Abstract
How should the governance system in a non-membership non-profit organization be designed? This organizational form has no shareholders; instead, donors provide funds. Thus, at the organizational level, the board of directors could have all the power. Under this legal form, who controls the board? If too powerful, boards could misuse resources or distract the organization from its foundational goals. We examine the case of private higher education institutions (HEIs) in Colombia and the balance of power in university governance systems which feature this organizational form. Most HEIs in our sample have a kind of assembly of representatives as the governance body with the highest authority and able to appoint and control the board. We specifically discuss the assemblies’ reason for being, structure, and functions in private HEIs in Colombia. We analyze a total of 204 HEI governance structures and find governance arrangements with the characteristics of an assembly of representatives in 154 (75.9%). Our analysis highlights features in some of these governance bodies that could lead to overly powerful assemblies (e.g., founder donors with tenure for life). Clearly, a proper balance of power is required to avoid rent-seeking behaviors or the pursuit of harmful private non-monetary benefits from assembly members as well as boards.
Highlights
A good corporate governance system guarantees a balance of power between different stakeholders
Previous studies in the higher education literature have considered the role of boards or councils in higher education institutions (HEIs) governance, highlighting their relevance for strategy and accountability (e.g., Dixon and Coy, 2007), but we find a gap in studies dealing with the balance of power among constituents within internal HEI governance systems, a gap we address in this paper
We aim to contribute to the university governance literature from the perspective of corporate governance, discussing the design of internal governance systems and arrangements to guarantee a balance of power among governance bodies and mitigate conflicts of interest that could emerge from different stakeholders and that could threaten the HEIs’ perdurability
Summary
A good corporate governance system guarantees a balance of power between different stakeholders. As a governance body to control the board, the assembly of representatives in private HEIs in Colombia is a kind of counterpart to the shareholders’ assembly in for-profit firms It seems to protect the interest of society as a whole, preserving HEIs’ foundational goals and monitoring the proper use of HEIs’ financial resources. This paper contributes to the corporate governance literature and to the university governance literature, by highlighting the relevance of the balance of power between different governance bodies in private HEIs. We discuss the emergence of assemblies of representatives as a special arrangement of private HEIs in Colombia and the governance body with the highest authority at the organizational level.
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