ADVISING ON NONPROFIT TRUSTEESHIP PATHOLOGIES
More business people are joining college and university boards. They make up forty percent of all board members compared to thirty-four percent in 1977.
-- Composition of Governing Boards, 1985 ( Washington, D.C.: Association of Governing Boards of Colleges and Universities, 1986), p. 15
Increasing costs of hospital insurance programs are causing corporations deliberately to place more of their executives on hospital boards. Thus, it seems that corporate America is becoming even more powerful in the nonprofit boardroom whether as statutory or advisory directors who are especially sensitive to and knowledgeable about trusteeship versus directorship.
The danger here, of course, is that individuals coming from the profitmaking sector may apply "the good business-like approach"--the proprietary mentality. It should be emphatically repeated that "business purposes have no place in a nonprofit boardroom or organization." 1
Professor James C. Baughman of Simmons College further points out that the reason so many recent court decisions involving trusteeship of nonprofit institutions have caused fierce shock waves was not so much that they were novel, but that "the myth that trustees have the final say--the ultimate authority--was so accepted. It is frequently stated that trustees sit on the top of the pyramid of power. They don't. The courts do. The board of trustees, although it may be appealed to by staff, is not the final court of appeal."