Shareholders and stakeholders develop confidence in their boards of directors more easily when they represent the people they serve. Multiple perspectives on issues foment creativity in the boardroom and prevent groupthink. It’s necessary for boards to disrupt the status quo to make room for new ideas. Fresh ideas are vital for boards as they deal with so many negative forces in the corporate world. Whether the board’s decisions are good or bad, they’re lasting. Overall, nonprofit boards that fail to include diversity are usually not as successful as organizations that abide by good governance principles.
The Risks of Neglecting Nonprofit Board Diversity of Race, Ethnicity and Gender
Employees who see people of a similar race, ethnicity and gender as theirs serve on the board or in senior leadership are better able to see themselves as long-term employees. Different cultures have diverse perspectives on business, life and society. Having various cultures represented in the boardroom informs the board, making them more knowledgeable and more sensitive to a wider variety of groups.
Gender diversity is becoming a more popular topic for boards. Women board directors have said that being a woman was a factor the first time they were appointed to a board, but not so much after that. As boards bring more women onto their boards, they’re more inclined to expand and accept nonprofit board diversity on other levels.
Research shows that women shoppers have the main purchase power in various markets, as indicated by these statistics from girlpowermarketing.com:
- Women make 70% of all travel decisions
- 84% of women are the sole meal-preparers within their households
- Women make 90% of the household healthcare decisions
- 65% of new auto purchasers are women
- Women spend over $200 billion on new cars and mechanical servicing
- 61% of all electronics purchases were made by women or women were involved in the purchase
Neglecting gender diversity on boards also means that companies will be turning away some of their best customers.
The Risks of Neglecting Nonprofit Board Diversity of Age
Nominating and governance committees tend to recruit older individuals for nonprofit volunteer board service. While nonprofit boards benefit from their life and work experience, they’re also missing out on many benefits that younger generations bring to the board.
Older people have fewer years of their lives yet to live, which sometimes means they tend to look at the short-term perspective. Younger people are more inclined to look at the long-term view of the nonprofit’s goals.
Technology brings many advantages to nonprofit organizations. Millennials have grown up with technology in their hands. Young adults are more knowledgeable about social media and cybersecurity than older generations. Companies in the IT space tend to have some of the most age-diverse boards in the country.
Nonprofit boards can take a page from the corporate world in factoring age and boards. According to Richard Leblanc, a governance expert at York University in Toronto, people aged 40-60 who are in the peak of their careers make good board directors because skills so easily become outdated in business today.
The Risks of Neglecting Diversity of Talents, Skills and Perspectives
Nonprofit recruiting efforts should consider the personal attributes, personalities, interests and values of board director nominees. These are issues that generate diverse perspectives on the board. Boards need the ability to bring many views together to unleash conceptual thinking, resilience and the ability to manage ambiguity to set the stage for assessing possible outcomes.
Nonprofit board diversity projects a board that is well-run and makes the nonprofit more adaptable to an ever-changing environment. Diverse board members will have a track record of successfully working with people within their network to build support for tackling complex issues.
The Risks of Neglecting Nonprofit Board Diversity of Expertise and Experience
Nonprofit boards need to be forward-thinking. Technology is the wave of the future, which means that nonprofit boards that risk neglecting the diversity of expertise and experience will be missing out on drawing in board directors who have tech skills. Because we live in a world of vast economic change, boards will need to utilize all available resources at their disposal.
The risk of not having a board with the proper experience will cause them to lose its competitive edge in attracting major donors. Innovative boards will consider how technology can tap into their functional and industry experience and knowledge to produce valuable digital tools.
Risks abound in the nonprofit realm, and they come from a wide variety of places. Boards that neglect expertise and experience in the area of cybersecurity will position their nonprofit at higher risk of hacking and data breaches.
The Risks of Neglecting Diversity of Geography
Nonprofit boards should seek board directors from geographically diverse areas. It’s helpful for board directors to come from a variety of geographic backgrounds, including rich and poor and rural and urban areas, etc. Boards that neglect geographical diversity may miss opportunities to serve people who are different than the board. A failure to serve as many people as possible may send potential donors to your competitors.
The Risks of Not Using a Board Management Software System
The risks of neglecting nonprofit board diversity as described here amount to a nonprofit board that isn’t performing well. A board management software system should be the first major investment that nonprofit boards make because it enables them to manage every other part of the business of running a nonprofit in an efficient, secure and responsible manner.
A BoardEffect board management software program is the modern solution to helping nonprofit boards build qualified, diverse and capable boards. BoardEffect provides a platform to streamline board meetings and create electronic board packets. Board directors will be able to communicate entirely within the security of the platform to preserve the integrity of confidential board business. Nonprofit board diversity is considered a best practice for good governance. Like their for-profit counterparts, nonprofit boards are facing increasing pressure to be fiscally responsible and perform at top capacity.