Governance is an immovable part of any organization, providing checks and balances to ensure the executive director is within set limits for his/her vision, operational plans, financial expenditures, and more. To explain why Nonprofit (NPO) Governance is fundamentally important to the existence of the organization, first we must understand governance vs. nonprofit governance.

Governance is the way the rules, norms, and actions are structured, sustained, regulated, and held accountable. The degree of formality depends on the internal rules of a given organization and, externally, with its business partners.

Basic governance for any entity or organization means that the norms that have been established are regulated and the governing body holds the organization accountable for staying true to those norms. Nonprofit governance is similar, but the ideology is that the governance is always positively impacting organizational progress and program impact.

Nonprofit governance has a dual focus: achieving the organization’s social mission and the ensuring the organization is viable. Both responsibilities relate to fiduciary responsibility that a board of trustees (i.e. also called directors, or Board, or Management Committee) has with respect to the exercise of authority over the explicit actions the organization takes. Public trust and accountability is an essential aspect of organizational viability, so it achieves the social mission in a way that is respected by those whom the organization serves and the society in which it is located.

In other words, governance in nonprofits is not only responsible for the traditional sense of governance (where norms and rules are regulated), but for the public side of it. This means governing bodies and boards will have to ensure the organization is achieving its mission for outreach and being financially responsible first and foremost to be positive the organization is capable of working successfully.

The proper board guarantees the mission and values are being followed for outreach so that the clients touched by the services and programs are effective promotion of the organization. Once you have that proven impact, funding is easier to receive, with increases in in-kind donations and by fiscal agents and stakeholders.

This is interesting, considering most nonprofit and community organizations fail due to lack of client impact, community recognition, and financial management. One could argue that most nonprofits don’t have the proper governance to survive. Specific subcategories that fall under governance are:

• Vision, Mission and Values

• Legal Status

• Governing Board

• Leadership and Succession Plan

For technical assistance in evaluating your organization’s capacity for governance and outreach, contact Social Solutions Consulting! We can help provide evaluations and comprehensive feedback on how to improve core competencies in governance and your organization overall.

For more resources on governance: Check out this article on governance from Nonprofit Quarterly, “What is Governance?”