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“Leave your emotions at home.” Almost every working individual must have heard of this phrase. And leaders admit repeating it time and again, to eliminate the ‘so-called’ emotional drama at the workplace and foster ‘practical thinking’. This raises many questions. Is it even possible? Aren’t emotions the part of human existence? Can they be separated […]
How Organizations Can Conduct Root Cause Analyses Without Indulging in Witch Hunts
What are Root Cause Analyses and How They Both Help and Hinder Organizations As the name implies, Root Cause Analysis, or the process of determining the causes and the reasons behind an event or occurrence in organizations, helps them understand why it happened and how it can be prevented from happening in the future, as […]
Trait Theory of Leadership – Advantages and its Limitations
The trait model of leadership is based on the characteristics of many leaders – both successful and unsuccessful – and is used to predict leadership effectiveness. The resulting lists of traits are then compared to those of potential leaders to assess their likelihood of success or failure. Scholars taking the trait approach attempted to identify […]
The ABC’s of Insurance Fraud in India
India is one of the biggest markets for insurance companies across the world. However, it also needs to be understood that operating an insurance business in India is not free from risks. This is because insurance companies in India face an abnormally large number of fraud cases. In fact, it is estimated that the Indian […]
Role of Team Leader in Team Building
A single brain sometimes cannot take decisions alone. One needs the assistance and guidance of others as well to accomplish the tasks within the desired time frame. In a team, every member contributes to his level best to achieve the assigned targets. The team members must be compatible with each other to avoid unnecessary conflicts […]
By definition, the nonprofit sector operates in the humanitarian goals and objectives space. This means that many nonprofits are loosely structured and are often volunteer driven without formal hierarchies and patterns of management. However, this does not mean that nonprofits need not have formal boards, management structures, and financial control.
The point here is that though nonprofits are made up of committed individuals working for a cause, there is still a need for a corporate type structure and management. This is especially the case with those nonprofits that receive large amounts of money and handle multiple projects across the breadth of the country.
Further, the fact that the government monitors the performance of the nonprofits means that there needs to be accountability and financial due diligence done periodically. Hence, there is a need for proper management and structure of the nonprofits and means of control and process driven internal environment as well.
The first and foremost requirement for a nonprofit is to have a board of directors who provide the high level monitoring and control. The board members can be drawn from all walks of life and must have enough experience in the social sector.
Further, the members of the nonprofits should be on the board as executive members. Apart from this, the nonprofits must have internal financial controls through auditing and monitoring of the inflows and outflows of funds. This is needed both from an internal Processual perspective as well as to satisfy the requirements from the government regarding compliance with all regulatory requirements.
For instance, in India, the government monitors the inflow of foreign funds into the nonprofits and hence, appropriate permissions must be taken according to the laws for nonprofits to receive money from abroad.
The third aspect as far as the management of nonprofits is concerned relates to the need for them to have people who can be held accountable for the actions of the nonprofits. This means that there needs to be a chain of command in case owning up to the decisions taken up the nonprofits are concerned. This is especially the case with nonprofits that are engaged in providing relief and service to the underprivileged, as the chances of wrong decisions boomeranging on them are high and where the implications include human life and health. The government is an important part of this, as the bureaucrats need structured responses from the nonprofits and clear patterns of organizational accountability.
Finally, the nonprofits need to have management structures that can be advertised to the external world as the single point of contact between the nonprofits and society lends itself to easy access to the nonprofits and helps in recruiting more volunteers for the cause.
In conclusion, while it is certainly not the case that nonprofits must be corporatized in their means of functioning, there are good reasons as discussed in this article for the nonprofits to follow due diligence and proper management principles.
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The Corporatization of the NGOs and How It Impacts Funders, Beneficiaries, and Others
February 12, 2025
