10 Tips for Mastering Nonprofit Governance

Due to the fact that non-profit organizations, the purpose of their creation, the procedure for registration and activities are fundamentally different from commercial organizations, contains a number of subtleties and individual points.

Management in Non-Profit Organizations

Non-profit organizations have the right to engage in entrepreneurial activities only if this activity is aimed at achieving the goals of the organization of good. The implementation of nonprofit governance cannot act as an end in itself, because in the end, managers and investors strive to achieve certain financial indicators and a synergy effect, and not to record another deal on their personal account of victories, although such cases happen in the world practice of corporate governance. That is why the task of clearly defining the motives for mergers and acquisitions is very important.

There are three characteristics that distinguish non-profit organizations from commercial ones:

    1. First, most non-profit organizations do not have outside shareholders providing capital to the business.
    2. Second (as a consequence of the first feature), they do not distribute dividends, so any profit (or surplus) generated is retained by the organization as an additional source of capital.
    3. Third, their goals usually include some social, cultural, humanistic, social, or environmental aspects that would be difficult to effectively implement within the normal market structure.

What Are 10 the Most Important Tips on Mastering Nonprofit Governance?

      1. Consultations on the state registration of non-profit organizations in the organizational and legal form.
      2. Competence of the supreme governing body as a general rule for non-profit organizations.
      3. The right to form the agenda of the general meeting of shareholders and the right of the chairman of the board of directors to conduct general meetings of shareholders.
      4. Control of the agenda and determination of the sequence of resolving issues, the sequence of voting at the general meeting.
      5. The adoption of decisions on dividend policy, on issues of reorganization, can be made only at the suggestion of the board of directors.
      6. Exercising control over the activities of executive bodies.
      7. The work of executive bodies in general and at the level of individual officials.
      8. Clarification of the company’s strategy.
      9. The achievement of the company’s goals in the field of marketing and sales.
      10. Financial results of the company’s activities.

Supreme Governing Body of a Non-Profit Organization

The global financial crisis caused a serious rethinking of a number of corporate governance issues and the place of nonprofit governance in the company’s management system. International expert organizations and state regulators are actively involved in the process of revising the standards of good corporate governance, trying to find the reasons for the not always adequate response of various organizations to the crisis, as well as to develop a common recipe for solving such problems in the future.

The competence of the supreme governing body of a non-profit organization includes resolving such issues as:

      • amending the charter of a non-profit organization,
      • determining priority areas of activity,
      • principles for the formation and use of the property of a non-profit organization,
      • forming the executive bodies of a non-profit organization
      • if necessary, early termination of their powers, approval of annual accounting report,
      • balance sheet, approval of the financial plan of a non-profit organization and making changes to it,
      • the creation of branches, the opening of representative offices of a non-profit organization, participation in other organizations, reorganization, and liquidation of a non-profit organization (except for the liquidation of a fund).