Governance Propriety for Not-for-Profits

Beyond just conflicts of interest I discussed the management of conflicts of interest in societies and charities in an earlier article.  Apart from conflicts of interest, there may be conflicts of loyalty arising from the other activities or commitments of people in governance, and these also need to be recognised and managed.  Both types of conflict also need to be considered in the wider context of the legal and moral obligations of those in governance. Duties of those governing a not-for-profit Those “… duties have often been broadly described as the duty of care, the duty of loyalty, and the duty of obedience” (Joining a Nonprofit Board – What You Need to Know, Epstein and McFarlan, 2011, and other quotations in this article come from this source).  Three core responsibilities in realising a not-for-profit’s purposes are to develop and oversee delivery of the mission, being accountable for mission performance and financial sustainability, and evaluating the performance of senior staff. While realising the purposes and mission are the key drivers for both for-profits and not-for-profits, there are key differences: For-profit entity: Realising the purposes (mission) produces cash Success in realising the purposes (mission) is measured in cash earned,   and retaining and growing the customer base Without cash the entity fails Not-for-profit entity: Realising the purposes (mission) consumes cash Success in realising the purposes (mission) is measured in the services   provided and the numbers of “clients” served Without cash the entity fails A not-for-profit’s purposes are primary and must be at the forefront of all governance thinking and actions, but financial skills are also critical in providing and managing resources to realise the...