Unlike in profit organizations, in nonprofit organizations it has been observed that leaders must fit their circumstances in order to succeed. Dym & Hutson (2005) continue to say that nonprofit organizational leaders are usually asked to fit in narrowly defined standards set by outsiders that is government agencies and philanthropic foundations who fund the nonprofit boards of directors and management consultants who advice them (Dym & Hutson 2005).
However in nonprofit organizations in order to please funders the leadership and governance in these organizations must show results through formal program evaluations (Dym & Hutson 2005). This therefore implies that despite the absence of skill and an absence of funding set aside for the evaluation process these leaders must demonstrate transparency. At the same time nonprofit leaders must demonstrate the kind of business like accountability which is taught at business schools (Dym & Hutson 2005).
Leadership thus in both for profit and nonprofit organizations involves interactions in which leaders make requests and followers comply and in which leaders respond to stated or perceived entreaties from their organizations. Robinson (2001) outlined that boards in nonprofit organizations should intersect with an organization on an intermittent basis form a distance. Robinson (2001) continues to say that sometimes executive directors can be valuable over board because the chief executive director tackles the daily reality of providing services, balancing budgets and motivating staff and volunteers (Robinson, 2001).
Robinson (2001) found out that forming a board is among the first steps in the formation of a nonprofit organization. Although there is a justifiable frustration of how boards behave people take it for granted that boards have some value in nonprofit organizations (Robinson, 2001). It has been established that good governance and high-functioning boards are usually faced with a hypothetical choices.
The value of boards in nonprofit organizations has been raised often. It is also in the minds of many how to make boards more useful and effective in nonprofit organizations (Robinson, 2001). He continues to say that the value of boards should be well defined so that the board meets the needs of the wide array of organizations that populate the nonprofit community (Robinson, 2001).
In both for profit and nonprofit organizations Robinson (2001) the boards usually have the potential to bring substantial value to the work of an organization but in most cases their value remains unused if they are not understood, articulated and well cultivated. The most cases it is important to understand that boards matter before engaging organizations in heartfelt effort to make them effective.
The success of both for-profit and a nonprofit organization is usually dependent on their workforce and governing body and structure which it assembles to accomplish its mission Zietlow, Hankin, & Seidner (2007). This means that throughout their operations transparency should take a central role. Both transparency and good governance in the business world in been replicated in the nonprofit management processes.
In addition the key attribute to the success of nonprofit organization is transparency. This is because they obtain their funding from other bodies such as government or other institutions hence they are surfaced with ethic, governance, transparency and the aspect of constantly building the trust between the organizations and the funders (Zietlow, Hankin, & Seidner 2007). Financial transparency is thus the most important enabler to the success of an organization.
Transparency should be reflected in the financial structure of both for profit and nonprofit organizations (Zietlow, Hankin, & Seidner 2007). This in turn allows organizations to accomplish their missions and achieve their goals. Transparency is thus highly valued in both cases because it helps the stakeholders to have a clear understanding of the organization has utilized its resources through planning, recording and reporting (Zietlow, Hankin, & Seidner 2007).
In both for profit and nonprofit organizations their sustainability is depended on their services which require diversification of their funding. This therefore implies that there should be a greater concern for transparency which provides a watchful eye on their day to day running (Light, 2000). For example funders of nonprofit organizations will usually pay for more attention to outcomes and they will do so by without ignoring the reporting requirements and financial disclosures (Light, 2000).
In a non profit organization it is important to determine if the board members should receive director’s fees or if they should be compensated for serving on the board (Blazek 2008). Blazek thus established that this factor should be looked at from different perspectives because some think that directors of charitable nonprofits should be paid while others think that they should serve as volunteers (2008).
Blazek (2008) established that for federal income tax purposes for example all types of not for-profit organizations which include private foundations, public charities and others can compensate directors so long as the amount paid is reasonable. He however continues to say that penalties can be imposed when excessive benefits are received (Blazek 2008).
He further established that if board members are to be paid compensation or are to be engaged in any other organizational transaction, organizational protocol for conflict of interest resolution should be followed (Blazek, 2008). A well defined documentation that proves the reasonableness of the amount to be paid is necessary (Blazek, 2008).
In his studies Blazek (2008) outlined that the panel on the nonprofit sector recommends that no fees should be paid to the board members except to reimburse the cost of board participation. In other cases it was established that board compensation should be allowed only when decided by the committee composed of the persons who are not compensated by the organization who do not have any financial interest in the determination (Blazek, 2008).
The leadership and governance system for both for profit and non profit organizations must uphold their core values and set performance prospects of the organization (Blazey, 2009). The leadership should also encourage an organizations wide focus on stakeholders, their customers, while ensuring that it supports workers empowerment through learning and encouraging innovation within the organization (Blazey, 2009).
In the same context as outlined by Blazey (2009) leadership and governance in both non profit and for profit organizations should strive towards meeting legal, ethical and societal responsibilities and supporting its key communities. These areas involve among others improving the environment and strengthening community services, education and health services.