The Director's & Officer's Guide to Advisory Boards

By Robert K. Mueller | Go to book overview

8
ADVISING NON- PROFIT-SEEKING VERSUS PROFIT- SEEKING ORGANIZATIONS

Most people think nowadays the only hopeful way of serving your neighbor is to make a profit out of him; whereas in my opinion, the hopefulest way of serving him is to let him make a profit out of me.

-- John Ruskin ( 1819-1900)

The great majority of nonprofits have no stockholders. What the full responsibility of being a trustee of a nonprofit institution means is often ambiguous. This complicates the role of an advisory board unless the scope is specifically focused on one or more definable elements of the institution's affairs. The general fiduciary obligation of the trustees is clear. The problem, in the event of alleged dereliction of duty by trustees, is how to determine precisely who the injured party is. "One of the outstanding characteristics of a charity . . . is that there is no beneficiary in a comparable position (comparable to the beneficiaries of a private trust or the shareholders of a business corporation) who is sufficiently interested to call the charitable fiduciary to account." 1

This does not mean that trustees of a nonprofit institution are free from liability for negligent conduct. Nonprofit corporations' directors frequently have a much larger constituency and may be sued by donors, beneficiaries, alumni, and states' attorneys general. In this regard, advisors from such constituencies can be of great help.

Another difference between profit-seeking and non-profit-seeking organizations, according to the late Charles C. Abbott, former Con

-103-

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The Director's & Officer's Guide to Advisory Boards
Table of contents

Table of contents

  • Recent Titles from Quorum Books ii
  • Title Page iii
  • Contents v
  • Tables and Figures vii
  • Preface ix
  • Introduction 1
  • 1 - Advisors Unlimited 9
  • Notes 26
  • 2 - Driving Forces 27
  • Notes 35
  • 3 - Counseling Versus Consulting Versus Mentoring 37
  • Notes 41
  • 4 - Role of an Advisory Board or Council 43
  • Notes 64
  • 5 - Activity and Societal Scan 65
  • 6 - Species of Advisory Boards 77
  • Notes 88
  • 7 - Weak-Signal Governance/Early Warning Advisory Systems 89
  • Notes 101
  • 8 - Advising Non- Profit-Seeking Versus Profit- Seeking Organizations 103
  • Notes 108
  • 9 - Care and Feeding of Advisory Boards 111
  • Notes 121
  • 10 - Insurance, Indemnification, and Contractual Matters 123
  • Notes 134
  • 11 - Advisory View of Corporate Strategy 135
  • Notes 148
  • 12 - Advisory Board Perspectives: Stakeholder Strategy 149
  • Notes 170
  • 13 - The Power of Advisory Board Networks 173
  • Notes 187
  • 14 - Advising the Family Business Board 189
  • Notes 201
  • 15 - Cultural Realities Facing Advisory Boards 203
  • 16 - Advising on Nonprofit Trusteeship Pathologies 223
  • Notes 240
  • Appendix ADVISEE SEARCH: GETTING INVITED TO SERVE AS ADVISOR 241
  • Notes 255
  • SELECTED BIBLIOGRAPHY AND REFERENCE READING LIST 257
  • Index 263
  • About the Author 279
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