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Nonprofit Board Effectiveness, Private Philanthropy, and Financial Vulnerability

Author: MATTHEW M. HODGE and RONALD F. PICCOLO
Published in PAQ, Vol. 35 No. 4


Nonprofit organizations rely heavily on their governing board of directors to provide leadership, strategic guidance, and financial oversight. As such, the extent to which effectiveness of the board shapes the financial health of an organization is of great interest to both practitioners and the academic community. Drawing on 112 nonprofit organizations in Central Florida, the current study examined relationships among three areas of interest in the voluntary sector: board effectiveness, private philanthropy, and financial vulnerability. Results of the study suggest that board effectiveness is a significant predictor of an organization’s financial health. Consistent with our expectations, the observed relationship between board effectiveness and financial vulnerability was strongest in nonprofit organizations that derived a majority of their funding from private philanthropy. Implications for practice and future research are discussed.

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