NGO Corporate Governance: Theories and Russian Practices

Abstract

The paper presents the data of the first empirical study on the role of Russian nonprofit corporate governance (boards). Board operations are analyzed through the lens of key theories of corporate governance in the third sector. Conducted interviews revealed that resources of effectiveness which the theories posit prerequisites are critically underused. It results from the prevalence of the NGO “leadership” type, which combines strategic guidance, operation management, and supervision roles. The survey, which provides the empirical basis for this study, showed that in the Russian nonprofit sector, unpaid board members assist paid management rather than manage and direct its activities. Comparison with the main theories substantiating the functions of corporate governance in the third sector and supported by foreign empirical studies does not allow us to consider this option as optimal from the point of view of trust in NPOs and their effectiveness. According to the research data, there is a demand for strengthening the assisting role of collective governing bodies rather than for their fulfillment of the role of full-fledged representatives of the principals. At the same time, our data highlight management’s unfulfilled demand for the boards’ more active engagement in strategic planning, expert consulting and especially expanding NGO contacts and fundraising. In this connection, gradual adoption of NGO corporate governance principles can be expected in Russia, which is particularly conducive to increasing trust in the third sector, enhancing the inflow of resources and their effective utilization.

Acknowledgments. This work was carried out at the Center for Civil Society and the Nonprofit Sector Research (HSE University) with the support of the Basic Research Program of the HSE University.