The Governance of Public and Non-Profit Organisations: What do Boards do?
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Book Review The Governance of Public and Non-Profit Organisations: What do Boards do? C. Cornforth (ed.) (Routledge Studies in the Management of Voluntary and Non-Profit Organization) Routledge, London, 2003, 259pp. ISBN: 0 415 25818 9, d65.00. Acta Politica (2006) 41, 93–96. doi:10.1057/palgrave.ap.5500110
In the last two decades, public tasks are being carried out increasingly by nongovernmental organizations. Traditional voluntary and non-profit organizations, like schools, hospitals, museums, trusts, and charity foundations, have been increasingly charged with public tasks. Furthermore, governments have put parts of their own organization at arms’ length, creating a whole range of public bodies, in charge of, among others, the payment of unemployment benefits, market regulation, the maintenance of infrastructure, policing, broadcasting, subsidizing art, and settling administrative disputes. As a result, the public sector has become more fragmented. Hence, the question of how to monitor these organizations has become more important — especially after a number of incidents in which politicians turned out to be unable to exercise control (see the investigation by the Nolan Committee in the United Kingdom). Both in political discussions as well as in academic research the focus of attention has therefore shifted from the management of public and non-profit organizations, to their governance. An important role in the governance of public and non-profit organizations is assigned to boards. However, there is much controversy on what the role and authority of boards can be, or should be. Cornforth argues that different bodies of theory now in use, such as principal-agency theory or the concepts of stewardship and stakeholders, offer only a part of the solution for the ‘corporate governance’ of boards. He argues that boards can and do play more than one role; they monitor and evaluate the executive, represent the stakeholders or even the public at large, offer expert knowledge to the organization, can bring resources like their network or generate funds, and can endorse or legitimize executive decisions. Board inadequacy can result from tensions between the different roles, asymmetries in the role perception by executives and board members, failing legal underpinning of boards’ competencies, and insufficient knowledge or training of board members. Three important tensions are presented.
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First, should a board consist of representatives from interested parties or of professional experts? Second, should a board help to improve the organization’s performance or only pay attention to conforming to the principal’s interests? And third, should a board be a partner to the executive or its auditor? This overview of roles and tensions offers a simple but powerful explanation for the dilemma of boards, or even the corporate governance of public and non-profit organizations as a whole. The solutions that Cornforth offers, however, are a lot weaker and not very new; most consultancy books give the same advice. The
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