Fund Raising and Lack of Diversity Are Key Challenges for Trustees

Trustees of nonprofit organizations aren’t doing enough to raise money for their groups or to make

their boards diverse, a new survey has found.

Only 40 percent of charity board members said they felt comfortable asking others to support their organizations, while three-quarters of the trustees said they had themselves made donations, according to data provided by 1,126 chief executives and 1,026 trustees who belong to BoardSource, a Washington nonprofit group that focuses on governance at charities and foundations.

The survey also found that 86 percent of board members were white and 57 percent were male. About half were 50 to 64 years old.

The importance of diversity on the board divided the chief executives in the survey from the trustees who were sampled.

Nearly half of the chief executives cited lack of diversity as a big concern, second only to worries that boards were not doing enough to raise money.

But fewer than a third of trustees rated diversity a top issue, placing it behind not just fund raising but also three other concerns: developing future plans for the charity, changing the board’s focus from day-to-day oversight to long-range planning, and improving board members’ commitment to the organization.

While chief executives said their boards did a relatively good job of understanding the missions of their charities and providing legal and financial oversight, they gave them low marks for community relations.

Setting Expectations

Both chief executives and trustees agreed that boards’ poor fund-raising performance is their biggest challenge.

“Fund raising is the No. 1 area of board performance that needs to be improved,” said Linda Crompton, president of BoardSource. She advised charities to set expectations for incoming board members about their role in raising money.

The survey found that about half (51 percent) of the boards require their members to solicit donations for the organization. Slightly more organizations require board members to attend fund-raising events (60 percent) and to identify prospective donors (61 percent). A little more than two-thirds (68 percent) require board members to make a personal contribution to the organization.

An active board is key to bringing in charitable donations, said Paulette Maehara, president of the Association of Fundraising Professionals, in Arlington, Va., which represents more than 29,000 fund raisers. Prospects get turned off when they discover that board members aren’t contributing, said Ms. Maehara.

“They ask, ‘If the people who are most committed to the organization aren’t supporting you, why should I?’” she said. “Every board member should have to contribute something, no matter how little.”

But boards have to be careful not to set the minimum too high if they are serious about recruiting trustees from diverse backgrounds, said Hugh B. Price, a senior fellow at the Brookings Institution, in Washington, who was previously head of the National Urban League.

“If you lay a heavy burden on every trustee,” he said, “do you make it impossible to recruit people from different stations in life?”

One charity board now trying to balance trustees’ diversity with their fund-raising ability is the LAM Foundation, a Cincinnati organization that fights lymphangioleiomyomatosis, a rare women’s lung disease.

The nonprofit group recently asked each board member to begin contributing at least $1,000 a year.

Trustees can opt to raise some or all of the money from other sources, and the organization’s board may vote to reduce or eliminate the $1,000 annual minimum if a new trustee represents a minority group whose members are largely unaware of the disease.

“We want to raise awareness and identify patients in other populations and communities and give them a voice,” said Leslie Sullivan-Stacey, the foundation’s president. “We want to be sure that we serve everyone.”

Among other key findings in the report:

• Organizations with larger budgets tended to have a higher percentage of black people on their boards; blacks made up 5 percent of the boards at groups with budgets of less than $1-million, and 10 percent at groups with budgets greater than $25-million.
• Financial sustainability was selected by the largest proportion of chief executives (35 percent) as the most pressing challenge facing their organizations; fund raising was the most frequent choice of board members (32 percent).
• The larger an organization, the more likely it was to have policies to hold its leaders accountable for their service. For example, only 33 percent of groups with budgets of less than $500,000 had a policy to protect employees who blow the whistle on wrongdoing at the organization, compared with 88 percent of those with budgets of $10-million or more.
• About half of chief executives said they plan to leave their positions within the next five years, but fewer than a third of the trustees said they expected their executives to change jobs.
• The ideal board size appears to be 15 to 22 members. Chief executives whose boards had more than 22 members said they were too big, while those with fewer than 15 members said their boards weren’t big enough.

A free copy of a report on the survey’s findings, the “Nonprofit Governance Index 2007,” is available online.

VIEW OF TRUSTEES AND CEO’S ON THE KEY ISSUES FACING THEIR ORGANIZATIONS Board Chief executive officer Financial sustainability 30% 35% Fund raising 32% 27% Strategy 24% 27% Staffing 8% 27% Board development 9% 11% Marketing 14% 11% Facilities and real estate 8% 7% DEMOGRAPHICS OF NONPROFIT BOARD MEMBERS White 86% Black/African-American 7% Hispanic/Latino 3% Asian 2% Other 2% By Gender Female 43% Male 57% By Age Younger than 30 2% 30 to 49 36% 50 to 64 49% 65 or older 13% By Employment For-profit or self-employed 54% Nonprofit 20% Retired 13% Government 8% Not employed 4% SOURCE: BoardSource