Understanding the Behavior of Nonprofit Boards of Directors:
A Theory-Based Approach What are Nonprofit Boards of Directors? When thinking about Nonprofit Board of Directors, you tend to think of a group of people sitting on a panel telling the owner of a company what’s best for their company. However, there are different behaviors being displayed amongst Nonprofit Board of Directors and according to (Miller-Millesen, 2003) agency theory, resource dependence theory, and institutional theory are ways to predict and understand board of behavior.
Define the Functional Responsibilities of the Board of Directors According to (Miller-Millesen, 2003), policy formation, strategic planning, program monitoring, financial planning and control, resource procurement, board development, and dispute resolution are the seven best practices for an board of directors to be effective.
“Directors have two fundamental fiduciary duties, the duty of care and the duty of loyalty.” (Responsibilities As A Director On A Board, 2012) Nonprofit Board of Directors may have all the right intentions to fulfill their duties, but may fall astray upon circumstances. We all have heard the saying “any means necessary” well Nonprofit Board of Directors maybe put in a position to do just that act in way they should not act. “Following the law may seem a simple charge, but ensuring that the organization does not drift from its mission may require greater vigilance, especially if that drift may bring with some unanticipated risks.” (Worth, 2014)
Three Theories “Agency theory predicts that nonprofit boards select members capable of providing organization oversight, Resource dependence theory suggests that the board is likely to recruit members who can facilitate access to critical resources, and Institutional theory are board members who can legitimize