When the Law Shapes Nonprofit Boards: The Key Role of Local Stakeholders

The study investigates how governance mechanisms can affect community representation within nonprofit organizations, focusing on Italian Bank Foundations where the community is on board by law. To investigate what governance arrangements increase substantive and symbolic representation, the study adjusts Guo and Musso’s framework by considering several formal mechanisms for appointing board members and the residence of board members as a new aspect of descriptive representation. A content analysis of the statutes and an email survey show that formal mechanisms contribute to substantive representation, whereas descriptive and participatory arrangements enhance symbolic representation. In addition, this study explores the moderating influence of local stakeholders in appointing board members, offering a wider point of view on the relationships among the five dimensions of representation.