Midsize Charities Urged to Set New Board Policies

The governing boards of midsize nonprofit groups ought to carefully set criteria for board membership,

encourage all members to influence the board’s focus and agenda, and better monitor their own performance, according to a new report.

Published by the Urban Institute with money from the Evelyn and Walter Haas Jr. Fund, the report is based on survey data from nearly 1,900 organizations with annual expenses between $500,000 and $5-million. The data represent a subset of information gathered in the Urban Institute’s first-ever national survey of charity governance, published last year, which included more than 5,100 organizations.

Francie Ostrower, author of the new Urban Institute report, says that much of the attention, research, and policy setting in recent years has focused on the governing boards of the country’s largest charities.

Her study found that board members at midsize groups are less engaged in many basic stewardship responsibilities, such as financial oversight, than their counterparts at larger organizations and that they have a harder time recruiting new members.

Fund-Raising Issues

The study also raised concerns about what the report called a high level of insularity among the boards of midsize groups.

Only one in five of the boards in the survey reported being actively engaged in fund raising, and only 16 percent were very active in educating the public about the organization, the report says.

On average, nearly half of the governing-board members at the midsize groups had not made their own personal contributions to the organization in the past year.

“We seem to hear all the time the worry that boards shouldn’t interfere with the CEO, but we learn here that boards are doing a great job respecting that line,” Ms. Ostrower says. “What we find, though, is that boards may not be active enough in fulfilling their own responsibilities.”

She says that how a board goes about attracting new members is critical to how successfully it can manage its duties. And boards must carefully build a culture that encourages all members to exert influence over board business, she says.

“If people don’t feel encouraged or able to make a difference, they withdraw,” Ms. Ostrower says.

She notes that the report’s findings about the composition of boards at midsize institutions — which show considerable homogeneity in age and ethnicity — also point to an opportunity for such groups to reach out to a greater diversity of leaders.

On average, 83 percent of board members are white, and at more than one-third of the organizations the entire board is white. The study also shows that only 6 percent of board members are under the age of 35, and 13 percent are older than 65.

“The over-65 group is an important and undertapped pool,” Ms. Ostrower says. “With the coming wave of retirement by baby boomers, it may be timely to start seriously considering how to recruit older people to these boards.”

A full copy of the report, “Boards of Midsize Nonprofits: Their Needs and Challenges,” is available from the Urban Institute.