When it comes to determining a charity's effectiveness, "a terrific indicator of an organization's effectiveness is its ability to constitute an independent board of directors comprised of highly respected volunteer leaders," writes the president of the Door County Community Foundation in a post at Pulse of Philanthropy.
But many charities, he writes, assume this is because of conflicts of interest, like when a paid CEO sits on the same board as the CEO's family.
"The lack of competition can result in complacency where charities continue to operate with outdated practices simply because there is no direct consequence for failing to improve."
An independent board does, in fact, serve as a "substitute for the competitive pressures that drive efficiency in the for-profit world," writes the foundation's president.
"Further, one of the greatest strengths of an independent board is the diversity of thought and experience it brings," he continues.
"This is why an independent board of directors is so essential to the health of a charity.
In this way, the board serves as a substitute for the competitive pressures that drive efficiency in the for-profit world."
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