Governance for boards of small organizations: Part 3

Small government boards share unique governance considerations with boards of small nonprofits.

In part three, we conclude the analysis of differences between boards of small and large organizations that was begun in parts one and two.

Elected officials do use fundraising techniques to finance their election campaigns, so they know something about the process. Are there lessons to be learned regarding communicating with all constituents the way a board member would communicate with potential donors? That topic might be worthy of additional research.

Fundraising difficulties due to the relative size of a nonprofit are also cited by Bonfanti, based on the small nonprofits difficulty meeting performance or other standards that are tied to giving. While some local governments have size-related fundraising difficulties, they are different from those of the nonprofits. Small governments often struggle with smaller overall property values to support property taxes, and lower economic activity, which generates smaller sales and income tax revenues than are generated in larger governmental units.

Bonfanti’s sixth comparison is the founder’s syndrome, in which the founder of an organization exerts too much control. When this happens, staff and board morale suffer, and it can be very damaging to the organization. While long time influence of a single family can be a similar problem for a local government, true founder’s syndrome simply does not apply to today’s local governments in Michigan and most states, since many years have elapsed since the founding of the governmental unit and actual founders are no longer involved. In some small government units, however, there may be similar issues with large, influential families.

Number seven is flexibility. He finds that smaller nonprofits can be more flexible and quicker to adapt to changing circumstances due to their smaller “bureaucracy”. Smaller governments would appear to have the same advantage, with fewer staff. In Michigan, many local governments are small, and were created by state governments to provide services to residents in close proximity, thereby being more accountable to the local people. As such, they have both constitutional and statutory mandates to provide certain services. These mandates often also dictate the way in which those services are to be carried out and funded. This structural difference between governments and nonprofits makes governments generally much less flexible than nonprofits.

Closer relationship with constituencies is the eighth difference Bonfanti discusses. Small, local governments share this advantage with small nonprofits. While not guaranteeing better services and programs, the deeper, more responsive relationships with funders and recipients of their services can lead to significantly higher quality services, more engaged constituents, and higher levels of trust between the organization, whether government or nonprofit, and the people they serve.

Collegiality is the internal form of the closer relationship we just discussed. Smaller staffs tend to be closer, and work more effectively together. Job responsibilities are often less specifically structured, giving less opportunity for territorialism. Those same closer relationships often occur between staff and board members as well, in both small nonprofits and small governments.

Bonfanti’s last comparison is about difficulty growing the organization. Nonprofits, like businesses, pursue a mission where growth is limited by factors such as access to financial and human capital to carry out that mission. Small, local governments have additional limits such as geographic boundaries, and constitutional and statutory mandates that define their scope of influence, as well as citizens who believe in a limited role for government.

In part four of this Michigan State University Extension series on Governance for boards of small organizations, we will look at Bonfanti’s recommendations and their applicability to local governments.

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