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The Board of Nonprofit Organizations: Some Corporate Governance Thoughts from Europe

European Corporate Governance Institute - Law Working Paper No. 125/2009

COMPARATIVE CORPORATE GOVERNANCE OF NON-PROFIT ORGANIZATIONS, K. J. Hopt, T. von Hippel, eds.,p. 531-563, Cambridge University Press, 2010

29 Pages Posted: 8 Jul 2009 Last revised: 3 Dec 2010

Klaus J. Hopt

Max Planck Institute for Comparative and International Private Law; European Corporate Governance Institute (ECGI)

Date Written: April 1, 2009

Abstract

Nonprofit organizations have been called the 'neglected stepchildren of modern organization law.' Deficits of control in nonprofit organizations are widespread. This is due to the absence of shareholders who could monitor and of the discipline by takeover markets. This article focuses on the board of nonprofit organizations as the center of nonprofit governance and tries to see what an be learned from the corporate governance discussion. The differences between the United States and Europe as to the board of nonprofit organizations is discussed at the outset. Then the organization and functioning of the board of nonprofit organizations and board responsibility are analyzed. Key problems of organization and functioning are the board structure (one-tier/two-tier), composition and size, committees, remuneration and audit. As to responsibility the duties of the board and its liability must be distinguished. At the end much can be learned from the corporate governance movement, but everything depends on enforcement, legal or non-legal.

Keywords: Audit, board, business judgment rule, comparative nonprofit law, corporate, governance, deficit of control, independence of directors, labor codetermination, monitoring, nonprofit organization, one-tier/two-tier board, professionalization, remuneration, standard of conduct.

JEL Classification: G3, K22, L3, L33

Suggested Citation

Hopt, Klaus J., The Board of Nonprofit Organizations: Some Corporate Governance Thoughts from Europe (April 1, 2009). European Corporate Governance Institute - Law Working Paper No. 125/2009. Available at SSRN: https://ssrn.com/abstract=1425670 or http://dx.doi.org/10.2139/ssrn.1425670

Klaus J. Hopt (Contact Author)

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
D-20148 Hamburg
Germany
+49 40 41 90 02 05 (Phone)
+49 40 41 90 03 02 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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