High performing nonprofit boards understand that diversity is essential to the success of their organization. When a nonprofit board reflects the diversity of the community it serves, it improves the ability to better serve its client base and results in an improvement in innovation, brand image, and, most importantly, community trust.
As a Diversity and Inclusion professional, I understand the challenges inherent in increasing diversity in any institution or agency. I know that increasing diversity sounds amazing in theory to most organizations, but is not always prioritized from above. Nonprofit boards are uniquely situated to drive real, substantial change in organizations. In order to do this work effectively, though, diversity must move from the back-burner and become a top priority.
Below are four reasons nonprofits should prioritize board diversity:
- You’re able to better serve the communities you’re representing and providing services to
- You’ll financially perform better
- You’ll foster a healthier and more inclusive workplace culture
- It will improve your brand image and community trust in your organization
1 . Better Serving The Communities You’re Representing
Let’s start with the first point: better serving the communities you’re representing and providing services to. It is essential that you have more board diversity when engaging in community work. By having more diversity, you can find better solutions to identifying the needs of your community, understanding the gaps are in your services, and creating effective marketing campaigns that will make donors and community members’ respect and identify themselves with your organization. Lack of diversity leads to lack of basic cultural awareness, which results in losing existing community participants and missing out on engaging people that could utilize your services.
For example, let’s say you are a nonprofit that wants to market free computer classes to elders with LEP (Limited English Proficiency). You know that in your key strategic neighborhoods the most commonly spoken languages after English are Spanish are Vietnamese, Korean and Arabic. You understand that if you want to provide accessible and relevant services in your area, you need to translate your marketing materials into those languages. You also understand that when promoting services in language-diverse communities, it is best practice to minimize text and rely on images and graphics. Let’s say you decided to use a thumbs-up graphic on your flyer to try to convey a positive message about the program you’re trying to market. The thumbs-up gesture is commonly used in many cultures to signify a job well done. However, if it is used in Australia, Greece, or parts of the Middle East – the thumbs-up sign essentially means “Up Yours!” or “Sit on this!” This is when lack of diversity and lack of cultural awareness can create some real problems. It was done with a good intention but can create more harm than good. For large businesses, you’ll hear about their mess ups on TV or when they trend on Twitter. For nonprofits, what this typically means is that people will make a mental note about your nonprofit and never reach out to receive your services because they no longer trust you. You may not face an uproar; you will just lose out on potential new clients/funders, or lose the ones you already have. By increasing diversity on your board, you are better able to understand and connect with the community you serve. This is an immediate need for service-focused nonprofits, where there is the potential for a large volume of cases where clients feel misrepresented and underserved because of an organization’s lack of cultural awareness. You might have diverse employees that are able to provide feedback, but in hierarchical organizations where most decisions are made at the top it is vital to have diversity on the board of directors so that board members can fill in each other’s cultural gaps. Remember, this is all in service of the mission of your organization.
2 . You’ll Financially Perform Better
Increased board diversity positively impacts profit, compliance, and grant eligibility. I know what you’re thinking: we’re a nonprofit, we don’t make money! While this is the case, most organizations are always looking for to mitigate risk and seeking continued source of funding to stabilize and increase their efforts.
As an organization, you need to evaluate risk. Not being able to properly mitigate risk can result in a huge financial impact, which leads to discussing compliance. Every year, as your closing out your books, setting aside dollars and/or creating initiatives for compliance should be taken as seriously as paying for your non-profit insurance. You are encouraged to do more than the bare minimum to meet your compliance requirements. Your compliance requirements should be recorded documentation demonstrating that you are trying to be an inclusive organization. While this is a practice that is practiced by businesses, it’s a practice you should implement in case you’ll ever need those records. It’s also good to have those records for when you’re submitting grant requests. Grant requests are now trending more towards requesting the diversity makeup of the board and its staff of the non-profit as well as the diversity breakdown of the clientele the non-profit serves. Grant requests are now being declined for nonprofits that lack diversity. It’s not a good look for an organization that serves a majority minority community to have little or no board diversity. Grant providers are now demanding diversity at all levels of the organization. You can use your compliance requirements to mitigate risk and also utilize them for requesting funding.
A relevant case study regarding why diversity is crucial for businesses can be seen on McKinsey and Company’s “Delivering Through Diversity.” McKinsey & Company’s global study of more than 1,000 companies in 12 countries found that organizations in the top quartile of gender diversity among executive leadership teams were more likely to outperform on profitability (21%) and value creation (27%). Organizations in the top quartile for ethnic/cultural diversity were more likely to achieve above-average profitability—33% more likely for diverse executive teams and 43% more likely for diverse boards. At the other end of the spectrum, companies in the bottom quartile for both gender and ethnic/cultural diversity were 29% less likely to experience profitability above the industry average. Researchers measured profitability by using average EBIT margins. If all that confuses you, just remember that more ethnic and gender diversity = more profit/funding.
Non-profit boards are often made up of professionals and talented business leaders. Understanding the data above and how they impact businesses, we can compare the data to how non-profit boards perform. By valuing diversity within your staff and your board, you’re able to mitigate risks by removing each other’s blind spots and providing different perspectives and ideas to solving complex issues. By not being able to identify your blind spots, it can place you in financial risk and place you in risk.
3 . Fostering a healthier and more inclusive organizational culture
Increasing diversity at the board level is fundamental to this process. It will help to create a culture in which your employees feel supported and know that the values of the board align with those of the organization. Committing to and following through with prioritizing the diversity of your organization’s board will help ensure that equity and inclusion are woven into the strategic direction as well as the day-to-day operations of your nonprofit. To put it another way: when it comes to diversity, we all need to put our money where our mouths are. It’s a wonderful first step to commit to diversity and equity principles in staffing and outreach decisions. But in order to demonstrate your organization’s values, it is important that they are reflected at the top. This is vital to making sure that your staff feels supported in their work and knows that the board shares their goals and has their best interest at heart.
Resource: https://insights.som.yale.edu/insights/what-do-leaders-need-to-understand-about-diversity
4 . Improving Your Image and Building Community Trust
Have you heard the term “good ol’ boys club?” This is a term that is commonly used to describe a situation where there is a large group of the same people in the room– typically white cis-gender men. A lot of nonprofits make the mistake of having a good ol’ boys network on their board because they lack insight and awareness in needing to approach board selection differently. Typically, how this happens is that the initial board is mostly made up of friends and advisors of the organization’s founder. Over time, the initial board may reach out to their trusted friends and advisors to fill vacancies. This approach to board recruitment leads to the usual suspect of the “good ol’ boys” network. After a while, they’ll add a woman or two on the board. For many decision makers, diversity ends with white women. In this way, diversity loses its meaning and becomes an afterthought. Lack of diversity on a board does not create adequate space for innovation and creativity. It also results in a lack of trust from the community. While trust may not have been lost with the existing client base, it has not been earned from all communities. People need to trust your brand, but in order to trust your brand, they need to feel represented by it. An increase in board diversity will result in more people feeling represented by your nonprofit and it will lead to better decision making due to the increase of thought leadership.
The bottom line is that diversity helps your organization thrive at every level. More diversity on your board means you can better relate to the community, improve your brand image, and build trust. It also helps to ensure that your organization supports your employees by fostering inclusion and prioritizing equity. Always remember: not one of us is as smart as all of us. Diversity in your organization helps increase thought leadership, model inclusive behaviors, and better serve the community.
Understanding and committing to diversity at all levels of your organization is the first step to ensuring access, equity, and relevant engagement. This work can be challenging, yes. However, take a deep breath; you can always reach out to us at The New Philanthropist to help.
By Angelica Erazo, Board Member, TNP, and Sr. Diversity and Inclusion at Oracle Corporation.