Combining Representation, Participation, and Expertise for Effective Nonprofit Governance

Abstract

Interest in the effective governance of nonprofit organisations stems from the nature of their mission: to fulfil societal needs and serve the public good. Due to the specificities of the sector, effective governance of nonprofits encompasses community representation on boards and the adoption of participatory mechanisms in strategy planning and activity design. However, the growing pressure to conform to managerialist norms over the past few decades has increased the importance of professional requirements aimed at ensuring that decisions, processes and actions are performed with the highest level of excellence. Adopting a democratic perspective, this paper explores how nonprofit organisations implement representational and participatory mechanisms to achieve effective governance. It highlights critical issues in the fair selection of representative board members and stakeholder engagement processes. Additionally, adopting a “rationality agenda” perspective, it considers whether effective governance also requires board members with the relevant knowledge and experience to address the organisation’s key challenges. To this aim, this study conducts a multiple case analysis of three large Italian foundations of banking origin (FBOs). According to the law, these organisations manage their endowments for the purpose of grant-making in the exclusive interest of their local communities. Community representation on the board is required by law in FBOs, and self-regulation defines mechanisms for stakeholder engagement and professional requirements of board members. To increase the reliability of the findings, data was collected through document analysis and semi-structured interviews with key informants familiar with the organisations’ governance practices. The findings show that FBOs use several representational and participatory mechanisms to develop an in-depth understanding of the communities they serve, the problems they face, and the solutions that can be implemented. Furthermore, great emphasis is placed on the professional knowledge and experience of board members in the foundation’s areas of intervention, ensuring they possess the necessary skills to identify community needs and maximise the organisation’s societal impact.