Armanino Blog

Is Your Nonprofit Board Diverse Enough?

December 03, 2018

One aspect of board diversity has been in the news lately. On September 30, California Governor Jerry Brown signed a law saying that public companies headquartered in California must include one woman on the board of directors by the end of 2019. By 2021, boards with five members will need at least two female members; larger boards must include at least three women.

The recent law cites dismal gender representation statistics in the for-profit world: As of June 2017, women held just 15.5% of seats on the boards of the 446 California-based public companies included in the Russell 3000 index.

Nonprofits might be tempted to pat themselves on the backs because their boards are closer to gender parity than in the for-profit world. (Women occupy 48% of nonprofit board seats, according to the BoardSource 2017 National Index of Nonprofit Board Practices.)

However, board diversity is about more than gender. And when it comes to racial and ethnic composition, nonprofits boards are overwhelmingly white. In the 2017 BoardSource survey, respondents reported that 84% of board members were Caucasian — slightly more than in 2015 (80%).

Overall, the nonprofit executives and board chairs who responded to the 2017 survey reported a high level of dissatisfaction with their boards’ racial and ethnic diversity. They recognized that when their boards do not reflect the full range of their constituents, they are missing out on the diversity of viewpoints that would make their programs and services far more effective.

Survey respondents reported that board diversity is important to (among other things):

  • Understanding the changing environment from a broader perspective
  • Developing creative solutions to new problems
  • Understanding the client populations served by the organization
  • Enhancing the organization’s standing with the public
  • Planning effectively

Diversity of thought at the leadership level has also been associated with better financial performance and improved risk management. When leaders come to the table with different world views, they have a higher likelihood of identifying potential risks and inequities. When board members all have a similar world view, on the other hand, they risk developing blind spots about the true issues and needs of their constituents.

What You Can Do

Improving diversity — gender, racial, ethnic or socioeconomic — is achievable for any nonprofit. It just requires a conscious effort to step outside your direct circle and reach out to people who are similar to those your organization seeks to help. Unfortunately, many nonprofits do not prioritize demographic diversity in board recruitment. Among the nonprofit leaders who reported extreme dissatisfaction with their board’s racial and ethnic diversity in the 2017 BoardSource survey, only 25% said they place a higher priority on demographics when recruiting board members.

Those who claim that boards should not include women (or other underrepresented groups) because there aren’t enough qualified candidates are not looking hard enough. In fact, I urge corporate boards seeking female directors to look to the nonprofit sector. Plenty of women have served on nonprofit boards and dealt with many of the strategy, personnel, finance and other leadership issues that are required for board membership in a public or private company. Women who have been successful in the nonprofit sector — as well as many other capable women and people of color — can bring a lot to the table, if you just open the door for them.

To nonprofit leaders looking to improve the diversity of their board, I suggest creating a formal nominating committee or an ad hoc group of members with a diversity mandate. This group should actively network with and seek out qualified candidates who are similar to currently underrepresented constituents. Some nonprofits even invite current clients to join the board, or they invite people who have gone through their programs and “graduated.” Doing so might require adjusting the board members’ giving requirement or exempting certain members from that requirement. This is a simple fix.

Board diversity leads to diversity of thought. Any efforts you can make to improve board diversity will reap rewards in the form of an organization that is more attuned and responsive to the needs of its constituents.

December 03, 2018

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