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Board Diversity

Board Diversity: What is the issue?

Every nonprofit is required to have a Board of Directors. At a minimum, the Board is charged with ensuring the organization’s financial responsibility, pursuit of its mission, and legal compliance.

Board Diversity aims to cultivate a broad spectrum of demographic attributes and characteristics in the boardroom.

Why do nonprofits care?

Diversity in all settings has been documented to improve outcomes. The various perspectives and understandings offered from diverse stakeholders make for stronger governance. And diversity is more and more being recognized in the U.S. as fair and necessary.

However, according to a June 2021 survey of the U.S.nonprofit sector by the Urban Institute, only 21% of Board members are women or come from racial or ethnic minorities. Our sector lags behind the for-profit sector. According to Fortune Magazine in June 2021, 42% of Board members on publicly-held Fortune 100 Companies represent those populations.

Is this a legislative issue?

Federally, in recent years, there have been several bills introduced in Congress related to Board Diversity. Yet, none has been passed by either the House or the Senate.

In state legislatures there has been quite a bit of activity, although virtually all of the legislation applies to publicly held entities and not nonprofit organizations. One exception, however, is New York State where legislation introduced in 2022 (Senate Bill 5971 and its companion House Bill A3620), would require nonprofit boards receiving state funds to reflect the ethnic makeup of the communities they serve. As of September 2022, the New York legislation has not moved out of committee. In all, twelve states have enacted or are considering board diversity legislation, calling for greater disclosure or actually requiring diversity. As yet, no legislation has been enacted which would directly impact nonprofit boards.

The most far-reaching board diversity statute in the country passed in California requiring publicly-held companies with principal offices in California to have a minimum number of “underrepresented communities” on their board of directors — a minimum of two directors from underrepresented communities on boards with more than four members but fewer than nine members, and a minimum of three directors on boards with nine or more members. The law defines an underrepresented community as “an individual who self-identifies as Black, African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaskan Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” However, in April 2022, this California law was struck down by the Superior Court of Los Angeles when it said the law was a violation of the Equal Protection Clause of the California Constitution.

What next?

While most state legislation has not been specifically directed toward the nonprofit community, TNPA believes that diversity is important for the strength and success of the nonprofit sector. We will continue to monitor and assess the potential impact of proposed legislation.

Read more…

Board Transparency Initiative: BoardSource and GuideStar launched an initiative that enables nonprofit organizations to share information about how their organizations are governed, including information about board composition.

Charity Navigator: Closing the Gender Gap on Nonprofit Boards (June 21, 2021)

Charity Navigator: Diversity, Equity & Inclusion on Nonprofit Boards (August 12, 2020)

BoardSource Statement on Diversity, Inclusion, and Equity

Learn about TNPA’s DEI Initiatives.

TNPA’s Leading EDGE internship program cultivates a diverse pipeline of talent for the nonprofit sector.

Additional Resources

Webinar: Steps You Can Take Immediately to Diversify Your Board and Major Donor Base (Candid Learning, September 11, 2019)

Nonprofit Board Assessment Tool from McKinsey & Company

BoardList: Connects diverse leaders with global board opportunities

BoardSource: Inspires and supports nonprofit boards and executives to lead justly and with purpose.

CariClub: CariClub partners with employers to connect talented young professionals with nonprofit associate boards. 

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