Interest in corporate governance has waxed and waned for more than 50 years, driven by recurrent cycles of “big business” scandals. Against the backdrop of this battlefield is a seemingly more serene landscape of non-profit institutions. However, despite outward appearances, non-profits often present splendid dramas of spoiled and conflicting ambitions.
Non-profits consist of all organisations that provide services or products to a community or association without the purpose of distributing a profit. This innocent definition poses a myriad of trivial to major complications and implications. The definition is sufficiently broad to cover not only classic non-profits, such as private schools and universities, hospitals and charities, but also co-operatives and mutuals, non-governmental organisations and industry associations. Despite the stipulation of “no profit distribution”, the potential still exists for profit-like payments to be captured by various groups – for example management, workers, suppliers and board members – or that ineptitude may waste the volunteered time and money.
These dangers are surely cause for concern in the context of the massive outpourings of generosity in response to disasters, such as the donations to non-profits in the wake of the recent tsunami. How do donors know if their contribution will reach the needy? How efficient is the organisation to which they are giving? And how does the non-profit make decisions?
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