Nonprofit Boards in Australia: A Distinctive Governance Approach

Abstract

This article reports the findings into patterns of governance on nonprofit boards in Australia. The research surveys 118 boards, upon which serve a total of 1405 directors.The findings indicate that nonprofit boards can mimic some aspects of a shareholder approach to governance. But nonprofit boards, in the main, indicate priorities and activities of a stakeholder approach to governance. The features of ‘isomorphism’ that arise largely stem from legislative requirements in corporate governance. Generally, nonprofit directors are influenced by agenda and motivations that can be differentiated from the influences upon director activity in the corporate sector.The study indicates that nonprofit boards prize knowledge and loyalty to the sector when considering board composition. The survey suggests nonprofits “compensate” for the demands placed upon them about fiduciary duty and due diligence responsibilities with the diverse intellectual expertise of non‐executive directors. Nonprofit boards possess greater diversity than boards in the corporate sector; they include more women as directors than corporate boards and they include a greater proportion of directors from minority groups. While strategic issues feature significantly as a task of the nonprofit board, they distinguish themselves from their corporate counterparts by engaging in operational management.The findings indicate that, in the main, directors on nonprofit boards deliberate and operate in ways distinctive from their corporate counterparts. Such findings offer a contribution to the reform of Corporations Law in other countries and the likely consequence on boards outside the corporate sector.