Open Forum

Would someone be able to briefly describe the differences between corporate and museum governance? 

You might read this from Ohio State

https://groups.cob.ohio-state.edu/fbf/files/For-profit-vs-nonprofit.pdf

I'm sure others will chime in here too, but without a lot of detail provided as to your specific situation, one of the primary differences is the for-profit (corporate) and non-profit (museum) structure. In order for a museum to receive tax-deductible gifts, donations, and grants they must be a 501-c-3 and are almost always classified as such in the educational category. As such they are obligated to provide educational experiences and (if a collecting institution) maintain a collection and facility for "the public good." 

Corporate (for-profit) companies are not required to provide educational experiences, although they can, and are governed by a different set of rules per the IRS. This also relates to the public (museum) and private (corporate) money used to support both. For example, a corporation can make a donation to a museum and get a tax write off, but if they invested in a corporate collection they would not. Of course there are nuances to all of this including museums that are hybrid in terms of partial government support and partial non-profit support, and museums that feature private collections. However, there are also a set of best practices by which museums seeking and maintaining accreditation adhere to which can be far more stringent than those maintained for corporate collections (although we're seeing more and more that managers of private/corporate collections are using AAM guidelines).

I'd recommend that you take a look at the IRS explanation page for 501-c-3's as well as AAM's Best Practices and Ethics standards for further explanation. 

There is a wealth of resources online on this topic, many of them from lawyers and consultants who work with non-profits.  If you google non-profit versus for-profit boards, you should be able to access a number of helpful articles. A concise description concludes a very complete article cited below. 

Nonprofit Corporate Governance: The Board’s Role

Posted by Lesley Rosenthal, Lincoln Center for the Performing Arts, on Sunday, April 15, 2012

Corpgov.law.harvard.edu

By a number of measures, nonprofit and for-profit board governance are similar: the board’s oversight role, its decision-making power, its structural place within the organization, and its members’ legal duties. The similarities end, however, where shareholder interest in maximizing returns gives way to mission fulfillment, a multiplicity of stakeholders, more complex business models, and self-accountability rather than external accountability.

Corporate governance is about money.  Nonprofict governance is about mission.  Some would say there is no mission without money but I would say there is no money without mission.  In the corporate world profit is the ultimate motive - at the end of the day, was a profit made.  In the nonprofit world altruism is the ultimate motive - at the end of the day, what positive societal difference has an organization made.  Once in a while in the museum world we hear the dictate that museums are businesses and should be run as such.  This inapplicable notion usually comes from errant trustees or bogus consultants. Museums are not businesses.  But, they should be run in a business-like manner.  Where corporate governance reports to itself and shareholders if a company is publicly traded, nonprofit governance reports to the general citizenry.

Steve      

Biggest difference has to do with the nature of the organization that is being governed--corporations are for profit (they can distribute their earnings) and museums are non profit (they cannot distribute their earnings.)  Also, not many corporations operate under the umbrella of a mission statement, and most museums do.  Although many corporate board members are paid for their time, non profit board members typically not only are not financially compensated but any such benefit is considered a conflict of interest.

Beyond that, differences between the governance of corporations and museums will depend in large part upon the by-laws of each institution.  Because many potential museum trustees are more accustomed to operating in the for profit world (and have been very successful at it), incoming trustee education that delineates the organization's strategic goals as an extension of its mission statement and highlights how these might necessarily differ from goals in the for profit world can be an important piece of a museum's governance policy to ensure that a board operates most effectively.

You might find the information on the American Alliance of Museums website concerning governance a helpful starting point in creating an effective governance policy for a museum board.

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Karla Kaneb