If the entry of for-profit entities into the nonprofit space is a structural shift, then governance is where its implications become most consequential. Boards are no longer operating in a stable, clearly defined sector. They are navigating a blended environment where traditional assumptions about competition, value, and accountability are being redefined in real time.

This raises a fundamental question: What does fiduciary duty mean in this context? Historically, fiduciary duty has been framed around three core responsibilities: the duty of care, the duty of loyalty, and the duty of obedience. These principles remain essential, but they are no longer sufficient on their own.

In a landscape where for-profit organizations can replicate or even outperform certain nonprofit offerings, fiduciary duty must expand to include a proactive commitment to future relevance. This is not a theoretical concern. It is a practical necessity.

Consider the duty of care. Boards are expected to make informed decisions based on reasonable inquiry. But what constitutes “reasonable” in an environment where disruption can come from outside the traditional field of vision? If board members are relying solely on internal reports and historical benchmarks, they may be fulfilling the letter of the duty of care while missing its spirit. True diligence now requires external awareness and an understanding of adjacent markets, emerging technologies, and new entrants that may not fit the conventional profile of a competitor.

The duty of loyalty also takes on new dimensions. Board members must act in the organization’s best interests, but what if the organization’s current model is no longer the best vehicle for advancing its mission? This is where governance becomes both more complex and more courageous. Loyalty to mission may, at times, require challenging loyalty to existing structures. It may involve difficult conversations about partnerships, joint ventures, or even the sunsetting of legacy programs that no longer create meaningful value.

The duty of obedience, ensuring that the organization adheres to its mission and complies with applicable laws, must also be interpreted dynamically. Mission is not static. It is expressed through choices, and those choices must evolve as the environment changes. I strongly suggest that you consider Jeff De Cagna’s concept of “intentional board leadership.” It is particularly relevant here. Boards must move beyond passive oversight to active stewardship of the organization’s future. This means asking different questions. Not just: Are we performing well? But are we positioned to matter in the future? Are our programs aligned with our mission? But are our programs the best possible expression of our mission in today’s environment?

These questions can be uncomfortable, especially in organizations with strong traditions and deeply held identities. But discomfort is often a signal that meaningful work is being done. Simon Sinek’s emphasis on purpose provides a useful anchor. If the “why” is clear, it can guide decision-making even in uncertain conditions. But purpose must be more than a statement; it must be a decision-making framework.

For example, when evaluating whether to compete with, collaborate with, or differentiate from a for-profit entrant, boards can ask:

• Does this option advance our purpose in a way that is distinctive and meaningful?
• Does it strengthen our relationship with the communities we serve?
• Does it position us for sustained relevance?

These are not purely financial considerations, but they are not disconnected from financial realities either. Sustainability matters. The ability to invest in a mission over time depends on sound economic models. This is where tension often arises.

For-profit entities are typically optimized for efficiency and scalability. Nonprofits are often optimized for inclusivity and mission alignment. These are not mutually exclusive, but they can pull in different directions. Boards and Executives must navigate this tension deliberately.

One approach is to rethink value creation. Instead of viewing financial performance and mission impact as competing priorities, they can be understood as interconnected outcomes. For instance, a nonprofit that invests in improving its digital delivery may increase costs in the short term but enhance accessibility, engagement, and long-term sustainability. A for-profit entrant may focus on maximizing user acquisition, while the nonprofit focuses on deepening community connection. Both are creating value, but in different ways. The key is intentionality. Boards should be explicit about how their organization creates value and how that value is distinct. This clarity can inform strategic choices and help avoid reactive decision-making.

Another governance challenge is speed. For-profit organizations often move quickly. They iterate, test, and adapt with agility. Nonprofits, particularly those with complex governance structures, may struggle to keep pace. This does not mean that boards should abandon due diligence or thoughtful deliberation. It means they should examine whether their processes enable timely decision-making. Approval of matrices, committee structures, and meeting cadences, all of these governance mechanisms, should be evaluated in light of the current environment. Are they facilitating responsiveness, or creating bottlenecks? This is not about adopting a “move fast and break things” mentality. It is about ensuring that governance supports, rather than constrains, the organization’s ability to adapt.

There is also an ethical dimension to consider. As for-profit entities enter the nonprofit space, questions about equity, access, and accountability become more prominent. Nonprofits have traditionally played a role in addressing market failures, serving populations or needs that are not profitable.

If for-profits focus on higher-margin segments, nonprofits may find themselves serving increasingly complex and resource-intensive needs. Boards must be prepared to address this reality. This may involve reaffirming commitments to equity and inclusion, even when they are financially challenging. It may also involve exploring new funding models or partnerships to sustain this work.

Ultimately, governance in a blended sector requires a balance of continuity and change. Continuity in purpose, values, and commitment to the public good. Change in how those commitments are expressed, delivered, and sustained. Boards that can navigate this balance will not only fulfill their fiduciary duties but also redefine them for a new era. And in doing so, they will ensure that their organizations remain not just compliant, but consequential.

Reflection for Part 2

• Are we treating future relevance as part of fiduciary duty, or as an optional strategic discussion?
• What external signals are we currently missing because our attention is too inwardly focused?
• How often do we scan beyond our own sector for emerging risks and opportunities?
• Which governance processes help us adapt quickly, and which slow us down unnecessarily?

Let me know what you think.