You may recall the story of Corinthian University. Corinthian was a for-profit that pretty much failed to meet all the standards applied to a college. Recognizing the situation and seeking to salvage the "good" amid "allegations of fraud and mismanagement, Education Department helped transfer Everest and a sister institution to Zenith Education Group, a nonprofit affiliate of a student-loan debt collection firm. Zenith pledged to transform Everest, ending the school’s habit of admitting “anyone with a pulse” and churning out unprepared graduates deeply in debt."
"Zenith would differentiate itself from its past as a for-profit company, but it maintains some practices at odds with virtually all nonprofit schools. Instead of having an independent and unpaid board of directors, Zenith shares its board with its parent company, Education Credit Management Corp., and pays its board members as much as $142,000 a year for a job that requires fewer than 20 hours each week. .....Zenith’s current board structure is working well. The Education Department’s Mitchell disagreed. As for Zenith’s continued lack of an independent board, he said: “I’m personally disappointed that they haven’t moved more quickly on this.”
Not singular to education, I believe that even when there is an incentive by for-profits to take-on services and products traditionally delivered by nonprofits, success is not guaranteed. And more importantly, one of the elements that helps assure success, yes, despite all the challenges, is an independent board of directors that cares passionately about the mission (aka, understands and is passionate about the theory of change). I would pose that while the issues are huge for Zenith, a solution is a board that cares and of course has the capacity and authority to fulfill its fiduciary duties. Clearly, Zenith's board does not meet this criteria. If it did, I suggest that the outcomes would be quite different.
By the way, on the issue of pay for directors, yes, it is the tradition of nonprofit boards to be uncompensated. Is pay a draw to get "better qualified" board members? No, my observational evidence rests in the many institutions where members are unpaid. Would pay serve as an incentive to attract better qualified people and get better results especially given a rather large number of nonprofit boards that are challenged in achieving top performance? Again, I would suggest that lack of pay does not appear to be directly related to performance. Perhaps research would reveal otherwise but clearly, in Zenith's case, pay has not delivered a better performing board.
For more information on the plight of the Zenith, see the Washington Post article here.