Abstract
This article examines some of the main limitations of research on the governance of nonprofit organizations. It argues that there are limitations in both the way governance has been conceptualized and the ways in which it has been researched. It suggests that research has focused too narrowly on the boards of unitary organizations, and ignored both the wider governance system and the more complex multilevel and multifaceted governance structures that many organizations have evolved. It also argues that the dominant research designs employed have been cross-sectional and positivist in orientation. As a result, too little attention has been paid to board processes and change and how they are influenced by contextual and historical factors. Based on this analysis, some new directions for nonprofit governance research are briefly mapped out.
Introduction
In many countries, the nonprofit or third sector has grown rapidly in size and significance in recent decades. This growth has been stimulated in part by the contracting out of public services and the desire of governments to see voluntary and nonprofit organizations play a greater role in public service delivery. The increasing significance of the sector and its growing reliance on public funds has also attracted increased scrutiny. In particular, paralleling developments in other sectors, the spotlight has focused on governance arrangements and whether they are adequate to ensure that nonprofit organizations are effective, responsible, and accountable for their actions.
It is not surprising therefore that the governance of nonprofit organizations has become an increasingly important (and popular) topic in third-sector research. At an organizational level, an organization’s governing body or board has the legal responsibility to ensure that governance functions are carried out. Perhaps, as a result, the main focus of nonprofit governance research has focused on boards. In a review of the North American literature on nonprofit governance in the areas of human services and health, which has tended to dominate the field, Ostrower and Stone (2006) suggest that the main topics for research have been the following: The composition of boards, the relationship between boards and managers or staff, board roles and responsibilities, and board effectiveness and the link with organizational effectiveness. An analysis of articles on nonprofit governance and boards published in the period 2005-2010 in three leading nonprofit journals, (Nonprofit and Voluntary Sector Quarterly [NVSQ], Nonprofit Management and Leadership [NML], and Voluntas) suggests that the dominant focus has remained on boards, see Table 1. About 50% of the articles focus on the four main topics identified by Ostrower and Stone, which suggests there has been a broadening of interests with a number of articles being published on governance structures and board characteristics; governance, stakeholders, and accountability; and a variety of other topics. Perhaps, most notably, there is a stream of more theoretical, conceptual, and review articles, and a number of articles that draw on and extend economic theories of corporate governance to nonprofit organizations.
An Analysis of Articles on Boards and Governance in the Three Main Nonprofit Journals From 2005-2010
Although the dominant research tradition focusing on boards has made an important contribution to understanding certain characteristics of boards and their behavior, the article argues it also has important limitations. The purpose of this article is to examine these limitations and to begin to sketch out some new directions for research. In particular, the article argues that the focus on boards has been unduly narrow (see also Renz, 2006 and Ostrower & Stone, 2007) and has not adequately kept up with the changing context in which many nonprofit organizations operate or the complexity of governance arrangements that are common in the sector.
The article examines three interrelated criticisms of third-sector governance research. First, it argues that implicitly equating governance with what boards do has lead to an overly narrow conceptualization of nonprofit governance that largely ignores the influence of the wider governance system, including regulators, audit and inspection bodies, and the role that internal actors such as managers, members, and advisory groups play in helping to carry out governance functions. Second, it argues that most research has focused on the boards of unitary organizations and has neglected the governance of organizations that have more complex governance structures. Third, there are important limitations in the dominant methodologies and research designs used to study nonprofit governance. In particular, much research has used cross-sectional research designs and tended to be positivist in orientation looking for general principles or relationships with respect to boards. As a result, it has paid insufficient attention to governance processes, the heterogeneous nature of the third sector and how governance structures and practices change over time and are influenced by historical and contextual factors.
The article is divided into a five sections. The next section examines briefly the changing context for nonprofit governance in the United Kingdom to help locate much of the supporting evidence used in the article. The following three sections examine in more depth the limitations of current research discussed above. Finally, in the concluding section, the article sets out some new directions for third-sector governance research that can help overcome these limitations.
The Changing Context
In recent decades, the delivery of public services in the United Kingdom (and many Western countries) has changed dramatically, which has had important consequences for organizations in the third sector. During the 1980s and 1990s, a series of government reforms, under what became known in the academic literature as New Public Management (NPM; Hood, 1991), began to change the relationship between the public and nonprofit sectors. Three interrelated reforms were particularly important in underlying these changes. First, was the disaggregation of parts of the public sector by government through devolving certain powers and creating quasi-autonomous organizations to deliver public services, for example, to schools and hospital trusts, or in some cases, completely “handing over” services to new third-sector organizations, such as housing associations, that took over public housing stock (Mullins, 2006a) or leisure trusts, that took over recreation services (Spear, Cornforth, & Aiken, 2007). The second was the creation of quasi markets through separating the role of public authorities as “purchasers” of services, who have the overall responsibility for meeting public needs, planning provision, and purchasing services, from the “providers” of services, who are responsible for delivering the service. This enabled a degree of competition by getting private and third-sector providers to compete for public service contracts. Third was a growing reliance by government on arms lengths 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 are met.
As a result of these changes, the boundaries between the public, private, and third sectors have become increasingly blurred. New hybrid organizations, such as social enterprises, that pursue both social and commercial goals have emerged (Billis, 2010) and many voluntary and nonprofit organizations have moved from providing services that supplemented public provision to being direct providers of what were previously regarded as core public services. At the same time, there has been a shift in much government funding of nonprofit organizations from grants to contracts, accompanied by increased performance monitoring and inspection. In some areas, this has also been accompanied by tighter regulation. This has led some commentators to question how independent many voluntary and nonprofit organizations are that are heavily dependent on government contracts (Carmel & Harlock, 2008; Harris, 2001). The move from government grants to contracts and a desire by many voluntary and nonprofit organizations to develop new sources of income through commercial activities lead to a large growth in earned income over the last decade to 2010 (Reichart, Kane, Pratten, & Wilding, 2008; Wilding, Clark, Griffith, Jochum, & Wainwright, 2006).
One consequence of the NPM reforms was an increasing fragmentation of public services. In the United Kingdom, this lead to a growing recognition by government that there was a need for “joined up” governmental action, to be achieved in part through the development of partnerships with organizations in both the private and third sectors (Newman, 2001; Osborne, 2010), which was conceptualized by some academics as a move to “relational governance” (Phillips & Smith, 2011). As a consequence, many voluntary and nonprofit organizations have been increasingly involved in interorganizational collaborations with public bodies at both local and national levels. These have taken a wide variety of forms from informal networks to formal partnerships with agreed terms of reference and structures (Huxham & Vangen, 2000). Indeed, Renz (2006) has suggested many social issues can now only be adequately tackled at these higher levels and so some governance issues can no longer only be addressed solely within organizations.
The election of a new coalition government in the United Kingdom in 2010 with its “Big Society” agenda (Alcock, 2010) has advocated an even bigger role for third-sector organizations in providing public services in England in the future. However, at least in the short term, severe cuts in public spending are leading to a contraction in the size of the sector.
As shall be discussed in the following sections, these changes have important implications for the governance of nonprofit organizations.
Reconceptualizing Governance: Changing Focus From Boards to the Governance System
As Ostrower and Stone (2006) note the term governance is seldom explicitly defined in the literature on nonprofit or third-sector governance. However, the predominant focus is very clearly at the organizational level and on boards and their behavior. This literature has largely ignored the fact that governance has become an important concept in a variety of different disciplinary and practice arenas including management, economics, public administration, social policy, and politics (e.g., Hodges, 2005; Keasey, Thompson, & Wright, 1997; Kooiman, 1999; Osborne, 2010; Rhodes, 1996).
The word governance has its roots in a Latin word meaning to steer or give direction. However, as Kooiman (1999) notes in a useful review article, the term is used in a number of different ways both within and between different disciplines, which can lead to confusion. He suggests one useful way of distinguishing between different usages is in terms of levels of analysis. The focus of this article is primarily on the organizational level and how organizations are governed. The term corporate or organizational governance is often used to refer to governance at this level. As Hodges et al. (1996, p. 7) note, there is no one agreed definition of corporate governance, but there is some degree of consensus that it concerns the direction and control of the enterprise and ensuring reasonable expectations of external accountability. The influential Cadbury report on corporate governance in the private sector in the United Kingdom defined it as “the system by which companies are directed and controlled” (Cadbury, 1992, p. 15) For the purpose of this article, organizational governance is defined as the “systems and processes concerned with ensuring the overall direction, control and accountability of an organization” (Cornforth, 2004).
It is important to distinguish organizational governance from public or political governance, at a higher level of analysis, where it is often used to refer to new patterns of government and governing (Hodges, 2005; Osborne, 2010). In particular, the shift away from a unitary, hierarchical state to a more fragmented and arms-length system of government where a range of nongovernmental bodies participate in the delivery of public services and policy formulation (Rhodes, 1994). Of course, as was discussed earlier, these new, more network-like patterns of political governance and public service delivery are an important part of the context in which many nonprofit organizations operate. This is reflected in the contracting out of public services to nonprofits and their increasing involvement in “partnership” arrangements with public and other bodies. (The implications of this for organizational governance will be discussed in more detail in the next section.)
The body with the main responsibility in an organization for carrying out governance functions is the organization’s board or governing body. However, the corporate or organizational governance system is wider than this and includes the framework of responsibilities, requirements, and accountabilities within which organizations operate, including regulatory, audit and reporting requirements, and relations with key stakeholders. It also includes other actors within organizations, such as managers, members, and advisory groups that may contribute to carrying out governance functions. As Demb and Neubauer (1992, p. 16) observed in their research on corporate governance in the private sector:
. . . to equate corporate governance with the role of the board is to miss the point. It is much too narrow.
A broader conceptualization of nonprofit governance opens up new questions for research concerning the relationships between different parts of the governance system, such as how regulation, audit, inspection, and funding regimes can influence governance structures and practices at the organizational level, or what contribution other internal actors such as managers, staff, and members make to carrying out governance functions?
An example from the social housing sector in the United Kingdom illustrates the important influence that changes in the regulatory and funding environment can have on nonprofit organizations. Until 2010, housing associations in England were regulated by the Housing Corporation (HC), a specialist regulator, which also acted as a public funder to subsidize new social housing. The regulatory and inspection regimes for housing associations in England are much stronger than those faced by many other nonprofit organizations in different fields of activity and the HC often shaped a good deal of the agenda of the boards of housing associations in terms of strategy, monitoring, and reporting requirements. For example, a decision by the HC in 2004 to channel money for developing new social housing through a limited number of housing associations, called development partners, was influential in encouraging many housing associations to enter into collaborative agreements, group structures, or merge completely with larger associations (Mullins, 2006b; Mullins & Pawson, 2010). Following the Cave (2007) review of social housing regulation, there have been a series of regulatory changes by both the New Labour and subsequent coalition governments which have aimed to give more responsibility and power back to boards and to further empower tenants (Victory & Malpass, 2011). Although tenant involvement on the boards of housing associations is well established, these changes are encouraging housing associations to develop new forms of tenant involvement, such as resident scrutiny panels which can call decisions of the housing association in for scrutiny or devolving some decision-making powers to areas or neighborhoods, where tenants can be more involved.
As the example above illustrates, it is also important to remember that regulatory requirements on nonprofit organizations may vary depending on the type of organization they are and the legal form they take. Regulatory requirements may also vary between different jurisdictions. This opens up the scope for comparative research, examining the impact of different regulatory regimes on the behavior of organizations and their boards. Interestingly, comparative studies of corporate governance systems in different countries are an important part of the literature on corporate governance in the private sector (e.g., Charkham, 1994; Clarke, 2007; Hopt, Kanda, Roe, Wymeersch, & Prigge, 1998), but have been largely neglected in nonprofit governance research, although a recent book contrasts various studies on the regulation of nonprofit organizations in different countries (Phillips & Smith, 2011).
As noted above, this broader conceptualization of governance also needs to recognize that other actors within organizations may contribute to carrying out governance functions. It has been recognized for sometime that the role of boards and management in nonprofit organizations are interdependent (e.g., Harris, 1993, 1999; Middleton, 1987). Both boards and staff contribute to carrying out governance functions. As Chait, Ryan, and Taylor (2005, p. 5) note, governance is too complex for a simple division of labor between boards and managers to be tenable. For example, although it may be the responsibility of boards to decide strategic direction of the organization or make major financial decisions, it is usually staff that have the time, knowledge, and information to work up different strategic options and proposals for the board to consider (Cornforth & Edwards, 1999). So at the organizational level, governance functions are often carried out through the interactions of boards with staff. As Harris (1999, p. 105) notes, the relationship between a board and staff is “negotiated and renegotiated as circumstances and personalities change.” Yet, although there has been research on the relationship between boards and management and in particular, the relative power of both parties, there has been surprising little research on how boards and management work together to “co-produce” governance functions, and how the relationship and responsibilities between them are negotiated and renegotiated over time (for an exception, see, Harris, 1993).
One corollary of the analysis above is that it is not just boards and managers that contribute to governance functions but a range of different actors. Many organizations are required to comply with regulatory requirements for auditing and external reporting, and both external and internal audit procedures may be important in assisting boards to carry out their monitoring function and ensure that resources are being used appropriately (Morgan, 2010). However, unlike research on corporate governance in the private sector, surprisingly little research has been devoted to the influence of audit and reporting requirements on nonprofit organizations. It is also quite common for nonprofit organizations to establish consultative bodies such as member, user, or advisory groups that feed into governance decisions. Saidel (1998) argued that the concept of governance needed to be expanded to include the contribution of such groups, but so far, this challenge has hardly been addressed.
In summary, a broader conceptualization of governance needs to recognize that both internal and external actors beyond the board itself contribute to the carrying out of governance functions. The next section argues that governance not only involves multiple actors but may also take place at multiple levels, not just the organizational level.
Multilevel Governance: Looking Beyond the Boards of Unitary Organizations
Not only has research on nonprofit governance focused primarily on boards, but also it has focused dominantly on the boards of unitary organizations, that is, organizations that have a single governing body or board. In practice, many nonprofits have more complex governance structures with boards operating at different levels, such as federations (Brown, Batliwala, Ebrahim, & Honan, 2007; Taylor & Lansley, 2000; Widmer & Houchin, 1999; Young, 1989) or organizations that have subsidiaries with their own boards (Cornforth & Spear, 2010). There are a number of reasons why these more complex governance structures have evolved over time and may take a variety of forms.
In the United Kingdom, if a charity wants to engage in significant trading that does not directly further its charitable objects, it is required by law to establish a trading subsidiary (illustrating again, the importance of regulation in shaping governance practices at the organizational level). Charities may also decide to set up trading subsidiaries as a way of protecting their charitable assets from commercial risks and for tax reasons (Co-operatives UK, 2005; Sladden, 2008). The growth in public sector contracting and other forms of trading to raise funds has resulted in increasing numbers of charities in the United Kingdom establishing trading subsidiaries, with their own separate boards, to undertake commercial activities.
Interestingly, a number of social enterprises that were established to trade in the market have “moved in the opposite direction” by establishing charitable subsidiaries, where they have social goals that qualify as being charitable (SEC, 2007; Spear et al., 2007). This has the advantage of helping social enterprises to protect their social mission and the added benefit that their charitable activities are able to attract tax relief and grants (SEC, 2007).
Multilevel governance structures are also found among many nonprofits that operate at both national and local levels. For example, a number of large UK charities, including Mind, Citizens Advice, Age UK, and Samaritans, have federal structures, where independent local charities are affiliated to and supported by a national charity that provides a range of services. These organizations also often have some form of democratic member involvement. For example, the mental health charity Mencap has a complex democratic structure where local groups are able to nominate two people to district committees, two members from each district are elected to regional and country committees, and all regional and country representative and trustees form a national assembly (NPC, 2009).
Interestingly, the governance structures of national associations and federations were the subject of various research studies at the end of 1990s and the beginning of the 2000 in the United States (Selsky, 1998; Widmer & Houchin, 1999; Young, 1989, 2001; Young, Bania, & Bailey, 1996, Young, Koenig, Najam, & Fisher, 1999), but with a few exceptions (e.g., Brown et al., 2007; Schnurbein, 2009), interest in the topic appears to have declined since then. A number of different studies have attempted to classify the different governance structures of national associations. Young et al. (1996) distinguished three main types: corporate organizations that are a single legal entity with one governing body, but in which a national or central body establishes local units or branches; trade associations which are membership organizations created by and for members that are independently constituted legal entities; and in between these two types, federations, which have a degree of central control over their members although usually within a governance structure influenced to varying degrees by their members. Taylor and Lansley (2000) extend this framework by introducing a fourth type the franchise, where the franchise model is distinguished from both the federation and the hierarchical corporate model because although local bodies are legally independent they have to agree to common standards developed by the centre to ensure a standardized service. Brown et al. (2007) have also developed a similar typology of governance structures that have evolved among international advocacy nongovernmental organizations (IANGOs) to better coordinate their activities and campaign at an international level.
A key challenge for these organizations is how responsibilities are divided between governing bodies at different levels and the balance of power between them. Widmer and Houchin (1999) concluded that federal organizations often experience a tension between the need for greater efficiency and centralization and the need for representation to stand up for the interests of local member organizations or affiliates. A similar tension between efficiency and representativeness or unity and diversity has been observed in interorganizational partnerships and collaborations (Provan & Kennis, 2007; Saz-Carranza & Ospina, 2010). Widmer and Houchin (1999, p. 34) suggest that one consequence of this is that federal organizations “spent considerable time, energy and other resources discussing and modifying their governance structures.” Recognizing this tension, other studies have examined some of the drivers toward greater centralization or decentralization in multisite nonprofit organizations (Barman & Chaves, 2001; Grosman & Rangan, 2001). This highlights another point that will be returned to later that governance structures and processes are not static but change and evolve over time as circumstances change.
Although researchers have made some progress in identifying and describing different governance structures and the drivers of processes of centralization or decentralization within federal organizations and national associations, this has been a relatively neglected area of research and many important research questions remain, such as the following: how do these multilevel governance structures evolve and change over time, how are responsibilities divided between governance actors at different levels, how do governance actors at different levels relate to each other, and what is the balance of power between them, and how do decision processes take place across different levels over time?
At the interorganizational level, the participation of nonprofit organizations in wider interorganizational collaborations through being part of a partnership, coalition, or strategic alliance may mean that certain aspects of an organization’s governance have moved to a higher organizational level. The implications of this have only recently begun to be discussed by nonprofit governance researchers. Renz (2006) argues that many of society’s most pressing problems and issues cannot be dealt with effectively by single organizations; hence, collaboration will be essential for many nonprofit organizations, which means that governance can’t just take place at the organizational level. Ostrower and Stone (2007) make a similar point. Noting the increased blurring of sector boundaries, they examine how the more extensive literature on public governance and partnership working can be used to extend and strengthen nonprofit governance research. In particular, they identify a set of new research questions concerning the relationships between nonprofit organizations and the wider civic and public sphere, and between organizational governance and higher level public governance. It is increasingly important therefore to examine the governance and accountability of interorganizational collaborations in which third-sector organizations are involved and the implications these collaborations have for governance of nonprofit organizations at the organizational level (Provan & Kennis, 2007; Stone, Crosby, & Bryson, 2010).
What the discussion above illustrates is that in many organizations, governance processes take place at multiple levels, both below and above the level of the organization’s main board, but relatively little is known about how these multilevel governance structures operate, develop, and change over time.
Limitations in Research Methodologies Used to Study Governance
Apart from limitations in how governance has been conceptualized, narrowly equating it with what boards do, there have also been limitations arising from the dominant research designs and methodologies employed to conduct research.
The majority of this research has been what Van de Ven (2007) calls variance studies looking at the antecedents or consequences of board characteristics and behavior. Much of this research has been carried out using cross-sectional research designs with a broadly positivist epistemology (Murray, 2004, p. 5). With some notable exceptions (e.g., Reid & Turbide, 2011; Wood, 1992), there has been a relative neglect of process studies (Van de Ven, 2007) that have attempted to explain how governance structures and practices have evolved and developed over time. Perhaps surprisingly, there has also not been a great deal of attention to understanding the internal processes and dynamics of nonprofit boards, although there is now some evidence of a growing stream of work in this area applying a range of novel perspectives including strategizing (Morrison & Salipante, 2007; Parker, 2007), learning theory (Beck, 2010), and psychodynamic theory (Reid, 2010).
However, as this article has shown, organizational governance structures and practices do evolve and change over time to meet new demands and circumstances. A charity may set up a trading subsidiary, an advisory body, or members forum; organizations may come together to form some sort of federation or looser alliance; an organization may join a partnership with other public or private bodies. Inevitably by their very nature, cross-sectional research designs are not good at capturing how and why these changes take place.
As Ostrower and Stone (2006) note, the field of governance research in North America lacks panel data on a representative sample of organizations so that the characteristics and behavior of boards can be tracked over time. Similar problems are evident in research in other countries. The problems in securing the long-term funding needed to enable longitudinal panel studies of third-sector governance may mean this often remains an ideal to aspire to rather than a practical reality. 1
Nevertheless, there may be other ways in which a longitudinal element can be built into survey research. Cornforth (2001) and Cornforth and Simpson (2002) were able to replicate aspects of earlier surveys on the governance of charities in the United Kingdom and show how various board characteristics and behaviors had changed over time. In a different approach, Abzug and Simonoff (2004) in an ambitious study were able to assemble historical data sets on trusteeship in five American cities to examine how changing external institutional factors had influenced board composition.
There is also a need for more in-depth process studies that use longitudinal or historical case studies to examine how governance structures and practices change over time. Process studies seek narrative explanations of how change happens in terms of the central actors involved in the change “that make events happen and to which events occur,” and the sequence of events that lead to change (Van de Venn, 2007, p. 154-155).
Another limitation of much of the research that has been conducted on the governance of nonprofit organizations is that it has often focused on quite restricted populations of organizations in a limited geographical area or field of activity. As a result, the degree to which generalizations can be made are limited. Much of the North American research has focused on larger organizations that employ staff in the field of human services (Ostrower & Stone, 2006). National representative sample surveys of nonprofit governance are relatively rare. It wasn’t until 2005 that the Urban Institute carried out the first national representative survey of nonprofit governance in the United States (Ostrower, 2007).
In particular, there has been a shortage of research on the governance of grassroots organizations that employ few or no staff, what Smith (1997) has called “dark matter” of the sector because it goes largely unobserved, which in fact make up the vast majority of nonprofit organizations. Even in the Urban Institute survey mentioned above, the smallest organizations had annual income of at least USD25,000, the threshold for filing annual returns, and so will have missed many grass-roots organizations.
Interestingly, some of the research that has been done does suggest that board characteristics and the challenges they face do vary with organizational size. Cornforth and Simpson (2002) in a survey of charities in England and Wales showed that board size and composition, board structures, formalization, and various board problems varied with size. Rochester (2003), based on case study research in the United Kingdom, suggests that organizations with few or no staff face a number of distinctive challenges in developing and maintaining an effective board. Similarly, Kumar and Nunan (2002) suggest these organizations have distinctive support needs. Ostrower (2008) in a survey of the boards of mid-size nonprofits in the United States identifies a number of distinctive weaknesses and challenges they face.
More generally, there has been insufficient attention in research design to systematically examining the influence of contextual factors on boards, or taking account of contextual differences in developing theory about boards. Despite calls by a number of researchers at different times (e.g., Cornforth, 2003; Kramer, 1985; Ostrower & Stone, 2001, 2006), research explicitly designed to develop and test contingency models has been relatively slow to develop although it recently appears to have gained some momentum (e.g., Bradshaw, 2009; Brown & Guo, 2010; Ostrower & Stone, 2010). Perhaps most significantly, Ostrower and Stone (2010) use a contingency framework that they developed out of a previous review of the literature to reanalyze data from a national survey of the governance of nonprofit organizations in the United States (Ostrower, 2007). Their findings demonstrated the utility of the framework and approach showing how various external and internal contingencies were associated with different board behaviors and accountability practices. As the authors suggest, their framework also has potential value in helping organize findings from empirical research on nonprofit governance and to encourage theoretical endeavors to take account of contextual factors. Indeed, Cornforth (2003) built on an earlier version of their framework to organize and discuss findings from a number of UK empirical studies.
Of course, contingency theories and frameworks have their limitations and have been subject to various criticisms in the organizational literature (e.g., Fincham & Rhodes, 1999, p. 364-367). Assuming a one-way causal relationship between contingencies variables and board characteristics and behavior is a simplification. Organizations may exert influence on their environment. Also, organizational actors such as boards actively construct or enact their environments, through what they selectively pay attention to and how they interpret the information they receive. Moreover, organizations and their boards are not powerless and exercise a degree of choice in how they react to external contingencies.
There is a need therefore for more in-depth, qualitative, case study research to complement quantitative studies of contingency relations, to examine how different actors involved in governance interpret and react to contextual factors. Such research has the potential to identify important new contingencies and develop new theory about the multiple, interacting factors that shape governance structures and processes.
Conclusions
This article has examined three interrelated limitations of research on the governance of nonprofit organizations: that nonprofit governance has been conceptualized too narrowly in terms of an organization’s main board and its behavior; that research has focused predominantly on the simple case of unitary organizations with a single main board, and not adequately addressed the more complex multilevel governance structures of many organizations and that empirical research has been dominated by cross-sectional research designs with a broadly positivist epistemology. Addressing these limitations suggests some important new directions for nonprofit governance research.
A broader conceptualization of nonprofit governance needs to recognize that boards are part of a broader governance system, including regulators, auditors, and other key external stakeholders, such as funders, that can place accountability requirements on an organization and its board. It also must recognize more fully how various internal actors such and managers, staff, members, and other specially constituted bodies like advisory groups may contribute to carrying out governance functions. This opens up a variety of new research questions about how different regulatory and funding regimes influence governance structures and practices within nonprofit organizations and how different actors, such as managers, membership and advisory groups, contribute to carrying out different governance functions and how they manage the relationships and inevitable tensions between them.
The insight that many nonprofit organizations have multilevel governance structures also suggests important new directions for research. Research on the governance of organizations with subsidiary boards and those with federal structures is still relatively undeveloped. In particular, there are important research questions about how responsibilities are divided up between boards at different levels and how relationships and tensions between these boards are negotiated and managed. Increasingly, nonprofit organizations are taking part in collaborations, partnerships, and alliance with other organizations to address important social problems. Research is needed on how these collaborations are themselves governed, and the implications the collaboration has for governance of the organizations involved.
A further limitation of third-sector governance research has been the reliance on positivist, cross-sectional research designs often conducted on a relatively narrow range of organizations. The emphasis in this research has been on seeking broad generalizations. Yet, as Ostrower and Stone (2006) note, boards defy easy generalizations. There is a need, therefore, for longitudinal and comparative research designs that not only focus on board characteristics and behavior but explicitly examine how governance structures and practices change over time and are influenced by external and internal contingencies.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.