Guest blog post by ESC Consultant & Governance Expert Theresa Hamacher
If there’s an evergreen topic in the governance world, it’s comparing and contrasting nonprofit and corporate boards. Lengthy articles analyzing the similarities and differences appear at regular intervals in the nonprofit press.
Some of these pieces argue that the two types of boards are inherently the same, others tweeze out their differences. More than a few suggest that nonprofit boards could learn a thing or two from their corporate cousins. (For an example of this genre, there’s Policy vs. Paper Clips: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective, now in its third edition.)
For a long time, I tried to join in the game, making lists of the strengths of nonprofit boards vs. corporate boards and vice versa – until I realized that the entire exercise was pointless, for two reasons.
First, there’s such incredible diversity just within each type of board that it’s impossible to address them all with one big generalization. Maybe it makes sense to compare Apple’s board to Harvard University’s board, but how can the Apple board’s experience be at all relevant to what happens on the board of my local nonprofit?
Even more importantly, there’s not much to be learned from comparing nonprofit and corporate boards because they do such different things. Nonprofit boards wear many different hats. They don’t just provide fiduciary oversight; they are also usually the organization’s biggest fundraisers, and the best ones are constantly recruiting for new members — and nonprofit directors are often pitching in to get the work done.
By contrast, corporate boards have a more limited role. Their primary purpose is providing that fiduciary oversight. Yes, they’re also involved in recruiting, though with a lower rate of turnover in their membership, it’s more intermittent project than at a nonprofit. Corporate boards generally don’t get involved in operations, and fundraising is irrelevant.
So if we were to narrow this bloated debate down to a single pertinent question, it might be, “Do Apple’s board and Harvard’s board handle fiduciary oversight any differently?” I think that the answer would be “no,” but where’s the fun in that?
Do you agree? What’s your experience of the differences and similarities between nonprofit and for-profit boards? Do you have a favorite article with a compare and contrast?
Adapted from 8 Habits of Great Nonprofit Boards: A Handbook for Smaller Nonprofits [forthcoming] and published with permission of the author. © 2014 Theresa Hamacher