MNGT 460-Assignmentn #1

1. Board governance is an important part of a nonprofit organization; the board holds many roles in the organization that helps fulfill the mission of the organization. In many cases, and nonprofit organizations, like the Hersey Trust Case, boards want to maintain their Duty of Care in order to take care of their organizations by using sound judgment in order to use all assets, including facility, people, and good will; and provide oversight for all activities that advance the nonprofit’s effectiveness and sustainability” (www.councilofnonprofits.org). However, in an effort to exercise the Duty of Care, boards may encounter opposition from the community. In which case, the board should maintain a Duty of Obedience. It is very difficult for a board to maintain both legal duties when they conflict with each other. A nonprofit organization board must recognize the impact their decisions would have on the community. It is also important for the community to recognize decisions nonprofit boards make, and the reasons why they are made. The relationship with the Board and the community is very important because it facilitates transparency, and fosters a strong partnership with both entities. Because the board knows the goings-on of the organization, in most cases, more than the public, a board’s decision should take precedence over the opinion of the community, provided that the decisions being made, maintains its ethical benefit to its beneficiaries.
2. In the Hershey trust it was evident that both boards wanted to maintain and improve the Hershey Foods financial stability. Both boards wanted to protect the company stocks and profits in the declining economic climate. The Milton S Hershey trust wanted to improve the trust's economic standing and prevent the lost of profits buying the Cadbury company to increase the trust's revenue. However, the Milton S Hershey trust needed to borrow money in order out bid Kraft. Hershey Foods saw that borrowing the large sum of money would cause a decline in the company's credit rating and stock price. This was a risk that Hershey Foods did not want to take.

Placing a bid to buy Cadbury had two opposing thoughts. Hershey foods, held accountable for the prosperity of the company, as a whole, saw the bid was too much of a risk and would have a negative impact on Hershey Foods economic standing. On the other hand, the Milton S Hershey trust, held accountable by the school, saw the bid as an opportunity to improve economic standing, in order to keep to school running. The Milton S Hershey Trust was also accountable for ensuring that Hershey Foods, a source of the trust's main income, is successful financially.
3. One of the issues, presented by the Robin Hood foundation case was that the foundation has invested with, including paying fees, to hedge fund managers who also serve on its board of directors. The relationship with the boards members and hedge funds creates a conflict of interest and impedes in the Robin Hood foundation's duty to loyalty. Although, the board was within legal limits, the financial management of the foundation was inappropriate because, it presented questions of self-interest. From the outside, it seemed that the Robin Hood foundation board members where, personally, financially gaining from this in arrangement. For this reason, the hedge fund investment of the Robin Hood foundation was discontinued in order for the board governance so avoid a conflict of interest that may be perceived but the public and government agencies.

4. -Duty of Loyalty: One of American University governing board's