There is one aspect of governance where non-profit organizations are way ahead of their counterparts in the private sector: in most cases, the board is chaired by someone other than the chief executive. While there is considerable debate on this practice in the private sector, my view is that separating the powers between the CEO and board chair is highly effective in strengthening governance.
Some commentators on nonprofit governance argue also that the chief executive should not be a voting member of the board. Their argument is essentially that full separation between trustees and management strengthens governance.
I was on this side of the argument until a few years ago. At a conference on improving nonprofit governance, arranged by Senator Chuck Grassley, the topic of CEO participation on the board came up. Amidst arguments on both side of the issue, Pat McGuire – President of Trinity University in Washington D.C. – told a story that powerfully demonstrated the value of full board membership. “Last year,” she said, “our board decided that we were going to have to make some deep staff cuts. This was tough news for our campus, and it was far better for me to be able to say that we decided to make these cuts, rather than to say that they decided.”
As full board members, executive directors have only one vote, hardly enough to turn the tables on important decisions. There are times – such as setting their own compensation – when executive directors need to be excused from the discussion and the voting. But having a full voice on the board is much more likely to strengthen both their credibility outside the board room and the deliberations inside the room, than to cause any governance problems or conflicts.
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