The Challenges of Nonprofit Governance

51 Pages Posted: 12 Aug 2020 Last revised: 4 Sep 2020

See all articles by Peter Molk

Peter Molk

University of Florida Levin College of Law

D. Daniel Sokol

University of Florida Levin College of Law; Department of Information Systems and Operations Management

Date Written: August 7, 2020

Abstract

The stakes for proper nonprofit governance are extremely high. Over 1.5 million nonprofits are registered with the IRS, collectively employing 12 million people and accounting for 5.4% of US GDP. Yet while for-profit companies have significant checks on the behavior of boards and management, nonprofit firms lack many of the same types of internal and external governance control mechanisms. COVID-19 is just the latest in a long history of shocks to expose the lack of preparedness and capability of many nonprofit boards in fulfilling their essential governance functions.

This Article contributes to the corporate governance literature by identifying aspects of nonprofit governance that create unnecessary risk to nonprofit entities and to society overall. Currently many governance failures that would be corrected in traditional for-profit entities go unaddressed among nonprofits. We make unique contributions to addressing these governance shortcomings by suggesting an enforcement reorientation by both public and private actors. Our novel solutions encompass disclosure, certification, oversight by state attorneys general, and federal actors.

Keywords: nonprofits, governance, compliance, oversight

Suggested Citation

Molk, Peter and Sokol, D. Daniel, The Challenges of Nonprofit Governance (August 7, 2020). Boston College Law Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3668951 or http://dx.doi.org/10.2139/ssrn.3668951

Peter Molk

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

D. Daniel Sokol (Contact Author)

University of Florida Levin College of Law ( email )

Spessard L. Holland Law Center
P.O. Box 117625
Gainesville, FL 32611-7625
United States
(352) 273-0968 (Phone)
(352) 392-3005 (Fax)

HOME PAGE: http://www.law.ufl.edu/faculty/d-daniel-sokol

Department of Information Systems and Operations Management ( email )

Warrington College of Business
ISOM Department STZ
Gainesville, FL 32611-7169
United States

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