reform proposals for corporate governance. As for positive motivators, there is no definitive evidence that governance begets improved organizational performance (in fact, a number of thriving institutions seem to have relatively weak boards devoted mostly to fundraising).

When in doubt, imitate. As a complex and subtle activity, governing defies simple, definitive pronouncements about what works and what doesn’t. An insight from sociology is useful here: when people are very uncertain about how to go about a task, they will tend to imitate what others are doing. As a result of this process of mimetic isomorphism, organizations or organizational forms can come to resemble each other.2

When in need, imitate. Organizations that are struggling to gain funding, volunteers or other resources often organize themselves to satisfy the expectations of their potential supporters. Sometimes their supporters even insist on certain forms or practice. This process of coercive isomorphism again results in organizations looking alike. And it might explain why organizations founded by ethnic or political minorities—the ones we might expect to rely on alternative traditions or ideologies to guide their governance—end up looking like everyone else. If they don’t, they can’t get mainstream support.

Any of these forces, and doubtless others, could inhibit innovation in governance significantly. This suggests that, in addition to considering how other organizations have changed their governing forms or practices, boards that are reassessing their approach to governance might also consider what forces complicate the prospects for governance innovation.

Most of the cases are stories of how organizations respond to their dissatisfaction with their governance situations. We can think of a wide continuum of responses. At one end is the expedient response, where an organization recognizes problems, but chooses not to make any changes. Making changes might confuse funders, get board members too involved, or create a high-maintenance board. So it settles for less. At the other end is the utopian response, where organizations radically change their governing approaches with ambitious reforms. Like utopian schemes for communal child-rearing, they may construct approaches that are technically feasible, but run so profoundly counter to tradition and custom that they have little appeal or staying power.

Most of our cases are clustered in the middle of the continuum. They have altered governance in ways that are nonconventional but fairly modest. They usually change a single dimension, not the entire governing system. In fact, most are more notable for their alternative stance on governing than for their alternative techniques. Whatever the merits of their various alternative practices, their inquisitive approach to governance may be worth emulating. Three features of this alternative stance are striking:

They accept ambiguity. They do not consider the roles and responsibilities of the board to be a fixed set of givens. Indeed, for them, part of the board’s job is to decide what the board’s job is.

They put governing first. Boards have long been valued for a number of contributions beyond governing, such as funding and fundraising, pro-bono technical assistance, political advocacy or community outreach. In several of the cases, nonprofits buck this trend. They move these ancillary and support functions to the margins to make more room for what they consider to be core governing functions.

They’re ideological, in the classic sense. They design their governing approaches to reflect, express and reinforce their values and beliefs. In a day when many nonprofits are pressed, sometimes uncomfortably, to adopt standardized, managerial approaches to their organizations, perhaps we should appreciate the design of governance systems as a matter of value expression and accountability.

One wonders what the result would be if more boards, especially those struggling to improve their performance, adopted this stance. Perhaps in this mid-range zone of governance innovation, organizations can rearrange the vocabulary of familiar governance systems, not only to practice governance differently, but to say something unique—about their missions, values and aspirations.

Beyond stimulating reflections about this stance, the cases raise a series of larger questions about the prospects for changing governance systems. For starters, we wonder:

    • Where does governance innovation come from? How else—beyond an impending crisis—does an organization become motivated to experiment with new governance possibilities?
    • Is accountability compromised? Several of the alternatives seem to raise red flags about accountability—as in boards that give executives a bigger role. Are they worth the risk?
    • Are the alternatives enduring practices or developmental phases? Each of the alternative practices arose in response to a particular challenge, if not crisis. Will they endure? If they don’t, is the organization likely to develop new alternative approaches, or will it revert to standard practice?
    • How can we create the same things for governance that management and organizational development have recently enjoyed in the nonprofit sector, namely curiosity and experimentation with new approaches? Can we give more thoughtful attention to the effect that change-averse board cultures might have on discouraging curiosity and experimentation?
    • What have we missed?

In the end, these cases—and others that will emerge from the project—raise more questions than they answer about nonprofit boards. And for a field where prescriptive best practices, practitioner concerns about board effectiveness, and public scrutiny on governance are all on the increase, revisiting the risks and benefits of innovation and inertia in the boardroom is surely a good thing.

1. BoardSource Governance Futures is a research project undertaken by BoardSource, in collaboration with the Hauser Center for Nonprofit Organizations at Harvard University. It is funded by the David and Lucile Packard Foundation, Atlantic Philanthropies, the Surdna Foundation, and the W.K. Kellogg Foundation. For additional information visit the BoardSource.

2. DiMaggio, Paul J. and Walter W. Powell. 1991. “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organization Fields.” The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.

William P. Ryan is a research fellow at the Hauser Center for Nonprofit Organizations at Harvard University as well as a consultant to foundations and nonprofit organizations. He is an investigator for the Governance Futures Project. Judith R. Saidel is executive director of the Center for Women in Government & Civil Society, and associate professor of public administration and policy at the Rockefeller College of Public Affairs and Policy, University at Albany, State University of New York. She is principal investigator of the Discovery Component of the Governance Futures Project, and has served as an officer and trustee on a number of professional and community boards of directors. Marla J. Bobowick is vice president of products and services for BoardSource, the premier resource for practical information, tools and best practices, training, and leadership development for board members of nonprofit organizations worldwide.