Week 2: Governance & Accountability

• Lucia Birchfield. MBA

Week 2: Governance & Accountability Understanding How PublicPurpose

                Organizations Function

Educational initiative independent of any government agency

An initiative of BridgingHealth Intl

1. Why This Week Matters

Strong governance is the backbone of every credible nonprofit or NGO. Whether operating in the United States, the United Kingdom, Nigeria, or elsewhere, organizations that serve public benefit must uphold systems that ensure transparency, accountability, and responsible stewardship.

Boards provide oversight and direction; management handles daily worka distinction emphasized in governance standards across countries. When paid staff exist, board members do not manage daytoday operations; instead, they provide foresight, oversight, and insight. [councilofnonprofits.org]

2. Nonprofits and NGOs: Different Names, Same Public Purpose

Across the world, the term nonprofit is often interchangeable with NGO (nongovernmental organization).

• In many African and Asian countries, NGO is the dominant label for organizations serving public good.
• In the U.S. and U.K., nonprofit or charity is more common.

Regardless of the name, the defining feature is the same:

These organizations exist to serve the publicnot private individuals.

3. Nonprofits/NGOs Are Public Organizations Not Privately Owned

This is a core concept: Nonprofits and NGOs do not have owners.

In the U.S., 501(c)(3) organizations must be organized and operated exclusively for publicbenefit purposes, and no part of their earnings may inure to any private individual. [irs.gov]

Nigerias FIRS guidelines echo this principle, defining nonprofits (NGOs) as organizations established to advance public goodnot for profit distribution. [decisionmakers.com.ng]

Why this matters:

• Leaders are stewards, not owners.
• Assets belong to the public purpose, not founders or board members.
• All financial decisions must align with mission and public benefit.

4. Governance vs. Management: Understanding the Line

Clear role distinction prevents confusion and safeguards accountability.

Board (Governance) Responsibilities

• Set strategic direction
• Approve budgets and financial reports
• Adopt key policies (conflict of interest, whistleblower, etc.)
• Oversee risk and organizational performance
• Hire, support, and evaluate the CEO/Executive Director

Boards provide oversight, not operational control.

This distinction appears in the U.S. (National Council of Nonprofits) and in the U.K. (Charity Commissions CC3 guidance on trustees). [councilofnonprofits.org] [gov.uk]

Management (Operations) Responsibilities

• Implement programs
• Manage staff and vendors
• Deliver services
• Report outcomes and risks to the board

5. Governance Standards Differ Across Countries

While core principles are similar, formal accountability requirements vary:

United States (501(c)(3))

• Must operate exclusively for exempt purposes
• Must avoid private inurement
• Must comply with publicbenefit requirements
• Most must file Form 990 annually (public document),  Form 990 EZ or by electronically submitting Form 990-N where revenue is less than $50,000 [irs.gov]

United Kingdom (Charities)

• Trustees must ensure public benefit
• Must comply with governing documents and law
• Must manage resources responsibly
• Must file reports to the Charity Commission depending on size [gov.uk]

Nigeria (NGOs under FIRS Circular)

• NGOs must register for tax, obtain a TIN, and meet reporting obligations
• Core charitable income may be exempt
• Trading/business income may be taxable [assets.kpmg.com]

Key insight:

Different countries apply different rules, but the publicbenefit principle is universal.

6. Annual Reporting and Transparency

Even though rules differ, annual reporting is the best global practice.

• U.S.: Most nonprofits file Form 990 annually, proving transparency, governance practices, and program results. [irs.gov]
• U.K.: Charities submit annual reports and accounts, reinforcing trustee accountability. [gov.uk]
• Nigeria: NGOs must file returns with the FIRS and comply with applicable tax laws. [assets.kpmg.com]

Annual reports demonstrate stewardship of public trust.

Globally, tools like Charity Navigator increasingly evaluate nonprofits on impact, accountability, and transparency rather than simplistic spending ratios. [charitynavigator.org]

7. Fiduciary Duties Simple Global Framework

Most global systems align around three duties:

       Duty of Care: Review information carefully, ask questions, and make informed decisions.

       Duty of Loyalty: Put the organizations mission first; avoid and disclose conflicts of interest.

       Duty of Obedience: Ensure the nonprofit follows its mission, laws, and governing documents.

These principles are recognized globally- U.S. nonprofit guidance, U.K. Charity Commission rules, and international NGO governance frameworks all reflect these duties. [councilofnonprofits.org], [gov.uk]

8. Quick Governance Checklist

Use this to assess whether your board is exercising real oversight:

• The mission is publicly stated and clearly tied to public benefit.
• The board approves budgets, reviews finances, and monitors risk.
• We meet reporting obligations in our country (Form 990, Charity Commission reports, FIRS filings).
• We publish an annual report with financials and outcomes.
• We collect and use data to measure impact (not just activities).
• Our board roles are welldefined and do not interfere with daytoday management(big organizations).
• We maintain key governance policies (COI, whistleblower, document retention).

Quote of the Week

When there are paid staff in place, rather than managing daytoday operations, board members provide foresight, oversight, and insight.

National Council of Nonprofits [councilofnonprofits.org]

Coming Next (Week 3)

Types of Nonprofits/NGOs & Global Examples

Well explore educational institutions, humanitarian groups, health nonprofits, international NGOs, communitybased organizations, and morewhat unites them and what makes them unique.