Governance in Non Profit Organizations Certificate Course in NGO Management IMS – University of Peshawar Working of An Organization Governance Management Operations What is Governance The English word “governance” comes from the Latin word meaning “to steer, guide, or direct.” The term generally refers to the way in which power is assumed, conveyed, and exercised within a society or an organization. It consists of either a separate process or part of management or leadership processes. How to Define Governance The World Bank defines governance as the exercise of political authority and the use of institutional resources to manage society's (or an organization’s) problems and affairs. The Worldwide Governance Indicators project of the World Bank defines governance as The traditions and institutions by which authority in a country (or an organization) is exercised. An alternate definition sees governance as the use of institutions, structures of authority and even collaboration to allocate resources and coordinate or control activity in society the economy or an organization. Peace Corps Defines Governance within an NGO as: System of oversight, exercise of authority or control within an NGO. Governance is the way in which an organization distributes power, rights and accountability. Types of Governance Global Governance: “Global governance or world governance is the political interaction of transnational actors aimed at solving problems that affect more than one state or region when there is no power of enforcing compliance.” Participatory Governance: “Participatory Governance focuses on deepening democratic engagement through the participation of citizens in the processes of governance with the state.” IT Governance: “IT Governance primarily deals with connections between business focus and IT management. The goal of clear governance is to assure the investment in IT generate business value and mitigate the risks that are associated with IT projects.” Non Profit Governance: “Non-profit governance focuses primarily on the fiduciary responsibility that a board of trustees has with respect to the exercise of authority over the explicit public trust that is understood to exist between the mission of an organization and those whom the organization serves.” Islamic Governance: “Islamic Governance is submission to the will of Allah in both private and public life. Submission to the will of Allah is attained by governing according to the Quran and the Sunnah (the actions and sayings of the prophet Muhammed).” Good Governance The Working Group on NGO Governance in Central and Eastern Europe defines good governance as “a transparent decision-making process in which the leadership of a nonprofit organization, in an effective and accountable way, directs resources and exercises power on the basis of shared values.” Tools for increasing the effectiveness of Governance Committees Reports Boards and Governance Models Committees Standing Committees Executive Committee Nominating Committee Finance Committee Ongoing Committee Marketing Committee Program Committee Community Relations Committee Ad Hoc Committee/ Task Force Advisory Committee Reports and Documentation Government Laws and Regulations Memorandum of Association Articles of Association By Laws Audit report CEO’s Report Board Report Annual Report Minutes of the Meetings Governance Models Operational Model: The board manages, governs and performs the work of the organization. Role Responsibility Governance Board Management Board Operation Board Governance Models Collective Model: The board and staff operate as a single team when making decisions about governance and the work of the organization. Board members may work with either or both service operations or management functions. Role Responsibility Governance Board + Staff Management Board + Staff Operation Board + Staff Governance Models Management Model: The board manages operations through functional committees that may or may not have a staff coordinator. Role Responsibility Governance Board Management Committees +/ CEO Operation Staff Governance Models Constituent Representational Model: An approach used by publicly elected officials. Federations or other constituency-elected boards have the primary responsibility of balancing the interests of their constituents with the best interests of the organization. Constituents Board Any Model Governance Models 1. Traditional Model: The board governs and oversees operations through committees established along functional lines (finance, human resources, and programs) but delegates the management functions to the executive director. Role Responsibility Governance Board Management CEO Operation Committees + Staff Governance Models Results-based Model: The executive director is a non-voting member of the board, carries substantial influence over policy making, and is viewed as a full partner with the board. Committees, organized around board responsibilities and lead planning, would guide governance, and monitor and audit performance of the board, executive director and organization. Role Responsibility Governance Board + CEO + Committees Management CEO + Committees Operation Staff Governance Models Policy Governance (Carver) Model: The board governs through policies that establish organizational aims (ends), governance approaches, and management limitations. These policies also should define the relationship of the board with the executive director. The executive director has broad freedom to determine the means that will be used to achieve organizational aims. Role Responsibility Governance Board Management Operation CEO Staff Governance Models Advisory Board Model: A board selected and dominated by the executive director. This board provides prima facie legitimacy to the organization but governs only in a nominal sense. Board members provide advice and may rubber-stamp the executive director's recommendations. CEO Board CEO + Staff Role Responsibility Governance Board Management CEO Operation Staff Governance Models Patron Board: Similar to the Advisory Board model, the board of directors in the Patron Model has even less influence over the organization than an advisory board. Composed of wealthy and influential individuals with a commitment to the mission of the organization, the Patron Board serves primarily as a figurehead for fund raising purposes. Such boards meet infrequently as their real work is done outside board meetings. Writing cheques and getting their friends to write cheques is their contribution to the organization. Many organizations maintain a Patron Board in addition to their governing boards. For capital campaigns and to establish credibility of a newly formed organizations, Patron Boards can be especially helpful. They cannot be relied upon, however, for governance tasks such as vision development, organizational planning, or program monitoring. CEO Board/ Patron Board CEO + Staff Which Model is Best for your Organization Do we have a clear understanding and agreement on the purpose of our organization? Is it written down? What are the basic values which guide our organization and our board? Are they written down? How do we know whether the good our organization does is worth what it costs to operate it? What financial resources do we have and can we reasonably count on for the next few years? To what extent are board members expected to contribute money and labour to fundraising efforts? Do we believe that the organization should be run as a cooperative or collective - with staff participating along with board members in the governing of the organization? How much time is each board member willing to give to the organization in the next year (or until the end of their term) How much trust does the board have in the ability of the CEO to ensure that the organization operates in an effective and ethical manner? What are our expectations about attendance at board and committee meetings? What is the attendance record of each board member? How do we hold board members accountable? What is the record of each board member and committee with respect to meetings and results? How useful has each committee proven to be? To what extent do committees duplicate staff jobs? How satisfied are our members with the current board performance? Who thinks we should change our governance model? How much time and money are we willing to devote to increasing our own knowledge and skills to improve our performance as board members? How does our board deal with differences of opinion? How do members deal with decisions when we disagree? To what extent is it necessary for us (board members) to be involved in the delivery of programs and services, marketing, public speaking, etc. Who attends our Annual General Meeting? Why do they come? As board members, to whom do we wish to be accountable? How effective is our current recruitment method in getting excellent board members? Fruit for Thought (and its your Next weeks Assignment too) Describe two or more activities a Volunteer might institute with his or her Counterpart(s) or coworkers to improve the governance of an NGO. Study an Non Profit organization’s Governance Model and Identify its flaws; and with which model you will replace the existing model and why?