THE VALUE OF NONPROFIT BOARD CONFIDENTIALITY

Norman I. Silber, Hofstra University School of Law

Abstract

Placement of the boundary line between transparent and confidential deliberation affects the quality, efficiency, and fairness of institutional decision making. Transparency can improve the perceived legitimacy of decisions and of those who make them; confidentiality can affect the ability to implement decisions effectively. The breadth of transparency affects the volume and quality of information that is available. In the nonprofit boardroom, the boundaries that are set by governance rules reflect, and also give shape to, institutional structures and cultural norms. This article explores and challenges the possible justifications for changing from a governance perspective which encourages transparency of decision making in nonprofit boardrooms, to a rule, such as proposed Section 340(b) of the draft Principles of the Law of Nonprofit Organizations, which would create presumptive confidentiality. In addition to presenting historical and cultural claims, it offers an analytic model to explore the most likely outcome of a strong confidentiality rule. It would be regrettable to endorse a presumption that would dissolve an important distinction between the culture of much of the nonprofit corporate world and for-profit corporate culture.