Saturday, September 19, 2020

Molk & Sokol: The Challenges of Nonprofit Governance

Molk-peter-DSC00926-500x500Sokol-DanielPeter Molk and D. Daniel Sokol (both University of Florida) have posted The Challenges of Nonprofit Governance, which will be published in the Boston College Law Review. Here is the abstract:

The stakes for proper nonprofit governance are extremely high. Over 1.5 million nonprofits are registered with the IRS, collectively empl

oying 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.

Lloyd Mayer

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