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CORPORATE GOVERNANCE
In Nonprofit Organizations
George Beyrouti
15 April 2014
USEK
ROLE OF NONPROFIT ORGANIZATIONS
Nonprofit organizations – as part of civil society - have
become major players complementing businesses and
governments in the current world order. The welfare and
well-being of society largely depends on their efforts and
contributions.
Nonprofit organizations, in particular the large
international ones, are governed, more and more, like large
corporations. They have a board of directors, a president, a
vision, a mission, a strategic plan, and guiding principles to
ensure stewardship and accountability.
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ROTARY CODE OF ETHICS
AS A ROTARIAN, I will
1. EXEMPLIFY the core value of integrity in all behaviors
and activities
2. USE my vocational experience and talents to serve in
Rotary
3. CONDUCT all of my personal, business, and professional
affairs ethically, encouraging and fostering high ethical
standards as an example to others
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ROTARY CODE OF ETHICS
AS A ROTARIAN, I will
4. BE FAIR in all dealings with others and treat them with
the respect due to them as fellow human beings
5. PROMOTE recognition and respect for al occupations
which are useful to society
6. OFFER my vocational talents : to provide opportunities
for young people, to work for the relief of the special
needs of others, and to improve the quality of life in my
community
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ROTARY CODE OF ETHICS
AS A ROTARIAN, I will
7. HONOR the trust that Rotary and fellow Rotarians
provide and not do anything that will bring disfavor or
reflect adversely on Rotary or fellow Rotarians
8. NOT SEEK from a fellow Rotarian a privilege or
advantage not normally accorded others in a business or
professional relationship
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THE 4-WAY TEST
Of the things we think, say or do:
1. Is it the TRUTH?
2. Is it FAIR to all concerned?
3. Will it build GOODWILL and BETTER
FRIENDSHIP?
4. Will it be BENEFICIAL to all concerned?
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CORPORATE GOVERNANCE
We tend to think of corporate governance only when
some outrage occurs such as:
 The economy collapse in 2008
 A big scandal occurs
 A CEO is vastly overpaid
What can we do about that?
 No magic cure
 Our best bet is educating our new generation of
leaders on good moral values and effective corporate
governance.
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CONCEPT OF CORPORATE GOVERNANCE
Corporate Governance is the systems and processes
put in place by which the owner controls and monitors
the use of corporate assets.
The governing body includes a board of directors, a
CEO, and a number of executives. The CEO is the link
between the board and the executives. He needs to
keep both of them satisfied and happy.
Corporate governance is especially important in large
corporations with diversified ownership.
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CONCEPT OF CORPORATE GOVERNANCE
OWNER
BOARD OF DIRECTORS
CEO
EXECUTIVES
EMPLOYEES
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GOVERNANCE IN A GLOBAL ENVIRONMENT
There are two approaches to corporate governance, the
contractarian and the communitarian theories of the
corporation.
The communitarian theory views the corporation as a
separate entity, with social responsibilities not only to the
shareholders but to the firm’s other stakeholders and
society at large.
On the other hand, the contractarian approach considers
the firm’s shareholders as the primary constituency to
whom management is accountable. Voluntary contracting
and market forces align the interests of management and
shareholders.
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CORPORATE GOVERNANCE BEST PRACTICES
Nonprofit’s play an important role in serving the social
and environment needs of society – to reinforce their
recognition
and
to
establish
credibility
and
trustworthiness with business, government, and the
general public, they need to have an effective governance
system in place. A list of best practices has been compiled
from a wide variety of sources.
Still there is no “one size fits all” good practice solution.
The guidelines we present here after needs to be
customized to every organization to improve their ability
to attract charitable contributions and grants.
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CORPORATE GOVERNANCE BEST PRACTICES
1. Board Composition
2. Committee Structure
3. Board Performance and Effectiveness
4. Consistency with Charitable Mission and Vision
5. Financial Accountability and Transparency
6. Culture and Ethics
7. Executive Compensation
8. Governance / Nominating Committee
9. Diversity and Inclusion
10.Advocacy Work
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THANK YOU FOR YOUR ATTENTION
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