Non-profits need to catch up on diversifying their boards
Nasdaq proposed a new requirement in December that each of the 3,300 companies it lists have at least one female and one racial minority or LGBTQ board member. The world’s second largest stock exchange joins a chorus of stakeholders calling for increased representation on corporate boards. Despite comparably abysmal representation and pledges for reform, nothing so tangible or broad has been proposed by the social sector. Nonprofit boards should take collective leadership on this issue before they are pushed to do so by external forces. Boards have a responsibility to advance the public good. This is a bedrock value for nonprofits and is increasingly articulated by corporations. While CEOs measure their achievements in quarters or years, boards are responsible for the long-term direction of their institutions. As such, they are best positioned to mount the structural changes necessary to reverse decades of discrimination and disadvantage caused by systemic racism. In a 2018 analysis of the Fortune 500, 84% of board members and 95% of board chairs were white. What may surprise some is that the nonprofit sector did not fare much better.
A 2017 survey of 1,500 U.S.-based nonprofits showed that 84% of board members and 90% of board chairs were white. According to the reports, racial diversity on corporate boards had increased from 12.8% in 2010 to 16.1% in 2018. However, the 2017 figures in the nonprofit sector were nearly identical to 1994 bench marks. These stagnant numbers are especially troubling in a nation where people of color make up 40% of the population and in a sector that represents 1.5 million organizations and $2.6 trillion in annual revenues. While corporate boards have a long way to go to achieve racial diversity, their journey could be instructive for nonprofits, which include most of the hospitals, foundations, colleges, museums and houses of worship in the country. ________ The Chicago Tribune opinion section publishes op-eds from readers and experts about specific issues of the day. Op-eds reflect the views of the writer and not necessarily the Chicago Tribune. ________ In the corporate sector, pressure for gender diversity began with advocacy from the outside.
The movement is now broad-based, with engagement from institutional investors, banks and state governments. In 2020, California approved legislation requiring public corporations to have at least one racial minority or LGBTQ director; this followed gender-based requirements passed in 2018. Several other states are considering statutes. While the initial focus was on gender, it has been slowly expanding as the Nasdaq proposal shows. Rather than waiting for external pressure to catalyze change, nonprofit boards can take steps to dismantle institutional racism. First, in partnership with senior management, boards must establish concrete and measurable diversity goals tied to their mission. Many organizations focus on the composition of their staff. While this is a good starting point, institutions must look at other ways that racism operates within institutions including systems, behaviors, perceptions and history. Boards should make their goals public and report their progress on a regular basis. Without transparency, anti-racism efforts will continue to be incremental and relegated to episodic calls to action that are forgotten when other priorities emerge. Second, boards must hold their CEOs and senior leadership teams accountable for achieving these goals. One way to do this is to establish a committee on diversity analogous to standing board-level committees. Another is to tie diversity goals to executive compensation, a practice gaining traction in the corporate sector.
Yet another is to implement consequences, including a willingness to dismiss leaders who are not meeting objectives. Third, boards must reform how they select their own members. Most are self-perpetuating entities that fill vacancies through opaque processes. Meaningful change will require that boards decrease their reliance on personal networks and look to individuals without strong ties to the senior team and other trustees. Boards can mirror the processes that already exist to ensure fair hiring among employees — drafting a job description, publicly advertising vacant seats, casting a wide net to identify talent and developing fair processes to evaluate candidates. Boards should track potential members and groom current ones, including women and minorities, for leadership roles. A recent positive example: Mercy Corps, a Portland-based global humanitarian organization, issued a public call for new trustees. Beyond demographics, many boards suffer from a homogeneity of background. Colleges and universities, for example, rely almost exclusively on alumni to populate their boards.
Museums have been criticized for focusing on Wall Street, often restricting trusteeship to those able to make seven-figure donations. By focusing on a narrow sliver of the talent pool, boards risk groupthink and miss great contributors whose novel perspectives could spur innovative approaches to their work. If nonprofits hope to make progress on addressing institutional racism, their boards will have to take a leadership role on diversity. This will require concrete and realistic goals, accountability for progress, and a shift in who sits around the board table.
Our democracy will not be able to thrive until its very building blocks — which include nonprofit organizations — are thoroughly transformed.
Aly Kassam-Remtulla, Ph.D., is associate provost at Princeton University. An expert on access and diversity in higher education, he is co-founder of the Faculty Advancement Network, an Ivy League consortium to further equity and inclusion in the American professoriate.