A model of governance practices for a nonprofit organization's board of directors: A systematic review and meta-ethnographic synthesis

The board of directors of a nonprofit organization (NPO) is responsible for governance. Unfortunately, many boards are not prepared or understand what it takes to govern, and as a result, some of these well-meaning nonprofits become exposed in the press, as scandals are uncovered. Much of the research that has examined the role of the board to govern the NPO has focused on a single organization, organizations in the same taxonomy, or NPOs in the same geographic area. In addition, anecdotal stories, while interesting, have served to increase the gap between what scholars offer and what is useful to an NPO board by expressing a personal experience that cannot be used by other NPOs. This research seeks to identify organizational practices that, when implemented, improve the probability that a board will effectively govern the NPO. Employing a systematic review of research on the role and responsibilities of the NPO board of directors this study develops a working model of organizational practices to identify, attract, and retain a board of directors capable of effective governance. From the study’s findings, three themes emerged that support specific organizational practices: a well-defined mission statement for the organization, a formal recruiting process for board members, and frequent training and development initiatives for the board. Each practice is an integral piece of facilitating a board of directors who are capable of governing the nonprofit organization.A MODEL OF GOVERNANCE PRACTICES FOR A NONPROFIT ORGANIZATION’S BOARD OF DIRECTORS: A SYSTEMATIC REVIEW AND META-ETHNOGRAPHIC SYNTHESIS By Brenda Shore Dissertation submitted to the Faculty of the Graduate School of the University of Maryland University College, in partial fulfillment of the requirements for the degree of Doctor of Management 2015 Advisory Committee: Dr. Thomas J. Mierzwa Dr. Denise A. Breckon ii © Copyright by Brenda Shore 2015 iii iv Abstract The board of directors of a nonprofit organization (NPO) is responsible for governance. Unfortunately, many boards are not prepared or understand what it takes to govern, and as a result, some of these well-meaning nonprofits become exposed in the press, as scandals are uncovered. Much of the research that has examined the role of the board to govern the NPO has focused on a single organization, organizations in the same taxonomy, or NPOs in the same geographic area. In addition, anecdotal stories, while interesting, have served to increase the gap between what scholars offer and what is useful to an NPO board by expressing a personal experience that cannot be used by other NPOs. This research seeks to identify organizational practices that, when implemented, improve the probability that a board will effectively govern the NPO. Employing a systematic review of research on the role and responsibilities of the NPO board of directors this study develops a working model of organizational practices to identify, attract, and retain a board of directors capable of effective governance. From the study’s findings, three themes emerged that support specific organizational practices: a well-defined mission statement for the organization, a formal recruiting process for board members, and frequent training and development initiatives for the board. Each practice is an integral piece of facilitating a board of directors who are capable of governing the nonprofit organization. Keywords: nonprofit, board of directors, govern(ance), organizational practices, meta-ethnography v Dedication We are influenced by many things in our life but for me, the most important is love and family. First and foremost is love and specifically, the love I have for and from my best friend and husband, Dave Kaiser. It is only with Dave’s belief and support that it was possible to have the privilege of writing this paper and completing my doctorate. When I had cause for celebration he was there with a glass of champagne and when I needed a boost to keep going, he was there to provide the needed push to keep me in the game. I thank my husband for everything he has given me, but most of all, I am so glad for his love. It is to Dave that this dissertation is dedicated. To my family, both immediate and extended, I thank you. You provided encouragement and love and made me believe that all things are possible. To my parents, John and Fran Shore, you have been my greatest supporter and advocate. No matter what I have sought to accomplish, you stood by and cheered me on to achievements that have made me the person I am today. Through your own work ethic and personal creed you have inspired me to develop and attain goals and to give of myself to others. I thank you for your continual support and dedicate my accomplishments to you both as a way of saying thanks for all you have done for me. Your life is a gift Treasure it with care You will always have our love And that wonderful family strength we share. by Fran Shore, written to me on December 29, 1998 Thank you Dave, Mom, and Dad. You make my life wonderful and I am proud to be your wife and daughter. I hope I have made you proud. vi Acknowledgements I have always maintained that an education is the one thing that no one can take away from you. As I have pursued my education there have been some notable people who have made my experiences richer and I am wiser for knowing them. While it is not possible to identify all of these great people, some must be acknowledged and thanked. First, I owe the pursuit of my own doctorate to Dr. Jerry (Yoram) Wind. As one of “Jerry’s Kids,” he taught me the importance of shifting my mental model and being open to how the world works. Dr. Wind gave me the impetus to keep growing and seek opportunities to expand my knowledge. Next I want to thank Dr. Thomas Mierzwa and Dr. Denise Breckon who for three years have encouraged, provoked, and guided me to create a dissertation that was important and relevant. Through their care and commitment to the doctoral process, I have been able to join the ranks of those before me who I admire who bear the title of doctor. Along with Drs. Mierzwa and Breckon, my cohort had an important role in making all of this possible. We set out on a long journey and together, with persistence and fortitude, we helped each other reach our goals. Lastly, I want to acknowledge my mentor and friend, Dr. Virginia Gauld. Jenny has always believed that my dream was possible. She made me laugh when things were tough and she let me vent when that was what was needed. The most important thing that she gave me, however, was confidence and there is no greater gift from a friend. Along the way, there were many other friends, professors, and sometimes, even strangers, who made my journey exciting and gave me the strength and determination to succeed. To each and every one of these people, I acknowledge your support and thank you. vii Table of Contents Abstract ......................................................................................................................................... iv Dedication ...................................................................................................................................... v Acknowledgements ........................................................................................................................ vi Table of Contents .......................................................................................................................... vii List of Tables ................................................................................................................................ xi List of Figures ............................................................................................................................... xii Chapter 1: Introduction ................................................................................................................... 1 Introductory Statement ................................................................................................................ 1 Problem Domain ......................................................................................................................... 2 Purpose of Study ....................................................................................................................... 10 Research Question ..................................................................................................................... 10 Theoretical Base ........................................................................................................................ 11 Definition of Terms ................................................................................................................... 12 Significance of Study ................................................................................................................ 12 Scope and Limitations ............................................................................................................... 13 Organization of Dissertation ..................................................................................................... 14 Chapter 2: Literature Review and Conceptual Framework .......................................................... 16 Literature Review ...................................................................................................................... 16 viii Theoretical Framework.......................................................................................................... 16 Research Review ................................................................................................................... 28 Socratic Inquiry ..................................................................................................................... 43 Proposition Summary ............................................................................................................ 44 Conceptual Framework ............................................................................................................. 46 Theoretical Lens .................................................................................................................... 46 Constructs of Conceptual Model ........................................................................................... 48 Conceptual Model.................................................................................................................. 51 Thesis Statement .................................................................................................................... 51 Chapter 3: Methodology ............................................................................................................... 53 Evidence-Based Management ................................................................................................... 53 Systematic Review Process ....................................................................................................... 54 Review Initiation ................................................................................................................... 55 Research Question and Methodology .................................................................................... 57 Search Strategy ...................................................................................................................... 62 Description of Study Characteristics ..................................................................................... 65 Quality and Relevance Assessment ....................................................................................... 67 Synthesis ............................................................................................................................... 77 Interpretation of Findings ...................................................................................................... 79 Using the Review................................................................................................................... 86 ix Validity, Bias, and Ethics .......................................................................................................... 87 Limitations ............................................................................................................................... 89 Feedback from Review Team and SMEs .................................................................................. 90 Chapter 4: Analysis of Findings ................................................................................................... 93 Organizational Practice #1: Mission Statement ........................................................................ 94 Organizational Practice #2: Recruiting Process ........................................................................ 96 Organizational Practice #3: Training and Development ........................................................... 98 Synopsis of Organizational Practices ........................................................................................ 99 Theoretical Implications of the Findings ................................................................................ 101 Revised Conceptual Model ..................................................................................................... 104 Limitations .............................................................................................................................. 108 Summary of Analysis of Findings ........................................................................................... 109 Chapter 5: Conclusion and Implications for NPO Boards .......................................................... 110 A Mission Statement to Attract Directors to Govern an NPO ................................................ 110 A Recruiting Process to Identify Directors to Govern an NPO .............................................. 112 Training and Development to Retain Directors to Govern an NPO ....................................... 113 The Three Organizational Practices in Tandem ...................................................................... 114 Implications for NPO Boards and Future Research ................................................................ 114 Engaged Governance Model for NPO Boards .................................................................... 114 Implications for Further Research ....................................................................................... 117 x Summary and Observations .................................................................................................... 118 References .................................................................................................................................. 120 Appendix A ................................................................................................................................ 140 Appendix B ................................................................................................................................ 142 Appendix C ................................................................................................................................ 144 Appendix D ................................................................................................................................ 145 Appendix E ................................................................................................................................ 146 Appendix F................................................................................................................................. 149 Appendix G ................................................................................................................................ 151 Appendix H ................................................................................................................................ 159 Appendix I ................................................................................................................................. 172 xi List of Tables Table 1. Prolific Authors of Scholarly and Practitioner Literature…………………………. 8 Table 2. Summary of Board Responsibilities by Researcher……………………………….. 37 Table 3. Summary of Propositions………………………………………………………….. 45 Table 4. PICOC for the RQ…………………………………………………………………. 57 Table 5. Mapping of Meta-ethnography Characteristics to Research Characteristics……… 60 Table 6. Integration of Systematic Review and Meta-ethnography Methodology………… 62 Table 7. Search Log Summary……………………………………………………………… 64 Table 8. Inclusion and Exclusions for Studies Selected, Including Rationale……………… 66 Table 9: Example of Weight of Evidence Framework Quality Appraisal Output………….. 69 Table 10: Results of Appraisal Process……………………………………………………... 70 Table 11: Count of Studies Used by Researcher……………………………………………. 74 Table 12: Contextual Summary of Literature………………………………………………. 76 Table 13: First, Second and Third-Order Meta-Ethnographical Concepts…………………. 78 Table 14: An Example of First-order Constructs …………………………………………... 81 Table 15: Summary of First, Second, and Third-order Constructs from Meta-ethnographic Synthesis……………………………………………………………………………………. 86 Table 16: Summary of Organization Practices Mentioned by Primary Researchers……….. 100 Table 17: Variables Mapped to Propositions and to Meta-ethnographic First-order Constructs to Validate the Efficacy of the Conceptual Model……………………………… 105 xii List of Figures Figure 1. 2014 NPO contributions by source …………………………................................ 4 Figure 2. The three modes of board governance …………………………………………… 6 Figure 3. The relationship and influence of NPO stakeholders ……………………………. 25 Figure 4. The theoretical framework examined through the levels of analysis…………….. 27 Figure 5. Theory of action and job performance……………………………………………. 39 Figure 6. The lens of agency theory, resource dependence theory and stakeholder theory… 47 Figure 7. Conceptual model for the study of NPO board governance…………………….... 51 Figure 8. Systematic review process………………………………………………………… 55 Figure 9. Continua of approach in a configurative systematic review……………………… 59 Figure 10. Fit between TAPUPAS dimensions and the Weight of Evidence framework…... 68 Figure 11. PRISMA diagram for research…………………………………………………... 72 Figure 12. Distribution of studies selected by journal………………………………............. 73 Figure 13. Dispersion of studies over selected years………………………………………... 74 Figure 14. Meta-ethnographic coding cycle and stages of synthesis……………………….. 79 Figure 15. Relationship between theory, organizational level, and practices………………. 102 Figure 16. Revised conceptual map based on findings……………………………………… 107 Figure 17. NPO board engaged governance model ………………………..………………. 116 1 Chapter 1: Introduction Effective governance by the board of directors of a nonprofit organization is a rare and unnatural act. Taylor, Chait, and Holland, 1996 Introductory Statement Reductions in federal funding to public programs, economic downturns, and an increase in public awareness through social media of humanitarian problems have put a heavy burden on nonprofit organizations (NPOs) and the board of directors who govern them. To support these changes, NPOs have increased their requests for funding. The donations made provide much of the resources for the NPO to conduct business and provide a service. Without these contributions, the NPO will fail, and the beneficiaries of the organization will suffer. Unfortunately, as much as each donor would like to believe that the money, or equitable product they are offering, goes to good use, the news is prolific with stories of fraud, abuse, and mismanagement. The oversight of the NPO and the group responsible for making sure that there is an appropriate use of donations is the board of directors (Internal Revenue Service, n.d.). Research, as well as popular books, expound on the importance of governance by an NPO board and offer a plethora of suggestions on what it takes to govern effectively. Most of the suggestions, however, target specific taxonomies or are so complex that they are not easily understood. Even with all of the information available, there is still a gap in many NPOs between what the boards should be doing and what is being done. The board may have administrative limitations imposed on the board that makes it difficult to absorb the voluminous, and sometimes confusing, information on governance, and at the same time, actually govern the board. Other boards want to trust those who work with them without exerting controls, and still others are just not familiar with what is required to reduce the susceptibility that exists for fraud and 2 embezzlement. To accommodate these very real constraints, the simplified model developed in this study will enable NPO leadership to implement organizational practices that promote engaged governance and encourage scholars to simplify their studies so that they are more useful to practitioners. This chapter provides relevant background on the problem, looks at existing research on the subject, covers the purpose of this study, includes the research question answered, and introduces the method used to conduct the research. In addition, the significance of this study and its scope are included. Problem Domain Nonprofit organizations, as a separate legal entity, are a recent phenomenon; the recognition of them as separate economic sector dates back only to the 1970s (Hall, 2010). They have emerged as one of the fastest growing sectors in the world. The nongovernmental organization (NGO) is the international equivalent to the NPO in the United States. While similarities exist, f