Focusing on instrumental skills as criteria for nonprofit organization (NPO) board membership ignores an obvious (but sometimes forgotten) difference between NPOs and for-profit organizations (FPOs): NPOs are created to fill a need in society not being filled by any other means, not to turn a profit. The need to be filled is articulated through the NPO’s mission, which is essentially a social contract with the community it serves (and from which it receives support). That mission becomes the guide for everything the NPO does. As trustees acting on behalf of the community, an NPO board’s main role is determining whether the activities the NPO undertakes adhere to its mission, known as “protecting the mission.”
There are many perspectives on what constitutes “good” NPO governance. Some point to the Carver model as a template for NPO governance that is widely applicable; others argue that the process and function are much more contextual. Even so, most agree that, given the behavioral expectations faced by NPO board members, strong judgment (informed by the dimensions of leader character) must combine with instrumental skills to underpin all decisions made by the board.
A study published in 2018 suggests that “a deeper understanding of how character affects individual behaviors and subsequent board processes is an important step in understanding how boards add value and contribute to organizational performance.” The study’s authors proposed that leader character was key to helping board members assert independent judgment while contributing to the team aspect of corporate boards in their governance role, which until the recent past had been focused on maximizing shareholder wealth. The study focused on how leader character among corporate board members could drive improved organizational performance, but insights on how leader character applies to governance of NPOs can also be gleaned.
Most people consider an NPO’s mission equally important as the pursuit of profit (some might say more important). Thus, if leader character is important to ensure an FPO board member is doing his or her job, then leader character is central to an NPO board and the ability of each board member to properly fulfill his or her role.
The mission-driven nature of NPOs means their board members’ behavior is held to a different standard than that of FPO directors. The notions of caring for the vulnerable and community service underpin the fiduciary duty and duty of care NPO board members must uphold.
Public trust in NPOs is difficult to earn and easy to lose. Board members play an important role in both, so it is critical that their behavior (and thus their judgment) be beyond reproach.
[For more from the author on this topic, see: “How Leader Character Can Help Nonprofit Boards Protect Organization Missions.”]
