How to unlock the power of an inclusive and diverse leadership team

Board diversity is crucial to the success of charitable organizations and foundations. Here’s how to overcome barriers that may prevent you from reaping its benefits.

 

Effective board leadership for nonprofits, foundations and charitable organizations requires bold decision-making with a focus on advancing the organization’s mission. “For nonprofits to perform optimally, research and our experience suggest that leadership must represent a broad range of perspectives and expertise,” says Dianne Bailey, national philanthropic strategy executive, Bank of America Private Bank. “Still, many nonprofit boards lack meaningful diversity.”

 

What’s holding nonprofits back? And what can be done to overcome the structural and cultural barriers to building diverse boards?

 

Encouragingly, there are a few high-impact strategies for removing obstacles and creating opportunities to diversify your foundation or charitable organization’s governing board, which are explored in detail below.

 

The impact of diversity on your nonprofit’s board

For starters, there’s no shortage of ways to think about diversity. Some of the traits that typically come to mind are age, race/ethnicity, gender, sexual orientation and socioeconomic status. But we shouldn’t stop there.

 

Also consider diversity through experiences such as physical ability, marital/parental status, military service, dissimilar points of view or approaches to problem solving. When varied personal characteristics are combined at the board level, research confirms they help organizations and their leadership become more effective in realizing their goals. “And for nonprofits, in particular, having a diverse and inclusive board can strengthen your organization in several important ways,” says Bailey.

 

  • Improves performance. Studies by McKinsey show that companies in the top quartile of gender and racial/ethnic diversity on their executive teams outperform companies in the bottom quartile by 25% and 36%, respectively.1
  • Enhances sustainability. Homogenous leadership risks “group think” and may fail to develop a strategy that can meet the demands of the future.
  • Addresses funder requirements. Nonprofit funders are starting to reconsider their support for organizations that are slow to diversify their leadership — and responding to any lack of diversity in their own boards with thoughtful plans.
  • Amplifies the mission. Nonprofits need boards that include voices from the communities they serve to fully understand, identify and deliver the scope of services needed.

 

 

What is the current state of nonprofit board diversity?

Most nonprofit leaders recognize the importance of diversity, but research reveals a gap between their attitudes and reality. In the recent BoardSource report, Leading with Intent, 82% of nonprofit CEOs surveyed said that racial and ethnic diversity was “very important” or “important” for strategic leadership and governance of the organization. However, only 26% of the respondents place a high priority on demographic characteristics when recruiting new board members.2

 

How can you effectively diversify your nonprofit’s board?

There are a number of common structural issues and cultural barriers that need to be addressed to reap the benefits of diversity and inclusion. Press + on each issue to learn how:

 

Structural

The dynamics of any board begin with how it’s structured — which includes informal as well as formal systems related to recruiting, onboarding and engaging board members to advance your nonprofit’s mission.

Finding candidates

Accessibility

Board terms

Fundraising

Role clarity

Cultural

A board’s culture is made up of often unwritten rules and shared values that shape how members communicate with each other, work as a team and make decisions.

Managing change

Fostering belonging

Avoiding unconscious bias

Expressing gratitude

 

If you have questions or want to learn more about effective strategies for diversifying your board, please contact your advisor. We are here to help.

1 McKinsey, Diversity wins: How inclusion matters, May 2020.

2 BoardSource, Leading with Intent: Reviewing the State of Diversity, Equity and Inclusion on Nonprofit Boards, 2021; and U.S. Census Bureau, 2022.

3 PRRI, "PRRI Survey: Friendship Networks of White Americans Continue to Be 90% White," 2022.

4 BoardSource, Term Limits, 2022

 

Institutional Investments & Philanthropic Solutions (also referred to as “Philanthropic Solutions” or “II&PS”) is part of Bank of America Private Bank, a division of Bank of America, N.A.,  Member FDIC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

 

Trust, fiduciary, and investment management services are provided by Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp., and its agents. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”).

 

MLPF&S makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered brokerdealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

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