New and Improved?: A Case Study of Nonprofit Policy Governance

This study examines the adoption of policy governance, a business-oriented governance model, by a women's human service nonprofit organization: a process that many of the volunteer directors blame for the organization's financial decline. One of several business-like models that are becoming increasingly popular in the nonprofit sector, policy governance, is part of the "totalizing ideology" of the market with its own language, logic, set of rules, and moral claims. The management literature conceptualizes such business-like models narrowly, as rational and neutral instruments, which can only improve organizational effectiveness. Though there is no empirical evidence substantiating the model's effectiveness over traditional governance methods, when the model fails, users are encouraged by the management culture to blame faulty execution. Analysis of the model's implementation shows that while the volunteers embraced its ideology, spoke its language, and upheld its ceremonial requirements, they resisted adopting many of its core practices. The implementation of the model disrupted the board's traditional means of acquiring organizational knowledge and diminished its ability to respond competently to a changing financial landscape, suggesting that nonprofits considering the adoption of business methods look beyond their ideology in evaluating the potential risks and benefits to the organization.