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“Effective Corporate Governance in the Nonprofit Sector”

On March 24, 2015 by Schnader

At its most fundamental level, corporate governance is concerned with the state law statutory regime that grants to a corporation’s board of directors the authority and responsibility to manage and govern the affairs of a corporation. In the case of for-profit corporations, corporate governance practices are designed to reflect and address the fundamental relationships they have with their shareholders or other owners who have an overriding goal of maximizing shareholder profits. Nonprofit corporations, on the other hand, do not have shareholders or other owners to whom they must be accountable and do not, therefore, have the same goal of maximizing shareholder profits. Rather, nonprofit corporations have missions that impel them to act in certain ways in the pursuit and furtherance of their charitable objectives. Nonprofit corporations, however, do have other interested stakeholders that they must account for when designing and implementing appropriate corporate governance practices. Such stakeholders include, for example, the state’s attorney general, the Internal Revenue Service, and the general public-donors, other supporters and volunteers.

Partner Noel Fleming explores some of the important issues nonprofits face in designing and implementing governance practices in “Effective Corporate Governance in the Nonprofit Sector,” written for The Legal Intelligencer.