Federated Press - Non Profit Governance ModelsWord - Doc1101470414

NONPROFIT GOVERNANCE:
The Next Generation

evolution of structure and function
Prepared for:
FEDERATED PRESS
Ruth R. Armstrong
MBA
management services
Toronto, Ontario
416-691-7302
66 Glen Davis Crescent Toronto ON M4E 1X5
November 6, 1998
The Next Generation

evolution of structure and function
This paper recognizes that governance has been an important aspect of our
nonprofit organizations for over a century. In the recent past as the
environment has changed dramatically and governance has become a focus
of study, an evolution is occurring.
There is no agreement in the field on the best way to structure a board for
effectiveness. There is instead an evolution of diversity of thinking about
governance models, structures and functions.
Four governance models are described within a framework and analyzed to
suggest that choosing a hybrid model to suit an organizations specific
characteristics has merit.
The conflict between theory and practice further reinforces the inadequacy
of theoretical constructs which cannot withstand the reality of human nature,
organizational features and environmental pressures. This conflict is
explored against key success/failure factors for boards.
Whatever hybrid model is chosen, structural forms such as committees,
information, agendas and board meetings must be in alignment with the
boards function, culture and strategy. A discussion of these structural forms
suggests a variety of options to consider.
Table of Contents
Acknowledgements................................................................Page 1
Introduction...........................................................................Page 2
Models of Governance..........................................................Page 4
1.
Policy Governance Model.................................Page 5
2.
Constituency Model.........................................Page 6
3.
Corporate Model...............................................Page 8
4.
Emergent Cellular Model..................................Page 9
Tension between Theory and Practice..................................Page 11
Key Success/Failure Factors......................................Page 12
1.
Leadership.......................................................Page 12
2.
Legitimacy and Power.....................................Page 12
3.
Job Definition..................................................Page 16
4.
Culture............................................................Page 17
5.
Competence....................................................Page 18
6.
Management of Board Process........................Page 18
Structure..............................................................................Page 19
Committees................................................................Page 19
Information................................................................Page 19
Agendas.....................................................................Page 20
Board Meetings.........................................................Page 21
Conclusion...........................................................................Page 22
References...........................................................................Page 23
The Next Generation evolution of structure and function
ACKNOWLEDGEMENTS
I wrote this paper after many stimulating conversations where my assumptions were
challenged and new insights formed.
I would like to thank:
Michael Armstrong
Marilyn Dumaresq
Leslie Wright
for their insightful contributions to the thinking behind this paper.
The four models of governance were developed within a dynamic working group charged
with the task of creating a new governance model for a Health Canada project.
I would like to thank:
Pat Bradshaw
Bryan Hayday
Liz Rykert
for the creativity that flowed from our sessions.
Ruth Armstrong, VISION Management Services
INTRODUCTION
Seven years ago only two people registered for a York University sponsored workshop on
Board Development. Today, workshops on governance are oversubscribed, consultants
are being hired at a furious rate to work with boards, and publications about governance
are proliferating.
Nonprofit organizations and their boards have been part of the Canadian landscape for
over a century. The focus on governance as a field of study however is recent. As all our
systems are undergoing radical change, nonprofit governance too is evolving.
This paper explores four models of governance, tension between the theory and practice
of governance, and the structures that support governance.
Understanding boards has evolved from exploring grassroots citizen participation in the
nonprofit board room to studying more sophisticated governance roles.
The last few decades have seen management boards fulfilling dual governance and
management roles as nonprofit organizations have become established. The boards focus
has been to build the organizations foundation and strength. Often management skills
were not available or affordable to a growing organization. In these situations, board
members also offered their volunteer skills in a management capacity. Board members
did double duty.
Organizations (staff and budgets) have grown and management skills have been hired.
Boards often became (and some still are) working boards offering skills (accounting,
personnel, program) to supplement limited staff resources. At the same time, boards
fulfilled their governance role by developing policies at all levels. Policies and issues
however were usually brought to the board by the chief executive officer.
Boards and chief executive officers worked together according to agendas driven by the
chief executive officer. Agendas were generally concerned with the health, function and
growth of the organization. An internal focus to ensure the continuation and survival of
the organization was paramount.
This internal organizational orientation began to shift and expand to include an external
focus in response to a drastically changing nonprofit environment. When author John
Carver published his book Boards that make a difference in 1990, boards of directors
were receptive to a new view of their roles and responsibilities. This new view was
timely because of the external pressures nonprofit organizations were facing. The policy
governance model has become a dominant model of governance in the 1990s.
contd...
...contd
The policy governance roles of a nonprofit board include:
Establishing the vision, mission and strategic directions;

Providing fiscal and legal oversight (accountability);
Selecting, evaluating and terminating (if necessary) the chief executive
officer;
Linking to the external community through a variety of stakeholders;
Developing and generating necessary resources;
Ensuring appropriate management systems;
Attending to board self-management through continuous evaluation and
improvement;
Advocating on behalf of the organization and its mission.
In order for a board to undertake this impressive array of expectations, a policy

governance board understands that its policy-making role is at a strategic, not operational,
level. Furthermore the board must develop and publish a comprehensive set of policies to
ensure continuity. The written record of a boards policies serves to provide consistent
direction for the organizations values and work as well as clear limitations to the chief
executive officers authority.
The inventory of roles noted above are at times an overwhelming challenge. Board
members as volunteers generally have limited time for and understanding of the
organization, are diverse in their skills and perspectives, and are continually coming and
going. They often struggle to fulfill their roles. Chief executive officers wonder if this
concept of governance is practical as they invest much of their time in helping their
boards carry out their responsibilities.
Many sectors and disciplines are re-defining themselves. Boards face a similar challenge.
Fortunately, the nonprofit sector has been known for its ability to innovate.
This paper explores the evolution in governance models, structure and function. It
highlights the tension between theory and practice. The paper also suggests various
structural vehicles to support governance.
MODELS OF GOVERNANCE
A framework of four models of governance (see Figure 1) was developed by the

Governance Working Group1 charged with recommending a model of governance to fit a
newly created multi-stakeholder network organization.
The groups exploration of the literature and their own breadth of experience in the
nonprofit field support the assumption that there is no one best way of designing
governance. Indeed a hybrid approach (Armstrong, 1996) offers the flexibility and
adaptability needed in todays turbulent environment.
The four governance models presented below are positioned along two dimensions
outlining key features in our nonprofit organizations. One dimension identifies stability
and innovation as an orientation. This orientation is often dependent on an organizations
life cycle stage, culture and environment.
The second dimension accounts for the unitary or pluralistic reality of a single
organization in contrast to an organization comprised of a network of stakeholders and/or
organizations.
Each of these models is described in more detail below.
Figure 1: Four Models of Nonprofit Governance
Unitary Vision
Policy
Governance
Model
Corporate
Model
Stability
Innovation
Constituency
Model
Emergent
Cellular
Model
Pluralistic Vision
Governance Working Group Co-Authors:

Ruth Armstrong, Vision Management Services
Pat Bradshaw, York University
Bryan Hayday, InnovAction
Liz Rykert, Building Effective Electronic Strategies
1.
Policy Governance Model

The Policy Governance Model clearly distinguishes between the leadership roles
of board and chief executive officer (CEO). The board role is one of stewardship
on behalf of its communities. In order to fulfil this role, the board focuses on the
vision, mission, values and strategic priorities of the organization, ensures a
responsiveness to community stakeholders and empowers staff to carry out the
mission within established limitations. The CEO provides operational leadership
in managing the organization in fulfilling its mission. The board monitors and
evaluates CEO performance according to its policies.
The board governs the organization by articulating and documenting broad policies
in four areas:
1.
Ends The focus is on outcomes and results rather than on means (a staff
responsibility). Ends include the organization's vision, mission, values and
strategic objectives.
2.
Executive Limitations The board establishes parameters or boundaries

within which the CEO has unlimited freedom. These boundaries include
attention to prudence and ethics in areas such as financial health, staff
treatment and communication to board.
3.
Board-CEO Relationship These policies outline the delegation of power

from the board to CEO as well as the manner in which the board monitors
the performance of the CEO and the organization.
4.
Governing Process This area ensures that the board is attending to its
own processes and structures. These policies include expectations of board
members, committee structures and the principle of speaking with one
voice.
The positive features of this model when it is working effectively are:
There is increased clarity of roles and responsibilities, vision and

accountability.
The focus on outcomes and results leads to increased accountability.
An external focus connects the board with other boards and
stakeholders.
The leadership role of the board can be satisfying for board
members.
This model liberates, empowers and supports the chief executive
officer.
contd...
...contd
The board engages in systems activities by scanning the

environment, becoming familiar with big picture issues as well as
major internal trends and entering into partnerships with other
stakeholders.
The board takes on the responsibility of ensuring adequate resources
are available to accomplish the mission (fund raising).
This model meets external legal requirements and has become a familiar and
comfortable framework for many nonprofit organizations in Canada over the last
few years.
The down sides of the Policy Governance Model are becoming more evident as
organizations are experimenting with this model:
Board and staff relations are vulnerable and disconnected because of

the emphasis on separate and distinct roles. This can interfere with
developing a productive board/staff partnership.
The board often feels disconnected from programs and operations
operational information is less relevant in this model.
Staff often mistrust the board's ability to govern because of a
perception that the board does not understand the organization's
operations. Links between policies, operations and outcomes are
often tenuous.
Board or chief executive officer may exercise their power in
overriding the others role. Power is concentrated in the hands of a
few.
This model can be self-limiting in its ability to embrace evolution and change
because it assumes one vision (to be articulated and achieved) and it
solidifies/perpetuates the status quo through its policy framework.
2.
Constituency Model
In this model there is a direct and clear link between the organizations board and
its constituents. The constituents are represented on the governing board and
participate in policy development and planning. This participation benefits the
constituents by offering them control over policy decisions through their board
representative.
This board ranges in size from about fifteen to over forty members. Strict policies
govern the composition and election/appointment of board members representing
specific constituents.
contd...
...contd
This model features centralized decision-making with decentralized input. The
time consuming quality of full consultation on major decisions ensures stability
and status quo protection.
The boards relationship to the CEO is not always clearly defined and is vulnerable
to changing expectations with changing representatives on the board. Within the
larger size board, the board/CEO relationship tends to be similar to the policy
governance model, i.e. the board empowers the CEO to manage the operations of
the organization within the limitations set by the board.
At times the roles and responsibilities of board and constituents are outlined in
written documents of agreement.
There is a broad base of participation and power is decentralized.

This model allows a vision to emerge that is inclusive of
constituents perspectives.
Constituent energy and participation is generally decentralized into
committees which are action oriented.
Communication is emphasized because of the need to involve large
numbers of diverse stakeholders.
The board tends to have a pulse on big picture issues as a result of
the broad based input by constituents.
The challenge of dealing with multiple interests and the resulting
conflicts is recognized and addressed in a variety of ways (some
ways are more successful than others).
The down sides of the Constituency Model are at the opposite ends of some of the
models positive features:
Because communication is a key cornerstone for this model, there

are pressures and demands for communication to be timely,
adequate, consistent, clear, accessible, etc. These pressures often
create difficulties in meeting high constituent expectations.
Energy can be dispersed throughout a large number of committees
and activities and therefore become unproductive.
contd...
...contd
3.
The vision often loses focus and commitment by the board as board
members turn over and other constituency interests come in.
Conflict which is a natural and common feature of a multi-interest
group does not always get resolved and can damage board
relationships.
With representative interests and positions, there is a tendency to
pursue self-preservation rather than shared interests which slows
down any change to the status quo.
The model generally requires some form of memorandum of
understanding that must be renewed regularly to keep it in force.
Corporate Model
The Corporate Model is often referred to as the business model of governance.
Within this framework, there is a particular emphasis on efficiency and
effectiveness measures which focus the organization to achieve a maximum return
on its investments. In this model, there is an explicit recognition of stakeholders
self-interest. Rewards are clear and there is a dominant culture which expects the
survival of the fittest.
The Corporate Model maintains a constant market orientation to find opportunities
and competitive advantage. More often than not, long-term corporate plans are
driven by an annual focus which emphasizes a short time horizon and a relative
immediacy of return, versus a longer-term perspective and vision. Innovation is
recognized as an opportunity to leverage proprietary gains. Market share and
niche dominance are highly valued.
Investors in the organization are proportionately represented in its governance
through a shareholder structure which elects the board of directors. The chair of
the board of directors often acts as the chief executive officer of the organization,
and it is common to find the board working at the levels of ends, means and
limitations policies as a focus for the work of the board and its subsequent
direction to the organization.
Participants efforts are clearly focused on the business of the

organization.
contd...
10
...contd
The organizational culture explicitly emphasizes efficient and

effective work processes.
There is a widespread sensitivity to any business-related changes in
the marketplace.
Leadership and resources are allocated to recognize and readily
adopt best practices.
The down sides of this model, particularly for nonprofit organizations, are:
4.
A disproportionate focus on bottom-line returns to one organization

does not ensure focused attention on common marketplace interests
or changing social conditions.
The consideration and quality of inter-organizational partnerships are
measured by returns to specific investors and not to the collective
benefit generated for consumers.
Broad-based societal needs are often discounted.
Systemic social and community changes do not lend themselves to
short time horizons for organizational business plans.
There is no particular incentive for innovation on behalf of public
gain.
Emergent Cellular Model

The Emergent Cellular Model is characterized by continuous, efficient innovation.
This model is evolving from the network form which allows for flexibility and
responsiveness to information, but does not explicitly support adaptions in
organizational form to support the creation and sharing of knowledge resulting
from new information.
Cellular organizations are made up of cells (self-managing terms, autonomous
business units) that can operate alone and can also interact with other cells to
produce a more potent and competent business mechanism. It is this combination
of independence and interdependence that allows the cellular organizational form
to generate and share the know-how that produces continuous innovation (from
Miles, et al, 1997). Understanding chaordic organizations and self-organization
provide more information on key characteristics of this new model.
contd...
11
...contd
In an increasingly knowledge-based economy, the organizational

form itself seeks to be knowledge and relationship based.
Organizational structures are highly adaptable to the work which
needs to be performed and supportive of innovation.
A minimal amount of structure is required as a condition of enabling
productive work.
By nature, this model is organic, adapting to the complexity and
unpredictability of its environment as needed.
Entrepreneurial energy and activity, both internal to and external to
the organization, are each nurtured in this environment.
Interdependent relationships and self-organizing practices are each
enabled and supported.
Pluralistic visions are both possible and sustainable.
The down sides of this model are:
The relative newness of this emergent model means that there is no

significant literature regarding its effectiveness.
The model is based on some naive assumptions about human nature
and the capacity for changeability and negotiated roles.
Significant negotiation may be required to address differences in
relative power among the participants.
The presence of multiple organizational foci may be problematic for
those who require specific and predictable parameters over time.
Accountability and resource allocation is distributed, therefore not
readily predictable.
Certain people may be excluded from full participation in this
organizational model because of the dynamics and expectations of
participation.
12
TENSION BETWEEN THEORY AND PRACTICE

Have we set the bar so high in our expectations of board function that we invite failure?
Can we insist on high standards of accountability without prescribing a specific set of
roles and structures?
There is no best way to structure a board or organization. The predominant notion that
certain governance functions must be performed may suggest that it matters less who
performs them. The fulfilment of these functions may be negotiated between board and
staff (Harris, 1993) and may shift over time with new boards and management. This
negotiated approach is flexible and takes advantage of changing skills and people.
Accountability has now become an expectation by government public, clients, funders
and other stakeholders. Accountability can be described as a standard which fulfills three
core elements (Kearns, 1996):
Answerability to a higher authority (government, the law, the public);

Responsibility to implement and measure;
Responsiveness to collect feedback and correct accordingly.
Although the board may be charged with holding the CEO and organization accountable,
who holds the board accountable? Current accountability vehicles are underdeveloped.
Organizations are attempting to establish total quality management protocols, evaluation
and information systems and feedback relationships with stakeholders.
A variety of approaches might be considered in strengthening a boards ability to hold
itself accountable.
The independent audit team providing an auditing function for boards and
organizations (evaluates the CEO, audits services);
Self-regulating bodies (umbrella associations providing accreditation to
boards);
Government (monitoring board functions through the Office of the Public
Trustee);
Establishment of citizen boards to hold organizations accountable (the
National Trust Model in Britain is an example).
13
Following the accountability path, six key factors are considered in a boards success or
failure (Leighton/Thain, 1998). The tension between theory and practices continues to be
evident.
Key Success/Failure Factors
1.
2.
3.
4.
5.
6.
1.
(Leighton/Thain)
Leadership independent from management which requires vision and

commitment.
Legitimacy and Power active support of stakeholders and the recognition of legal
and moral authority.
Job Definition purpose, functions and tasks.
Culture shared beliefs and norms.
Competence knowledge, skills, attitudes.
Management of Board Process planning and implementation of functions and
processes for board effectiveness.
Leadership
The importance of a strong board leader cannot be overemphasized. There are
exceptional board chairs who have vision and commitment and lead the board team in
fulfilling its governance functions. These leaders share leadership and work in a
productive partnership with the CEO. Interpersonal skills are well developed.
In other boards, the board chair is sometimes weak with poor meeting management skills.
This situation often invites the CEO to step into the breach and drive the boards agenda
and work. Some boards have difficulty attracting and maintaining competent leaders for a
variety of reasons (poor board functioning, low organizational profile, poor leadership at
board and/or CEO level).
2.
Legitimacy and Power

Broad based support of stakeholders is pursued more vigorously by some organizations
than others. Depending on the values and mission of the organization, the board may be
very inclusive in its board election processes (i.e. inviting nominations from a broad based
membership), open in its communications, and extensive in its consultation before
adopting any new policies. Constituency and Emergent Cellular Models of Governance
(see above) are likely to pursue a strategy of broad based stakeholder support to ensure
legitimacy and power.
contd...
14
...contd
This strategic direction has its tensions. These tensions are outlined as paradoxes that
have been successfully addressed by a number of constituency based organizations (often
called associations).
Paradox: owners and customers
The members of a golf club who were generally older and retired were against
making a capital investment to improve their club facilities for families. A capital
investment would translate into higher membership fees. The board on the other
hand knew that as current membership numbers dwindled, the club would need to
attract and retain an incoming group of club members who had young families.
Members of an association are both the owners of the association and its customers. As
owners they govern the organization through the board and participate directly in policy
development and planning. As customers, members are most concerned with quality and
value of services. This "double-vision" often creates conflict between the board's long term
perspective and a member's immediate concerns.
Paradox: centralized decision- making and decentralized input

A national health association with a provincial and local branch structure has
lost its ability to make decisions quickly in response to a fast paced environment.
The board has a cumbersome consultation process to ensure fairness and equity
in decision- making. All levels of the organization have opportunities to review
and modify any policies and major decisions. Unfortunately, this decision- making
process takes at least two months to be completed.
The board and its chief executive officer (CEO) undertake responsibilities on behalf of the
membership. It is a wise board who is in touch with, and responsive to, its members as it
makes policy decisions. Theoretically, this makes sense; practically, an association with
different constituents struggles to convert diversity into collective vision and quick action.
contd...
15
...contd
Paradox: self- interest and collective interest
An association is lobbying government to centralize the allocation of contracts
and resources within the association to its members. It finds itself at odds with its
larger member organizations who have been relating to government without the
association's help. These larger organizations stand to lose their autonomy, power
and ability to negotiate directly with the government. Smaller organizations,
however, need the strength of the association to improve their situation.
Most members join associations for two major reasons: to satisfy their own needs through
member services and to exert more power by pooling collective resources and skills.
Many association boards are weakened by the tension inherent in this paradox. If board
directors see their primary role as representing their constituency's interests, they may
have difficulty in setting aside specific constituent needs and voting for the association's
collective interests. Board directors represent constituents and bring constituents'
perspectives to the board table so that a collective decision can be informed, rather than
driven, by constituent self-interest; however, this approach is often lost.
Paradox: service and advocacy

An association is caught in an all too common tension. The board is pushing for
increased advocacy activities. The CEO is insisting that any decrease in member
services will have an adverse effect on the membership, membership fees and
therefore the association's financial viability. Articulating this tension as "either
advocacy or service" is not helpful or accurate. The conflict, however, is taking
its toll.
Most associations have a dual reason for existing. Firstly, they deliver tangible services
such as benefit plans, education, consultation and information. Secondly, they capture the
strength of a broad-based constituency with large numbers of participating members and
use it to influence the industry's environment. The tension arises when allocating limited
resources and energies to each direction. Members as customers continue to want quality
services. Members as owners recognize that the future is about preparing an environment
that is supportive of the industry. Resources spent on changing legislation, lobbying
government, increasing the industry's profile can be never-ending without recognizing a
direct link to outcomes. Evaluating the return on the association's investment is much
more tenuous for advocacy activities than for service activities.
contd...
16
...contd
Governance Responses
Associations continue to address these paradoxes and challenges in a variety of ways.
Five responses have become successful strategies for several associations recently
interviewed.
A) Clarity
Associations with written policies describing the different roles of board, members and
staff have reduced confusion in the areas of power and accountability. There is not one
"correct" description. An effective process of clearly differentiating roles starts with role
negotiating and articulating the roles and is followed by written policies. Policies outlining
board recruitment, nominations and elections are particularly sensitive areas requiring
clarification.
B) Communication
Communication represents a critical lifeline in the health of an association. The increasing
demands and expectations of members to receive timely, complete and accurate
information become a tremendous challenge. Association boards and staff who are
attentive to improving communication among board, staff and constituents/members have
benefited by creating a connected membership.
C) Commitment and Connection
Ownership and involvement of board and members can be encouraged in a variety of
ways. Active committees, project work, strategic planning and effective communication
keep large numbers of members connected to the association. Members generally do not
feel committed or connected unless they are actually contributing something more than
simply membership fees.
D) Conflict Resolution
Resolving conflict among competing interests must be a targeted and active issue.
Structured conflict resolution techniques and discussions go a long way in facilitating
satisfying outcomes. Developing important conflict resolution skills among board
directors assist in addressing association tensions. The resolution process adopted by the
association can be communicated to all members in developing a common approach to
conflict.
contd...
17
...contd
E) Contracts and Agreements
Because of the pluralistic nature of associations and the diversity of interests, some boards
have found it useful to sign letters of agreement between the board and its constituency
representatives. The contracts clarify conflict of interest, financial contributions,
accountability and information exchange. Agreements often describe: how the board
director will be accountable to the association and his or her constituents, how he or she
will keep members apprised of important information, the nature or amount of
contributions the director or the constituency will make, how conflicts will be resolved,
and the commitment to the mission/direction of the association. As board directors
change, an association's vision can become diffused because of multiple interests carried by
a changing broad based membership. Contracts serve to stabilize the organization's vision
and processes as it moves forward.
Critical factors for success in constituency based and emergent cellular organizations
include a combination of self-analysis and creative response. Boards need to understand
their unique characteristics, paradoxes and tensions. Only then can they design a
governance model to address their realities. Innovative organizational forms and
governance models are finding fertile ground.
3.
Job Definition
Board members often cite lack of clarity in role and responsibilities as a barrier in their
ability to fulfill their governance function. This deficit can be addressed by ensuring that
the boards job definition is written and communicated during an orientation of new board
members.
Problems arise when job definitions do not match the life cycle stage of organizations.
Board members are then torn between the articulated job definition based on a particular
governance model and the work that needs to be done.
Life cycle stages of organizations have an effect on governance needs.
(Armstrong, 1998)
contd...
18
...contd
A newly created organization in Stage I focuses on building its foundation: creating
operational systems, policies (at all levels) and procedures. These activities take much
board and staff energy, and are antithetical to the Policy Governance Model's separation of
means (staff) and ends (board). Once the foundation is laid the organization can focus on
its strategic agenda in Stage II. The board attends to its vision and mission by allocating
resources strategically. At this second stage, the board can remove itself from the
operational foundation building and function like a policy governance board.
Once the organization reaches Stage III and has experienced progress towards its strategic
agenda, it can begin to form external alliances and transcend its organizational boundaries
to influence the system. At this third stage, boards fit the Policy Governance Model in
developing board-to-board linkages.
At Stage IV, boards should be exploring innovative organizational forms to assist the
organization in adapting to unpredictable challenges. At this fourth stage, the Policy
Governance Model provides more of a trap than a springboard into the future. The
Emergent Cellular Model offers a more robust structure and approach.
The Policy Governance Model encourages boards to enshrine processes and structures in
its policies. Although policies can be changed by boards, many boards and CEOs use
these policies as a stabilizing mechanism. This is helpful for Stages II and III of an
organization's life cycle but does not facilitate Stages I and IV.
A one size model or one best structure does not fit organizations at all stages of
development.
4.
Culture
The culture of a board has a powerful impact on success or failure. Culture as a system of
shared beliefs and norms is generally not explicit and so is difficult to change. Some
boards on the other hand have not only articulated their beliefs and values but are
extremely committed to actualizing their values and principles.
These committed boards guide their organizations from a strong value base and measure
all actions against stated principles.
contd...
19
...contd
Boards that are conflicted internally and polarized in their values struggle to overcome this
dysfunctional state. Many resources (time, money, effort, people) are often consumed in
correcting a dysfunctional culture. At times little progress is evident until a critical mass of
board members and/or management turns over.
5.
Competence
The knowledge, skills and attitudes of board members contribute to a boards competence.
Boards generally try to attract competence as well as build it. In some sectors like mental
health where there is a strong consumer movement, boards take on the responsibility of
educating board members. This responsibility ensures that marginalized consumers can
participate in the governing function of their organization. The board identifies one of
their functions as education and capacity-building.
Carver (1990) says "board difficulties are not a problem of people, but of process". His
policy governance model features a well-designed system and ignores human nature.
Despite well-crafted policies, clear role separation and a focus on ends, board
competence can be made or destroyed by individuals and their behaviours, skills,
motivations.
6.
Management of Board Process

The planning, implementation and evaluation of board process is a board responsibility.
Some boards are able to carry out these functions successfully. This ability is most closely
connected to the leadership, competence and job definition factors. More and more
boards are attending to managing their own processes. Many CEOs however are still
playing an active role in assisting boards in this basic activity. The maturity of the board
(i.e. later stage of life cycle) has an impact on the boards readiness and/or ability to attend
to its own management processes.
20
STRUCTURE
Board members are often concerned with their committee structures, information needs, agendas
and meetings. These structures should support the governance model and specific functions of
the board. Although straightforward in the notion that structure follows strategy and form
follows function, appropriate implementation is sometimes elusive.
Committees
The current trend in the boardroom is to reduce the number of committees needed to assist the
board in fulfilling its governance functions. The Policy Governance Model relies more on the
work of the board as a committee of the whole.
Some boards have eliminated all their committees only to find that the board is less productive
and finds it difficult to do all its work within a two to three hour time frame. The reduction of
committees has also had an impact on keeping board members active and connected to the
organization and staff.
Boards are experimenting successfully with ad hoc committees and task forces. These flexible
structures allow board members to commit to shorter term time frames in relation to their
interests, availability and skills. Board members also recognize accomplishment more easily when
the task is defined and delegated by the board. The boards responsibility in creating task forces
includes the articulation of outcomes, terms of reference, composition and reporting requirements.
Within the Constituency and Emergent Cellular Models, self-managing units and other cell type
structures are more effective in encouraging innovation and evolution. Committees as we know
them do not operate with the flexibility and autonomy expected of a cell-like structure.
Information
The volume of information is overwhelming. The effect of too much unsorted information has the
same impact as too little information. CEOs try to second guess their boards information needs
and respond accordingly. The results: board members are often dissatisfied with the timeliness,
form and volume of information. Boards are beginning to think about and articulate their
information needs a task that proves to be more difficult than it seems.
contd...
21
...contd
Experimentation is a useful way to approach getting it just right. Unfortunately, a drawback to
experimentation is the increased CEO and staff workload necessary to respond to shifting
reporting requirements.
The balance between the information the board needs to do its job and the investment of time by
staff in preparing the information is constantly changing. This is an area where board and CEO
can negotiate a mutually beneficial agreement.
The board might consider its information needs in alignment with its job description and
accountability role. Information needs might include:
external environment forces (eg. government directions and policies);

controversial internal issues that may have an impact on public perception;
trends within the sector (eg. increase in homelessness, poverty);
financial information about significant variances between budgeted and actual
expenditures;
significant staffing issues (eg. high turnover, volume of grievances, critical
incidents);
progress towards achievement of mission and strategic plan;
violation of policies;
significant legal and fiscal issues.
Agendas
The agenda is a powerful tool which can assist the board in having the right discussions about the
right topics. Often agendas are similar in form from one meeting to another. The agendas form
often repeats the categories of:
approval of minutes;
business arising;
CEO report;
committee reports;
other business;
adjournment.
Agendas can signal the theme and purpose of any particular meeting.
excitement and prepare participants for decisions and discussions.
Agendas can build

contd...
22
...contd
Matching agenda items to the boards job description and to its strategic priorities keep the focus
on its role and on its future.
Placing agenda items that require decisions and discussion ahead of information items ensures that
board members energies are used productively. Often information is delivered and passively
received by board members at points in the meeting when energy is high. Decisions left to the end
of a long meeting are sometimes hastily disposed of as board members get distracted by the
lateness of the hour and a low level of attention.
Board Meetings
Some boards open all their board meetings to staff and public. The public, staff and media are
welcome to attend. Other boards are reticent in having their meetings open even to staff other
than the CEO. These styles are sometimes influenced by mandate (eg. childrens aid societies are
required to be open to the public) or by principle.
This openness affects stakeholder activity and interest. This in turn affects the boards legitimacy
and power. Broad based constituency support can be aligned more easily with the Constituency
or Emergent Cellular Models described above.
In camera sessions are a technique used to protect sensitive or controversial issues from becoming
public. Some boards whose meetings are open to the public routinely go in camera during every
board meeting. Other organizations go in camera when it is warranted. A policy on when boards
may choose to go in camera can be useful in guiding a boards self-management processes.
23
CONCLUSION
The subject of board governance as a field of study is relatively new.

Although as a society we have experienced boards for over a century,
the academic community began studying boards only twenty years
ago.
Recently (1990), John Carver, an American consultant and author, has
had a tremendous impact on the non-profit and voluntary sector in
Ontario and Canada.
Carver in his book "Boards that Make a
Difference", has been able to articulate clearly the distinct roles and
responsibilities of board members and staff of non-profit organizations.
Aside from Carver's marketing abilities, his Policy Governance Model
has been a timely response to the increased public demands for
accountability and the decreased availability of funds.
Organizations in Canada have been experimenting with the Policy
Governance Model as described by Carver over the last eight years.
Academics, consultants, board members and chief executive officers
have begun to assess this and other models of governance.
So the evolution of board structure and function continues. This paper
outlines a framework of four models which serve:
To emphasize that there is no one best way to govern an

organization. A board's structure and way of operating must
fit with the organization's history, culture, maturity, size,
external and internal pressures, strategic goals and life cycle
stage.
To introduce and analyze four models of governance so that

boards can choose the unique combination of features that
can serve them best. In essence, this means creating a
hybrid model of governance tailored to the individual
organization.
The hybrid governance model will be heartier for having been

developed within its own unique set of circumstances.
Where to from here? We must evaluate the effectiveness of our
governance functions and processes. What works and why? We must
24
share our made-in-Canada versions through writing, presenting and

research.
25
REFERENCES
Armstrong, R. Does the Carver Policy Governance Model Really Work?

Front & Centre, Canadian Centre for Philanthropy, May 1998.
Armstrong, R. Association Governance: A Study in Paradoxes

Association Vol. 15 No. 4, June-July 1998.
Armstrong, R. Hybrids are heartier: Exploring four models of board

governance
Working Paper, Vision Management Services, 1996.
Bradshaw, P., Stoops, B., Hayday, B., Armstrong, R., Rykert, L. Nonprofit Governance
Models: Problems and Prospects
ARNOVA Conference Paper for Presentation, Seattle, November 1998.
Carver, J. Boards that Make a Difference

San Francisco: Jossey-Bass, 1990.
Harris, M. The Power and Authority of Governing Bodies

England: Working Paper 13, 1993.
Kearns, K. Managing for Accountability

San Francisco: Jossey-Bass, 1996.
Leighton, D., Thain, D. Making Boards Work

McGraw-Hill Ryerson Limited, 1997.
Miles, R., Snow, C., Mathews, J., Miles, G., Coleman, Jr., H. Organizing in the
Knowledge Age: Anticipating the cellular form
Academy of Management Executive, Vol. 11 No. 4, 1997.
26

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NONPROFIT GOVERNANCE:

The Next Generation

66 Glen Davis Crescent Toronto ON M4E 1X5

The Next Generation

Ruth Armstrong, VISION Management Services

Establishing the vision, mission and strategic directions;

In order for a board to undertake this impressive array of expectations, a policy

Ruth Armstrong, VISION Management Services

A framework of four models of governance (see Figure 1) was developed by the

Governance Working Group Co-Authors:

Ruth Armstrong, VISION Management Services

Policy Governance Model

Executive Limitations The board establishes parameters or boundaries

Board-CEO Relationship These policies outline the delegation of power

The positive features of this model when it is working effectively are:

There is increased clarity of roles and responsibilities, vision and

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

The board engages in systems activities by scanning the

Board and staff relations are vulnerable and disconnected because of

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

There is a broad base of participation and power is decentralized.

Because communication is a key cornerstone for this model, there

Ruth Armstrong, VISION Management Services

Participants efforts are clearly focused on the business of the

Ruth Armstrong, VISION Management Services

The organizational culture explicitly emphasizes efficient and

A disproportionate focus on bottom-line returns to one organization

Emergent Cellular Model

Ruth Armstrong, VISION Management Services

In an increasingly knowledge-based economy, the organizational

The down sides of this model are:

The relative newness of this emergent model means that there is no

Ruth Armstrong, VISION Management Services

TENSION BETWEEN THEORY AND PRACTICE

Answerability to a higher authority (government, the law, the public);

Ruth Armstrong, VISION Management Services

Leadership independent from management which requires vision and

Legitimacy and Power

Ruth Armstrong, VISION Management Services

Paradox: centralized decision- making and decentralized input

Ruth Armstrong, VISION Management Services

Paradox: service and advocacy

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

Management of Board Process

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

external environment forces (eg. government directions and policies);

Agendas can build

Ruth Armstrong, VISION Management Services

Ruth Armstrong, VISION Management Services

The subject of board governance as a field of study is relatively new.

To emphasize that there is no one best way to govern an

To introduce and analyze four models of governance so that

The hybrid governance model will be heartier for having been

share our made-in-Canada versions through writing, presenting and

Ruth Armstrong, VISION Management Services

Armstrong, R. Does the Carver Policy Governance Model Really Work?

Armstrong, R. Association Governance: A Study in Paradoxes

Armstrong, R. Hybrids are heartier: Exploring four models of board