Governance failures also occur in the non-profit world
by Eric W. Hayden
International Journal of Business Governance and Ethics (IJBGE), Vol. 2, No. 1/2, 2006

Abstract: While most of the recent, widely publicised attention on governance failures has focused on the corporate sector, cosy boardroom ties have also undermined the viability and sustainability of many non-profit organisations. The healthcare sector of Massachusetts, dominated by non-profits, is a case in point. During the 1990s, the state's five non-profit health maintenance organisations (HMOs) each suffered major financial shortfalls. This paper presents as mini-case studies the experiences of those institutions, asking in each instance why governance structures did not do a better job of monitoring and supervising their respective managements. The findings are relevant for all non-profits, namely that governance suffers when boards are dominated by affiliated outsiders or when the allegiance of the board is not fully committed to the organisation's mission and ongoing financial viability.

Online publication date: Thu, 30-Mar-2006

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