The word "good" has a number of different meanings—it is a condition, a salable item, a benefit —but what does it mean when we talk about good governance of nonprofit organizations? In this instance, the discussion is still at least two-fold, if not more.

Nonprofit organizations, by their essence, have a duty to serve public interests—to provide for the greater good. In order to ensure they are doing that, the Internal Revenue Service (IRS) monitors closely how these entities are governed. Nonprofit boards thus have to ensure that they are running the entity appropriately and strategically in a manner that fulfills that duty and the entity's purpose—that they practice good governance.