SYNOPSIS
A board interlock occurs when a board member from one organization joins the board of a separate organization. This interlock forms a social network between board members, through which information, knowledge, practices, and policies flow between organizations. Academic research on for-profit entities suggests that interlocks are a conscious strategic choice made by organizations (Hallock 1997). We study board interlocks in the nonprofit sector. In doing so, we shed light on the impact of interlocking boards on nonprofit governance, organizational efficiency, and donations secured. Using a sample of more than 3,000 industry-diverse nonprofit organizations in the Washington, DC metropolitan area, we find that interlocked organizations have better governance practices and run more efficient operations, in line with the diffusion of best practices and shared knowledge and experience between organizations. Furthermore, we find that interlocked organizations report more donations, consistent with the expanded network provided by these relationships.
Data Availability: The data used to perform this study are publicly available via GuideStar.
