Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Governing Non-profits: Checks and Balances

Written by johnleemk on 5:37:10 pm Oct 3, 2007.
Categories: ,

One amazing thing about being at Dartmouth College is its unique nature; it is probably the only Ivy League university primarily focused on undergraduate education, something which obviously benefits me as an undergraduate.

The other interesting thing is the immense loyalty of alumni to the institution, and their involvement in its governance. Until recently, half of the university's Board of Trustees was elected by the alumni.

Of course, that is now changing; after several controversial trustee elections, where the winning outsider candidates campaigned on a platform alleging that the university was giving up its undergraduate focus, the university announced it would now be giving appointed board members a majority of the seats, expanding their number.

This has naturally been a heatedly-debated move, with the Alumni Association condemning it as in violation of an earlier agreement; today, it was announced that they would be suing the university over these changes.

The interesting issue at hand, as Meir Kohn, one of the most famous economics professors at Dartmouth, pointed out in an editorial in a student newspaper today, is that this move has wiped out one of the more well-balanced governance structures in American universities and non-profits in general.

Kohn rightly noted that non-profit boards are often insulated from market forces and checks and balances; they are rarely accountable to anyone but themselves. To a slightly less extent, this also holds true for corporate governance, but as Kohn pointed out, if the board of directors simply fails, it always runs the risk of a disruptive takeover.

Since appointed board members now clearly outnumber elected board members, in Kohn's view the change is one for the worse.

While I agree in broad strokes with Kohn's opinion, I found another opinion, penned by a current student, in the same issue of the paper to be just as striking.

This student argued that the alumni were not necessarily best-placed to judge conditions at the university, and that furthermore they were not necessarily the only stakeholders in the institution.

As has been pointed out by other critics before, if alumni could force their viewpoints through, the institution would not be coeducational today, something which most (if not all) current students can agree would be for the worse.

Ultimately, Kohn is right that Dartmouth's unique model of governance is one worth preserving; elected trustees should be given an equal, if not greater, voice.

However, the appropriate question is, who ought to elect these trustees? It seems to me that alumni are not the only stakeholding group who deserve a voice; all who are intimately involved with Dartmouth College must be given the chance to defend the institution we love.

A university, and any non-profit or corporation in general, cannot afford to be backward-looking and caught up in an obsession with tradition. It must look to the future, and to the present.

The present governance model gives alumni a disproportionate voice in the university's governance, inappropriately tilting the university towards looking backward, rather than forward.

Dartmouth should work towards giving those who are the prime stakeholders of the college and university — current students and faculty — a greater voice in its governance.

Kohn rightly concluded his piece by stating that a failure to defend Dartmouth's unique system would wipe out an exemplar of balanced governance in American universities and non-profits. But it is not enough to elect the governed; it is of equal importance to consider who the electors are.

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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

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