New Report: Nonprofit Governance Index 2010

Posted by on January 17, 2011

Survey shows concerns about nonprofit board diversity

BoardSource, with support from the W.K. Kellogg Foundation has released its Nonprofit Governance Index 2010, a report based on surveys of nonprofit chief executives and board members, updates data on board practices and performance, including financial oversight, fundraising, and strategic planning.  The Index reports on data collected from surveys of 978 nonprofit chief executives and 780 nonprofit board members and board chairs.

This year’s index collected data on the three most visible types of diversity and inclusion: race/ethnicity, age, and gender.  Findings included data from chief executives on their perception and priority of racial/ethnic diversity on boards.  According to the Index, 71 percent of chief executives believe racial/ethnic diversity on their board has value to their organization’s mission, and 55 percent consider it to be a priority of their organization.  However, just 28 percent of the chief executives surveyed reported being satisfied with the degree of racial/ethnic diversity on their board.

The survey showed that among respondent agencies, 84 percent of board members were white.  Nonprofit charitable organizations had a slightly higher (17 percent) percentage of people of color on their board than foundations (13 percent) and associations (11 percent).

Only 6 percent of agency executives said that board members had discussed noninclusive practices with them, and only 12 percent of boards reported have evaluated or modified board recruitment activities with the aim of increasing diversity.

The Index examined data on nonprofit board governance practices, roles and responsibilities, structures and dynamics, and composition and recruitment.  It includes background on methodology, organizational participants, individual respondents, and comparative board intelligence.

According to the Index, attention paid to governance policies and practices in the nonprofit sector has been on the rise, driven by two recent developments.  The global recession has taken its toll on nonprofits, and the IRS has changed reporting requirements on the Form 990.  In response to this scrutiny, nonprofit boards have increased personal giving and adopted accountability policies.

Nevertheless, the data suggest improvements are still needed.  Nonprofit chief executives gave their boards D+ grades in both fundraising and increasing board diversity, and rated them just a C+ overall.  Nonprofit chief executives and board members agreed that fundraising was the area in which boards most needed to improve.  Strategic planning was second, and an increased focus on strategic priorities – over operational issues – was third.

The impact of the recession is clearly evident.  Over the past two years, 41 percent of responding organizations cut or froze staff salaries.  Twenty-nine percent cut staff, 28 percent dipped into reserves or endowments, and 26 percent downsized their operations or reduced services.

The 2010 Index is the sixth edition produced by BoardSource since 1994.

To download the report, click here.

http://www.commonfund.org/CommonfundInstitute/Documents/BoardSource%20Nonprofit%20Governance%20Index%202010.pdf