Volunteer leaders must hold common principles
By Kelvin Taketa
In an era of corporate reform fueled by scandals and the resulting Sarbanes-Oxley legislation in Congress, regulators are bearing down on the possibility that some of those practices might be transferred to nonprofit organizations.
Before nonprofits are subjected to any comprehensive reforms, we should take a step back and consider the nature of the field.
First, it is important to remember that most nonprofit organizations are only well-intentioned and run with integrity. By most estimates, there are more than 5,000 registered nonprofit organizations in Hawai'i. While it is impossible to eliminate all misconduct or mismanagement, few of them engender serious complaints or allegations.
Second, these organizations are there because of a perceived need in our community. It is part of the foundation of our country as a democracy to encourage the organization of people around issues that matter to them. The formation of nonprofit organizations, associations and community-based organizations reflect this tradition.
While some evolve into behemoth organizations that rival private business in size, complexity and scale, others remain small or wax and wane as needed.
In our attempts to define what a nonprofit is, we sometimes fail to recognize this diversity and settle on generalized characterizations — its challenges and solutions. For example, the field remains dominated by a corporate governance model that defines the roles of a board and paid staff and places all of the decision-making authority and responsibility in the hands of one or the other.
Many nonprofit organizations have few, if any, staff or rely heavily on volunteers for most of their activities. Certainly, one size does not fit all.
Deputy Attorney General Hugh Jones has proposed a set of minimum governance policies and practices that should be in place at nonprofit organizations. While large nonprofits can and should adopt many of these practices, I believe that, instead, there need to be some common principles that apply regardless of the practices in place to achieve them.
First, the volunteer leadership, whether it is a formally constituted board of directors or not, must take its oversight responsibility seriously. Volunteers can have specifically designed roles and assignments that are crafted to fit their expertise or interests. Whatever the assignment, service in a leadership position means commitment.
What cannot suffice is board service in name only.
Second, leadership, at the board and staff level, must be shared. These organizations legally receive public benefits because they serve the public. A single dominant individual with unfettered authority or without independent input raises serious questions about the balance and diversity that are needed for reflection and accountability.
Finally, volunteer leadership owes its fiduciary duty first to the community, and second to its organization. Resources collected for the organization are provided to achieve a public purpose, not just to serve the organization.
Volunteer leaders must understand their responsibility to review and challenge the efficacy of their organization in the context of the community it serves.
Whatever the case, boards and staff need to engage in serious discussions around governance, looking at best practices or common principles. We should allow organizations to develop alternative structures and policies that fit their circumstances best. We must recognize that the diversity of interests, people and programs served by these nonprofits require such flexibility.
Kelvin H. Taketa is president and chief executive of the Hawai'i Community Foundation. Reach him at kelvin@hcf-hawaii.org.
