When Good Turns to Bad: An Examination of Governance Failure in a Not-for-Profit Enterprise

Abstract

This paper examines the assumption that is present in society (if not in law) that not-for-profit enterprises are unlikely to exhibit unethical behaviour in their governance function. It explores this issue by examining a recent case of governance failure within a not-for-profit social enterprise that had unethical behaviour at its root. This failure ultimately led to the organisation becoming bankrupt. A parallel is drawn with governance failures within the private sector which also resulted in bankruptcy. The paper draws on theories of governance and stakeholder management in order to reflect on whether unethical governance behaviour is a continuing threat to all sectors. In doing so, it concludes that there is merit in challenging the assumption that values-based organisations are immune to such a threat to their organisational existence