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A Contingency View of How Boards Can Best Contribute to the Efficient Management of Nonprofit Organizations

Patricia Bradshaw

Associate Professor

Organizational Behaviour

Schulich School of Business

York University

Paper for Presentation at the York-Mannheim Symposium, York University,

September 13 and 14, 2006

A Contingency View of How Boards Can Best Contribute to the Efficient Management of Nonprofit Organizations1

With the movement away from a normative view, with its corresponding assumption that there is one ideal model of nonprofit governance, we have not seen the emergence of an “anything goes” approach. Instead we have learned that attention and reflection, and perhaps even more importantly strategic choices, must be made about the governance model selected if the governance function in a nonprofit organization is to be effectively performed. There seems to be a growing acceptance that some kind of contingency model is at work and that there should be an alignment or fit between the board model and various internal and external contingencies if the board and organization are to operate most efficiently. A number of studies have explored various contingent relationships in nonprofits and these will be reviewed in this paper after a brief overview of the key elements of classical structural contingency theory. The paper will also report on several action research projects where a simplified contingency approach has been applied in helping nonprofit boards and staffs reflect on and define a governance model that is subjectively perceived to be the best fit for their organization. Implications of this type of approach will conclude the paper.

Structural Contingency Theory: A Brief Overview

Often students complete their first organizational theory course at university and when asked what they learned reply; “it all depends”. At the heart of much organizational theory is a contingency approach going back to some of the earliest thinking about organizations and it is still taught because it has a great deal of empirical support and because it suggest ways of aligning an organization with its environment and other contingencies. This theory represents the movement away from the notion that there is one ideal way to organize that characterized early classical management theory. The core of contingency theory, which Donaldson (2001) calls a paradigm (but not a unifying paradigm or singular theory) is that “organizational effectiveness results from fitting characteristics of the organization, such as its structure, to contingencies that reflect the situation of the organization” (Donaldson, 2001, p.1). Some of the key contingencies that have been examined are the environment (Burns and Stalker, 1961), organizational size (Child, 1975) and organizational strategy (Chandler, 1962). The basic argument is one of “fit” and if the organization’s characteristics fit with the contingencies then the organization will perform better and will be more effective. As the contingencies change the organization will adapt if it wants to avoid loss of performance (Donaldson, 2001). When in alignment the organization will succeed and will be more effective. As Donaldson summarizes:

“organizational effectiveness can have broad meaning that includes efficiency, profitability (Child, 1975), employee satisfaction (Dewar and Werbel, 1979), innovation rate (Hage and Dewar, 1973), or patient well-being (Alexander and Randolp 1985). Organizational effectiveness can be defined as the ability of the organization to attain the goals set by itself (Parsons 1961), or by its ability to function as a system (Yuchtman and Seashore, 1967), or by its ability to satisfy its stakeholders (Pfeffer and Salancik, 1978).” (Donaldson, 2001, p. 6)

In structural contingency theory the external contingency variable of environmental uncertainty impacts on internal organizational characteristics such as task uncertainty that in turn causes adoption of a particular structure (e.g. organic). Size is a well recognized contingency variable and is defined as the number of members of an organization (e.g. employees). Size has been found to affect organizational structure (e.g. Blau, 1972; Child, 1973). There are two contrasting contingency theories of structure; organic and bureaucratic (Donaldson, 2001, p.21). As Burns and Stalker (1961) define it in organic theory structure can vary from mechanistic (top-down, centralized decision making, clear job descriptions for subordinates and formalized) to organic (relying on light control of employees, decentralization and low formalization). The mechanistic approach fits low task uncertainty and is related to an environment that is characterized by low levels of technological and market changes. On the other hand if task uncertainty is high because of external environmental turbulence then expertise must be distributed and a more participatory style will allow the organization to innovate and be effective. Under bureaucratic theory the main continuum is simple structure to bureaucratic structure (e.g. bureaucratic is decentralized but high on formalized with many rules and specialized with job descriptions). According to this theory the level of bureaucratization of structure fits the contingency of size and consequently low levels of bureaucracy fit smaller organizations. As they get larger effective organizations will have taller hierarchies, more specialization, more delegation and more formalization. Donaldson (2001) has proposed ways of integrating the various contingency factors and I recommend that interested readers refer directly to his book which is the source of this brief summary.

Morgan (1986, 1989) also attempts a synthesis of contingency theory and suggests a way of profiling organizational characteristics to determine congruence or non-congruence between various organizational subsystems (see figure 1). The model hinges on the external environment as the key contingency variable (which ranges from a high degree of stability/certainty to turbulence/unpredictability). He then includes the following organizational subsystems in his model: strategic, technological, human/cultural, structural and managerial. As shown on his model a subjectively created profile of an organization’s congruence across the various subsystems can be created and required changes based on how alignment with the perceived or enacted external environmental uncertainty is defined. While not as academic an approach Morgan’s model is rooted in contingency theory and is a helpful diagnostic tool for students of organizations and for managers.

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Inset Figure 1 Here

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In classical contingency theory, in addition to debates about the relative importance of various contingency factors, there has also been a debate about the degree to which contingencies are deterministic versus the role of strategic choice (Child, 1973). The concern of some scholars is that contingencies make some structures, such as bureaucracy, inevitable and thus preclude alternatives such as organic or more power sharing and flexible styles. Particularly, in segments of the nonprofit sector where certain ideologies, such as feminism, consciously inform organizing this is a concern. It has been argued that with strategic choice “perceptions, beliefs, political interests, and power are added to the contingency theory model so that human action is entered into a model that otherwise deals in impersonal variables such as environment, size, structure and performance” (Donaldson, 2001, p 132). By purposefully or strategically changing contingencies an organization can regain structural alignment and avoid having to fit their structure to their contingency (for example, a nontraditional or social justice nonprofit might make the choice to stay small so that their structure remains non-bureaucratic and organic).

Nonprofit Literature and the Contingency Approach

There has been growing speculation about, and subsequent empirical research on, the relationship between a variety of contingencies and various models and practices of nonprofit governance (and a parallel dynamic seems to be unfolding in the corporate governance area see Strebel, 2004; Nicholson and Kiel, 2004; Lamm, 2004). The primary driver behind this way of thinking, as in the mainstream organizational theory literature, is recognition that there is no normative ideal or one best way of structuring and organizing. Robinson (2001) declares this in the title of her book called: “Nonprofit Boards That Work: The End of One-Size-Fits-All Governance”. As early as 1985, Kramer argued for a contingency approach to board-executive relations based on power/dependency relations. Middleton (1987) reminded the field that boards are both part of the organization and the external environment. Research is showing that there is more than one way to organize a board but that it is not a case that anything goes and what is required for effectiveness is reflection on the governance model. For example, Nobbie (2006) reports that in her dissertation she found that boards, across a variety of types of organizations, benefit from adoption of, and adherence to a model of governance, but there is little evidence that adoption of one particular model (in her case the policy governance model) yielded significantly higher board or organizational performance. Brown (2000) concludes that models of governance must reflect organizational needs and environmental constraints but that different models of governance can be associated with effective governance. Similarly, Brudney and Murray (1997) suggest that each organization must develop its own unique model for the board based on the organization's environment, history, set of personalities, and culture. Cornforth (2003) argues that rather than search for the “right” board model or approach boards need to balance tensions or paradoxes in a reflective and balanced way.

In addition, there is a growing consensus that while more than one governance model can be effective there are certain core responsibilities and roles that all boards must fulfill regardless of the governance model used (Ostrower and Stone, 2005). For example, Widmer and Houchin (2000, p. xvii) suggest that:

“There are simply too many variables – such as size and complexity of the organization and its environment, number of stakeholders, size of the board, number of committee (if any), and frequency of meetings – to embrace a single model or recommend a specific structure for the work of the board. Because each organization is different, we recommend a contingency approach to nonprofit governance. The contingency approach suggest that even though all boards have the same responsibilities, the manner in which a board can most effectively organize itself and fulfill its responsibilities depends on the characteristics and values of the board and the organization”

They then go on to outline the principles that inform effective governance in all organizations regardless of the model selected (following the legal frameworks and focusing on critical issues) and main responsibilities. Similarly, Chait, Ryan and Taylor (2005) outline the key modes of governance, fiduciary, strategic and generative, that all boards must engage in, although as they point out many are currently not strong at performing leadership functions and working in a generative mode. So the premise of much of the literature is that there is no one ideal model but there are certain roles, responsibilities and functions that all boards must perform regardless of the governance model used. Gordon (2000), in his thesis, suggests that nonprofit leaders who seek to increase board effectiveness should delineate responsibilities and facilitate a shared understanding about governance regardless of the operational model. The question remains, however, about how to do this and what factors can or should be taken into account in the process.

In starting to explore the contingencies that inform the selection of a governance model and the impact they may have, a number of researchers and consultants have conducted empirical research with to-date largely mixed and at times inconclusive findings. Mel Gill (2005) identified nine board “types”, and various hybrids of them, that differ based on the boards heavily involvement in operations (e.g. operation and collective) to those less involved (e.g. policy, fundraising and advisory boards). He then mapped these types along the one combined dimension including of scope (geographic or jurisdictional such as local, provincial/state or national), size (of budget/staff) and complexity. However he found in his research that all types were just as likely to be correlated with board or organizational effectiveness (Gill, 2005, p. 36). As a consultant he concluded that creative application of practical knowledge is the best way of fitting governance to a particular organization. Cornforth (2003) in his book says that we need to take into account the contextual factors that influence or shape board characteristics or how they work. Building on the work of Ostrower and Stone (2001) he models the contingencies that impact of board characteristics (composition, power, structure and processes), roles and effectiveness. The external contingencies include legal and institutional environment, field of activity, stakeholders and funding environment. Internal contingencies include the organization’s age, size, phase of development and complexity. Below is a summary of some empirical research that has specifically addressed various contingency factors in research done to date.

External Environment

Looking at a population of United Ways, Stone, Hager and Griffin (2001) found differences in organizational characteristics between the nonprofits with higher proportions of government funding and those with higher percentages of Untied Way funding, including organizational size, number of board members, administrative complexity, use of volunteers, and the racial diversity of boards, staff, and volunteers. Saidel and Harlan (1998) also found that the how governance responsibilities in nonprofits are distributed is influenced by government revenues including grants and contracts. Foster and Meinhard (2002) had more mixed results in their study of the responses of Canadian social service organizations to funding cutbacks by the government. They found that these organizations were more likely to engage in activities focused on raising funds as opposed to cost containment strategies in response to environmental changes. Alexander and Weiner (1998) found a relationship between the adoption of corporate governance models by hospitals and their size, growth rate and relative stability in performance and avoidance of competitive pressures. They also suggest that other nonprofits will want to avoid these corporate models because of their mission, values (such as volunteerism and stewardship) and relationships with key stakeholders. It appears that aspects of the external environment are related to governance models and board characteristics but this research is still in its earliest phase.

Size

Rochester (2003) looked at the role of boards in small voluntary organizations and found distinctive differences when there is only one paid staff member to carry out the operational activities of the agency and he concludes that “size does matter”. He found that these small organizations made decisions in a more informal and political fashion rather than based on formal decision making procedures and managerial techniques, that it was very difficult to differentiate between the role of the board and the staff and that the function of governance is taken as a responsibility of the organization as a whole rather than just of the board. This is consistent with contingency theory that says that in effective small organizations there will be more organic processes rather than bureaucratic or mechanistic. Stone and Wood (1997) based on research in small, religiously affiliated social service providers, suggested that small size leads to relatively simple governance structures and informal but centralized control systems. Cornforth and Simpson (2003) did a large empirical study of the impact of organizational size on a variety of variables including board changes in the previous three years. They found that larger organizations tend to have larger boards with different structures (e.g. larger size is related to more sub-committees) and more formalization in terms of written job descriptions and formal supports such as training for board members. This research seems to support the mainstream research on size as a strong contingency factor.

Ideology

Grant (2003) looked at women’s organizations and collectives where feminist ideology and perspectives led to struggles to resist bureaucracy and hierarchical power relations. She concludes that “an organizations governance and development might be influenced simultaneously by internal factors like size, income, age, where the organization is in its life cycle, the tasks it performs or its ideology and external factors such as pressures from funders, new legislation, the changing role of women, or the rural economy’ (Grant, 2003, p 234). With the emergence of hybrid models Grant found that some of the larger women’s organizations seem to be making strategic choices to dismantle layers of bureaucracy and hierarchy while some of the groups in the movement are building in more structure as they find it increasingly difficult to be completely flat. While intuitively one would expect ideology to inform governance there has not been a lot of research in this area.

Organizational Age

One of the most widely supported contingencies in the nonprofit field is organizational age and what has been discovered is that there is a relationship between the age of the organization and the board model (e.g. Mathiasen, 1990; Wood, 1992; Born, 2000). The metaphor that has been applied to this contingent relationship is “life cycle”. Wood (1992) found cycles of governance from founding, super managing, corporate to ratifying and that the older the organization the more cycles they are likely to have completed although she does point out that there may be other contingent variable influencing this process including power relations and organizational culture. Dart, Murray and Bradshaw (1996) found significant correlations between organizational age and increasing formalization of the board, more elaborate committee structure and increasing board size. One would expect a correlation between age and size but more work will be needed to examine this link.

Strategy and Structure

Brown and Iverson (2004) explore the link between strategy of the nonprofits and structure using the strategy typology developed by Miles and Snow (1978). They found support for the strategy - structure relationship and for example found that nonprofits with a prospector approach to strategy tend to emphasize innovative programs and encourage staff experimentation along with having broader board committee structures with more constituent groups involved in them. Defenders in contrast emphasized efficiency had more well defined services and few committees. Young (19??) suggests that the sector that a nonprofit works in may influence their strategy and structure and in particular he finds in a case study approach that international advocacy associations will be more successful if they adopt a decentralized, federated structure.

More research is required to explore the explanatory power of the contingency paradigm in nonprofits and systematic meta-analysis and synthesis of the research will also be required. More studies are also needed that combine various contingencies (Brown and Iverson, 2004). None-the-less, the work done to date is largely encouraging and suggests the value of such an approach. Given the long history of contingency theory and its deep acceptance in organizational theory I have been working with nonprofit boards to examine how they can apply these concepts in practice to inform decisions about what governance model makes the most sense given their context and contingencies. In the rest of the paper the result of some of this work will be reported and suggestions for moving contingency theory into practice made. This work involves a more experiential and tacit approach to knowledge about contingencies.

Contingency Theory in Action

Action research (Zohar and Borkman, 1997) or, perhaps more accurately, a “catalyst model” (Milofsky, 2006) informs this section of the paper. In each of the projects described below I worked with the board and staff of the nonprofit organizations to determine the most appropriate governance model for their organization. As suggested by Brudney and Murray (1998, p. 346) I believe that it is “worthwhile to have the board go through some form of explicit, planned self-renewal exercise at regular intervals” and that participation in the process is most likely to lead to ownership by the board of the changes. My role in each of these cases was a catalyst and at the time I was doing the work it was not my explicit objective to collect the findings for publication (Milofsky, 2006), however, I did want to see if the contingency approach had value in the field. Unlike Milofsky (2006), however, my engagement with each site tended to be shorter and more focused with fewer stakeholders being involved. In each case I contributed the theory and models and facilitated a discussion and process of assessment, reflection, decision and action planning for next steps. Each intervention was based on contingency theory and a corresponding underlying framework for decision making but in each case the participants constructed (Maitlis, 2005) or enacted their reality (Weick, 1995) and made strategic choices to accept the contingency model and its implications for alignment or not. Below I will describe the process, give two brief examples of how it was applied in each setting and then explore the implications of this approach.

This paper grows out of an earlier one presented at ARNOVA (Bradshaw et. al., 1998) where we made an early call for the use of a contingency framework. At that time we also proposed a typology of governance models based on two dimensions (see figure 2). The first dimension is stability versus innovation and this dimension acknowledges that some models of governance are explicitly, and often implicitly, more oriented toward sustaining continuity within the organization/sector and in perpetuating established ways of doing things. On the other hand are models of governance and organizational missions which are more open to change and innovation whether that change is toward increased efficiency or toward fundamental social change. The second dimension is unitary versus pluralistic. With this dimension we are attempting to reflect whether the model applies to a single organization or to a network or group of related organizations, stakeholders and/or constituents.

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Inset Figure 2 Here

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Based on these two dimensions we identify four basic models of governance. The Policy Governance Model (top, left quadrant) applies to single organizations and tends to be focussed on a situation of stability and established ways of working. The Entrepreneurial Model (top, right quadrant) also applies to the single organization but it has more of a focus on innovation and change, often in the direction of more efficiency and effectiveness as in the entrepreneurial or corporate fields. As we move away from the models which deal with the single organization we find the Constituency/Representative Model (bottom, left quadrant) in which the board reflects and includes groups of associated organizations by having representatives of each on the board and still has a fundamental valuing of established ways of working. In the final quadrant is what we call the Emergent Cellular Model which is the least well articulated in the field. We conceptualize this model as multi-stakeholder or multiple organizations connected in a distributed network with a commitment to innovation and flexibility. The paper also suggests that organizations may want to adapt these governance models and develop a “hybrid” model that is the best for their particular set of circumstances. In the paper by Bradshaw et. al. (1998) each model and its strengths and weaknesses are described. Since this work was presented at ARNOVA other typologies of boards have been developed (e.g. Renz, 2004; Gill, 2005) but here I will report on two projects that used this typology in order to assist boards of nonprofits select a governance model that was most appropriate, from their perspective. In the next section of the paper the process that was used with each organization is described and then examples provided.

The Process

In working with boards and senior staff in a number of organizations over the past six years I have developed an approach that I have found useful in helping the groups understand their choices with regards to governance and to define a model that, in their own view, best fits given their own relevant contingencies. Below is a brief outline of the steps in the process as I have now evolved it.

1. Establish goals for the day and negotiate the norms for how the groups will work together. The goals are typically to get consensus on a governance model for the board and organization and to start to get an action plan for implementation of the model (if it represents a change from the existing model). In terms of norms the group typically addresses the role of the facilitator given that she is an academic, power implication of having board and staff working together, how to deal with conflict and how to make decisions etc.

2. Overview of some of the relevant research on nonprofit governance including the findings of a correlation between effective boards and effective organizations (e.g. working on governance seems to matter), the life cycle of nonprofit boards, a reminder that there is no one best way to govern but there are a set of core functions that you must perform (e.g. setting or approving strategic direction, fiduciary and stewardship responsibilities, evaluating the Executive Director and replacing them if required, liaison with external communities, self assessment etc.). I also present the typology of governance models (from figure 2) and outline the philosophy of contingency theory. During this stage I am attempting to help the participants to understand that what they are doing is important but that they have choices to make about their model. Given my perceived expertise as an academic I attempt to legitimate their range of choices and to empower the group to take ownership over their own governance model.

3. If the group does not have debilitating issues regarding how board and staff are working together (a common challenge for nonprofits) I then move the group to an assessment of the contingent variables that will inform their choice of governance model. I start with the external environment and this includes an assessment of the degree of stability or uncertainty that the organization is facing. Included in this I will sometimes ask them to do an environmental scan including an assessment of the trends and issues facing the organization across a number of relevant dimensions (e.g. funding (including donors, government, foundations etc), volunteers and employees and other stakeholders, technology, political context, demographic shifts, social attitudes, legislative and regulatory changes, etc). I then ask each participant to assess the degree to which they feel the overall context of the organization is stable or turbulent on a scale from 1 to 10. They then share perceptions and try to come to some consensus on the relative degree of uncertainty of the external environment. I plot this on a diagram similar to that in Figure 3.

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Inset Figure 3 Here

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Clearly, this is a subjective enactment of the environment and the rest of the contingency exercise is dependent on the validity of this assessment. I will often play a “devil advocate” at this stage to ensure that the environmental complexity and uncertainty is critically reflected on. I will also, at times, challenge a group if they perceive an extremely uncertain context when they have secure government funding and have been able to grow successfully and occupy a stable niche and strategy. A critical part of contingency theory is the ability to assess shifts in the external environment and to then re-align the organization to fit the changing context. Successful organizations are the ones who can make such adjustments and my contribution to the process is often to provoke reflection and to see if the board and staff have failed to identify changes over time. We then assess the organizations current approach to strategy (proactive and goal oriented to emergent and reactive), the current structure (mechanistic/bureaucratic to organic), stage in the life cycle (mature to founding) and the organization’s ideology (traditional to alternative). I have modified Morgan’s framework to include contingencies that the nonprofit literature has found to be particularly important to nonprofit organizations as reflected in Figure 3.

4. Once we have gone through this exercise we assess the extent to which the organizational contingencies are in alignment. The final step is to look at the current governance model and map it according to the degree to which it is more consistent with policy governance versus emergent cellular governance. I find that in working through this process that groups will often intuitively understand which model of governance makes the most sense given their external environment and other contingencies such as ideology, size, age, strategy and structure. I propose to them that the governance model needs to be in alignment with the other contingent variables. Thus, in a stable environment, an organization with a more bureaucratic structure, a traditional ideology in an older organization will be more effective and efficient with a clear separation of roles of board and staff, more formalization and better developed committee structures and consequentially policy governance is most appropriate. Alternatively, in small, grass roots, younger organizations facing a complex and uncertain environment they will be more effective if they create a more flexible, emergent cellular form of governance with more power sharing between board and staff, less formalization and more adhoc committees. If the organization is out of alignment and the governance model is in need of changes we then discuss what needs to happen and how to implement the changes. In the next section I will describe two cases of groups that have worked through the process and the outcomes in terms of governance models that they have arrived at.

Case One: The Education Association

This organization is a national, bilingual, charity that has as its mandate the improvement of education in Canada. It was founded in 1891 and was historically well supported by government and had a clear sense of its mission and role. The board was a traditional “old boys” network and rubber stamping model with a management style that was autocratic and a traditional managerial ideology. By the late 1980’s, however, the support for the organization began to decline and they faced significant financial challenges. The Board and organization faced an identity crisis and they asked themselves if they were still relevant or not. The context was described as “unpredictable, unstable, politicized, fragmented and controversial”. A new Executive Director implemented a Board initiated revised strategic plan and new sources of funding were found, programs were reviewed and changed and new members and partnerships developed. The Board was predominantly a constituency board and had a membership of 36 people meeting twice a year with representation from all provinces and territories. They had a seven member Executive Committee, four other committees. They recognized the need to revisit and change the governance model in the face of the significant changes in the external environment and a movement from the right hand of the framework toward the more turbulent end (about a 4 or 5 out of 10 ranking for the degree of environmental uncertainty). Working with this group and using a contingency framework they came to see how the traditional alignment down the left side of Figure 3 was changed by a shift in the environment toward the right end of the continuum and more turbulence and uncertainty (however, given their age, size, reputation and success in finding new funding sources they had not moved all the way to the right end of the continuum). As a result the Board and staff agreed that they needed to shift the governance model toward a more entrepreneurial, emergent cellular hybrid model with a little less of a constituency and policy focus. The Board realized that it had to be less of a rubber stamp and become more transparent and accountable for financial oversight and less of an association of “elites” to more of a network of constituents with a clearer recognition of their overlapping interests and concerns. Thus, they could become, within the larger system of education, more of a forum for discussion and dialogue, a stage setter for critical debate and a place where diversity of voices about the future of education could be heard in a more grass roots fashion. Thus the committees were enlivened and more networked with horizontal communications enhanced. More adhoc committees were established to deal in a more organic way with emerging issues. While the Board was still large and formal using Roberts Rules of Order with clearly structured agendas they also try to create more space for strategically focused dialogue and debate on agenda items and more environmental scanning. Membership on the Board was broadened through the elected seats and a more empowered Executive Secretariat that would meet more often than twice a year and provide more vibrant leadership was established. This organization felt that with these changes their governance model would be more in alignment with the external environment and they would be better positioned to respond to shifts and unanticipated changes that they expected to continue.

Case 2: Community Pride

This small nonprofit organization has the mission of coordinating and hosting Pride Week which is an annual set of events that supports, empowers and celebrates the community of lesbian, gay, bisexual, transgendered, intersex and queer people in the community they serve. It has a small staff (Managing Director, part time office administrator and a full time manager of Volunteer Development) and an extensive set of volunteers who, along with the Board come together to organize the ever growing set of events, including the parade, that make up Pride Week. This nonprofit was founded in 1970 and it has a history of being flexible, inclusive, fun, political and open to change and innovation. The organization is highly dependent on its volunteers to make the events successful and the external environment has been seen over the years as unpredictable and uncertain (e.g. finances are uncertain, city politics volatile, weather uncontrollable, the community increasingly diverse and very political and the attitude of various publics and stakeholders changeable). The Board is small (currently 9 members with two co-chairs) and at times gets overwhelmed with logistics and organizing of the events of the Pride Week. After a review of the contingency model they did come to see that while they had a highly unpredictable external environment that in fact over the 35 year history of the organization that they had become more institutionalized and that with the hiring of some paid staff the Board could start to think about a new governance model. While funding, for example, was uncertain it was not as uncertain as in the early days. New things (like skyrocketing insurance rates) could hit them unexpectedly but relatively speaking there were more organizations who wanted to contribute as the recognized the value of the “Pink Dollar” and the market opportunities represented in the LGBT communities. This shift in their perception of the external environment from the left end of the continuum toward the right and with the structure becoming more stable, the size larger and the organization older and more mainstream signified time for changes in the Board. After reflection the Board agreed that it needed to move out of hands on operations toward more strategic planning. It needed to become more formalized in its operations and it also had an opportunity to be seen as more accountable to its various constituencies. In defining its new governance model this organization also saw the need to recognize the seasonal nature of its work. Every winter and spring the whole focus of the organization, despite a desire to be more policy focused and strategic, moved into hands on preparation for the events of the week. Despite the best laid plans for the Board to stay more hands off there were always predictable crises and everyone would be called on to roll up their sleeves and help out. One governance model they played with was a seasonal one and the suggestion was made that strategic planning, learning and reflection would happen after Pride Week and in the summer and early fall and the rest of the year the Board would be ready to move back into more of an operational mode if needed, at least in the short run until more staff was hired.

Discussion and Conclusions

Above I describe two organizations that used this approach of contingency analysis in a facilitated process of rethinking their governance model. In both cases the participants in the workshops found the approach useful and insightful. In one case the organization’s environment actually seemed to the group to becoming more uncertain and unpredictable and the decision was made to move away from a rubber stamping model of governance to a more engaged and strategic mode. In the other case a social justice organization realized that over time its environment had shifted more towards relative predictability and that it was time to move away from a hands-on working board model (at least for part of the year). In each case the boards needed to engage in debate and exercise strategic choice in selecting the best governance model. In the Educational Association there was strong consensus that this made sense and the contingency approach resonated and seemed consistent with people’s tacit knowledge. When they learned the theory it gave them a framework and a confidence about implementing the changes. At the Community Pride organization the shift in the environment was largely understood but the group was also highly divided about moving away from the more hands-on model of governance. The issue that particularly triggered the debate was informed by the ideology as a contingency. Some members of the board felt that the move to hire more professional staff, to increase formalization and to become more strategic and even apply policy governance was a move toward corporatization of the organization. It meant a potential risk that the organization would not be as responsive to its various constituents and to the grassroots history of the organization. They believed the changes could even threaten the legitimacy of the organization in the eyes of key community stakeholders (while it also made the organization appear more accountable in the eyes of funders and corporate donors). This example highlights the role of strategic choice in the nonprofit sector and the need to include contingencies that reflect ideology and power relations in ways that may not be as applicable for researchers in the for-profit field. For example, in feminist collectives with an alternative ideological framework they will often make the choice to stay small so that they can sustain a more organic, more feminist, power sharing and collectivist, and less bureaucratic, structure and approach to governance.

Through using this approach I have observed that groups come to reframe their previously predominately psychologically framed, interpersonal dynamics and relations between board and staff to a frame that is a more detached, structural and sociological. They often come to see that all organizations change and shift on the various dimensions over time and that conflict and tension are normal aspects of such changes. With more critical assessment of their contingencies they are often able to co-create a new way of working together without blame and with more of a sense of ownership and empowerment. As one participant said in their evaluation of a workshop, “The validation that we do have a good organization, after all, that we are still a growing organization and that we aim to improve as we grow-up was great. It’s OK to reassess ourselves”.

One implication of this work is that we need not only more empirical research on contingencies but also more action research. As academics and scholars we can feel more confident that the underlying tenants of contingency theory are valid for nonprofits and can be extended to the domain of the boardroom. We can use this to play a catalyst role in the field and to help empower nonprofit board members to name their own governance needs and models while still fulfilling the core responsibilities of good governance. They do have choices from this perspective and can strategically reflect on what is best for them. We do, however, need to share our experiences and continue to learn about what works and what is not working. Academics, consultants and practitioners need to share experiences so that nonprofits can stay adaptable and efficient in highly uncertain and changing contexts and especially where expectations for governance are increasing. As contingency theory suggests, organizational effectiveness and efficiency will result when organizations change to stay in alignment as contingencies change and this all starts with the external environment. In these changing times this type of flexibility in the design of board and organizations poses a significant challenge but good governance requires such adaptability and critical reflection. As we move away from the belief in one best model we cannot afford to assume anything goes and we need clear heuristics to contain change and provide frameworks for thinking about what is possible. Paradoxically, as we get clearer about the range of choices we can actually make choices that will enable all nonprofits, regardless of their ideology and relationship to the status quo, to be successful.

Figure 1: Morgan’s Profile of Organizational Characteristics

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Figure 3: Revised Contingency Profile for Nonprofit Governance

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References

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1 This paper grows out of an earlier one by P. Bradshaw, B. Hayday, R. Armstrong, J. Levesque and L. Rykert, “Nonprofit Governance Models: Problems and Prospect” ARNOVA Conference Seattle Washington, 1998. Anyone who would like a copy can email pbradshaw@schulich.yorku.ca.

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