Nonprofit Governance 02: Policy Governance Model

Governance context of the nonprofit organisations is an area of interest for most scholars who are interested in this subject. The next few articles of this series will therefore explore various governance models and analyse them.

Policy governance model is the most commonly used among the nonprofit organisations. This model focuses on single organisation with clear differences distinguished between the Board of Directors and the Chief Executive Officer. The role of the board is one of stewardship on behalf of its communities. For this purpose, they focus mainly on the vision, mission, values and strategic priorities of the organisation. They further ensures the responsiveness to community stakeholders and empowers staff to carry out the mission within established limitations.

The Chief Executive Officer (CEO) on the other hand is expected to provide operational leadership in managing the organisation and ensure the fulfillment of its mission. The Board of Directors monitors the CEO and evaluates his performance based on the KPIs agreed upon. Within this clear demarcation of roles, the Board of Directors govern the organisation by engaging at a policy level and monitoring the key official who is in-charge of their implementation.

In order to ensure efficiency within this model it is expected to have clearly defined roles and responsibilities of the CEO and the Board of Directors. Secondly, accountability stands as another important feature. The focus on outcomes and results are expected to lead to increased accountability. An external and policy focus of the Board of Directors will connect them with other boards and stakeholders. The Board of Directors need to be satisfied about the leadership role they perform in order to empower and support the CEO to efficiently manage the operation. The Board is expected to engaged in the system by scanning the environment, becoming familiar with the “big picture”, trends in the sector and entering into strategically important partnerships for the benefit of the organisation. This leadership and networking role of the Board will facilitate ensuring adequate resources and make the CEO’s role in fund raising more easier towards accomplishing the organisational mission.

While this model has been commonly used by the nonprofit organisations, they also identify this as a more familiar and comfortable framework of governance. However, this model also faces few significant downfalls. Board and staff relations are put in a vulnerable and disconnected position where there is no space or opportunity to build productive working relationship between the Board and staff. The staff may often mistrust the Board’s ability to govern them as their understanding on the operation is minimal and the Board will also feel disconnected from program and operation related work. This creates a gap between the policy makers, policies and their implementation towards achieving the expected outcome. The policy governance model further limiting the ability to embrace evolution and change as a result. The only successful way to address these issues is through a CEO who would be able to balance both the staff and the Board where the opportunity for both parties to interact will also be provided. However that has not been a very successful means of addressing this issue.

 

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