How Can Non-Profit Organizations Enhance Performance and Legitimize Their Operations?
26 Pages Posted: 18 Mar 2014
Date Written: February 22, 2013
The purpose of this paper is to identify how Non-Profit and government controlled Organizations (NPO’s) can improve and legitimize their operations while avoiding the conflicts of interest and unethical practices adopted by investor owned firms. The conflicts in investor firms arise from governance and management power being excessively centralized. The systemic global problem of executives obtaining excessive benefits provides evidence of the excessive powers of so called “best” governance practices. This paper describes how to legitimate the governance of NPO’s by: (1) Removing excessive powers with constructive checks and balances; (2) Minimizing unethical practices in the exercise of residual powers; (3) Minimizing conflicts between the mission of the NPO and unaligned personal interest of stakeholders seeking Power, Status and Influence (PSI); (4) Establishing creditable processes to manage residual PSI conflicts; (4) Engaging with stakeholders the organization has been created to serve and, (5) Establishing transparent and creditable processes for stakeholders to hold the organization accountable for the efficacy of its operations. To legitimize and enhance the performance of NPO’s the paper recommends that they adopt constitutions that systemically integrate their Corporate Social Responsibilities into their governance processes.
Keywords: Accountability, Conflicts of interest, Ethics, Non-profit governance, Stakeholder engagement, Transparency
JEL Classification: B41, D02, D03, D21, D23, D72, D74, D81, L31, L32
Suggested Citation: Suggested Citation