Corporate Governance and Ethics

Chapter 13

Corporate Governance in Private and Not-for-Profit Organizations

INTRODUCTION

TYPES OF NPOs

PURPOSE AND ROLE OF NPOs

PUBLIC TRUST IN NPOs

GOVERNANCE OF NPOs

GOVERNANCE STRUCTURE OF NPOs

OVERSIGHT FUNCTION OF NPOs

INTERNAL CONTROL IN NPOs

SUMMARY

KEY TERMS

REVIEW QUESTIONS

DISCUSSION QUESTIONS

NOTES

INTRODUCTION

Not-for-profit organizations (NPOs) are usually established to achieve philanthropic purposes rather than maximize the wealth of their stakeholders. The emerging corporate governance reforms discussed in the previous chapters are normally aimed at improving corporate governance of for-profit organizations (FPOs), particularly public companies. However, private companies and NPOs such as government entities, health care organizations, colleges and universities, and charitable organizations have been under scrutiny for their governance. In the context of corporate governance and accountability, NPOs have the same stewardship responsibilities as business corporations. NPOs have a fundamental difference with business corporations with respect to their relationship with their stakeholders in that NPOs receive grants, which are funds from their constituencies, to provide services to the community. This chapter discusses corporate governance in private companies, state and local government entities, health care, colleges and universities, and other NPOs.

Primary Objectives

The primary objectives of this chapter are to

• Discuss the purpose and roles of NPOs.
• Evaluate ...