In contemporary American society, non-profit boards are common, controlling trillions of dollars of annual revenue and publically owned assets. As non-profits are chartered and disbanded on a regular basis, and given that the size of boards may range from as few as 3 members to dozens, it is impossible to determine the number of extant NP board members at any given point in time. Let’s just say that the number is large. Of the members in this group, I feel confident that very, very few have specific or even general knowledge concerning the history of NP boards in the U.S. Though, I could not find the source, I’ll cite the cliché’, “We can’t know where we’re going until we know where we’ve been.” Certainly, this statement (or advice), is applicable to nearly any worthwhile undertaking. Where trillions of dollars of public funds are at stake, a brief look back might be in order.
In his article, A History of Nonprofit Boards in the United States (2003. www.BoardSource.org) Peter Dobkin Hall provides an historical overview of the context of NP boards. Certainly, my goal here is not to fully reiterate his work. Should you want the full text, you could simply read it yourself. However, there is value in providing the NP practitioner a quick glimpse of a few of the defining moments which have shaped our current condition. Given the breadth of the information (which Hall has already compressed to a great degree), and limitations of a concise blog entry, I’ll focus only on the early contributions of educational institutions – their struggle, though reduced to words, was apparently epic.
As most alums are wont to remind (J) Harvard is the original U.S. Institution of Higher Learning. Yale was not far behind. Our current structure of NP boards owes much to the struggles of early leaders of these institutions as they formed the spearhead of lay governance. Initially modeled after European colleges, they were fully controlled by the clergy (tudors, leaders, decision-makers). Harvard’s charter, providing for divided governance between two bodies (1. the president and fellows and 2. the overseers), helped to ensure a balance of power and provided a base from which future organizational adjustment would be made. As funding needs grew and political, religious and private interests began to clash (apparently this in not, in fact, a new problem…J); so too did the interest in institutional control. In the early 1720’s, Harvard president John Leverett led the movement to break away from church influences, setting the stage for the future generations of American institutional governance.
Yale underwent a similar period of strife in generally the same period, with conflicting interests resulting in a charter which provided separation from state legislature, yet pushed it closer to the church. Circa 1750, outspoken Yale Board member Joseph Noyes became a target of the church. Ultimately, Noyes posited and defended the uniquely American argument that trustees (board members, et al), had the right to follow their conscience, rather than proceed in lockstep with the church. “His arguments established that corporations, though granted certain powers of self government, remained subject to the state, and it affirmed that trustees were ultimately accountable not to the corporation, but to their consciences and to God.” (Hall, 2003). Again, how uniquely American, and pertinent to today’s condition.
I’ll make one final reference to the early contribution to the current American state of NP Board structure / governance by educational institutions. In this case, perhaps the most important, Dartmouth alumni and congressman Daniel Webster challenged the Jeffersonian establishment, which maintained that corporations, including colleges, were fully subservient to the state as a condition of funding assistance. Relying on Article I, Section 10 of the U.S. Constitution, Webster made the case that corporations were private. While the state could place conditions on grants, it had no authority under the constitution to regulate how privately donated funds were spent. In turn however, he made no claims that trustees were immune from public accountability, a cause later championed by Leonard Bacon. His impassioned argument held that the state had infringed on Dartmouth College’s contracts with private donors, who were in fact, stakeholders in the institution and by association, owners of the public entity that was Dartmouth. In a sweeping judgment, Supreme County Chief Justice John Marshall paved the way for private institutionalization in the public interest. The Jeffersonian model was dealt a mortal blow in that the decision implied that the will of the public could be feasibly achieved in avenues other than electoral governance. In short, the previous condition of government control was gelded. The door had been opened for private corporations (generally via boards) to control their own destiny, with or without governmental aid, setting the stage for the base structural relationship which both joins and separates NPOs and the collective set of electoral / appointed entities we call “the government.”