Title: Governance failures also occur in the non-profit world

Authors: Eric W. Hayden

Addresses: College of Management, University of Massachusetts Boston, Boston, MA 02125, USA

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.

Keywords: board allegiance; board composition; organisational sustainability; organisational viability; board of directors; governance failures; non-profit organisations; health maintenance; healthcare.

DOI: 10.1504/IJBGE.2006.009412

International Journal of Business Governance and Ethics, 2006 Vol.2 No.1/2, pp.116 - 128

Published online: 30 Mar 2006 *

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