Boards Often Disappoint in Fund-Raising and Diversity Efforts, Study Finds

Chief executives of nonprofit organizations gave their boards grades of D+ in fund raising and C+ in increasing board diversity, according to a new national survey.

The 2010 Nonprofit Governance Index, compiled by BoardSource, an organization in Washington that focuses on improving nonprofit boards, shows many organizations are still struggling from the recession: Forty-one percent cut or froze staff salaries, 29 percent laid off staff members or eliminated positions, and 28 percent dipped into reserves or endowments. The survey included responses from 978 chief executives and 780 board members of nonprofit organizations.

When asked to identify the most pressing challenges facing their groups, 60 percent of chief executives identified money—or the lack of it. Many pointed to “financial stability” or “the economy.” One CEO wrote: “We’ll be fine when things settle down, but we’re still grasping during the turbulence.”

The survey asked chief executives and trustees to rank their boards’ performance on 10 basic board responsibilities. Some of the lowest grades came in fund raising, community relations, and board recruitment. More than two-thirds of boards received a grade of C, D, or F in those areas from chief executives. The trustees graded themselves more favorably, giving themselves C’s in those areas. Grades from both CEO’s and board members soared highest for understanding the organization’s mission, providing fiduciary and legal oversight, and board-chief executive relations.

A Dearth of Diversity

The survey also revealed dissatisfaction about diversity efforts. It showed more than 70 percent of chief executives said they believe racial or ethnic diversity adds value to their organization’s mission. However, just 28 percent of CEO’s surveyed said they were satisfied with the degree of ethnic diversity on their boards.

The survey found 84 percent of board members surveyed were white, as were 88 percent of CEO’s. The share of minority board members rose slightly, up to 16 percent from 14 percent in 2007. Forty-eight percent of board members were women, up 5 percent from 2007.

More than half of the groups reported that they had built diversity into their statements of values, but just 15 percent had developed a plan for the board to grow more inclusive.

Also, the survey showed that new disclosure rules in the Form 990, the informational tax returns that charities file with the Internal Revenue Service, are prompting organizations to put more accountability measures in place. The number of organizations with written conflict-of-interest policies rose from 88 percent in 2007 to 95 percent this year. Some 87 percent require annual statements disclosing potential conflicts, compared with 67 percent in 2007.

“The 2010 Nonprofit Governance Index” is available on the BoardSource Web site at http://www.boardsource.org.