March 26, 2013

Boards Are Not Ready for the Next Generation of Trustees

A rising generation of younger donors and philanthropic leaders could bring new money to nonprofits and fresh energy to their boardrooms—if boards can overcome their current dysfunction enough to engage them.

Next-gen donors' appetite for engagement was cited earlier this year in one of the first large studies of high-capacity donors in their 20s and 30s (a report that received grant support from the Meyer Foundation, where I work, and several other grant makers).  Some of the 300 participants were entrepreneurs in the early stages of their careers who are just beginning to think of themselves as philanthropists. Others came from families with established foundations that will soon be governed by a new generation of trustees.

Whatever their current circumstances, these donors are poised to become even more influential in the decades to come as control of major institutions and an estimated $40-trillion is passed to the children and grandchildren of baby boomers.

In their report, "Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy," the philanthropic consulting firm 21/64 and researchers at the Johnson Center for Philanthropy at Grand Valley State University describe next-gen donors as driven by personal values, often those transmitted from their parents and grandparents, and motivated primarily by a desire for social impact rather than a sense of obligation or a need for recognition.

Perhaps most significant for nonprofits and their boards was the desire of younger donors to go “all in” once they engage: to develop close relationships with the organizations and causes they support, to offer their personal and professional talents in support of the cause, and to encourage their peers to give and participate as well.

For organizations that are constantly on the prowl for skilled, engaged board members with deep pockets, next-generation donors represent an unprecedented opportunity to revitalize their boards and engage the skills and resources of a fresh cohort of supporters who are just beginning to come into their own as philanthropists.

Yet despite their appetite for deep engagement, younger donors are likely to be put off by board service unless boards can improve the way they function.

A decade's worth of research suggests that board performance is at best uneven and at worst highly dysfunctional. A majority of executive directors are at least somewhat dissatisfied with their board's performance; many are very dissatisfied. Large numbers of trustees report low levels of engagement across almost every area of board responsibility. For far too many people, serving on a board is a frustrating and daunting experience, and many trustees wonder whether their service is making a difference. The experience of serving on a board—unless it is high functioning, superbly led, supported by a skilled staff, and working in a true partnership with the executive—is often quite the opposite of engaging.

Simply adding younger people to the mix—no matter how enthusiastic and skilled they are—is not going to change the fundamental dynamics of nonprofit board service. Even worse, a next-gen donor who has a negative board experience may become disenchanted with the organization and its cause—or even with board service in general.

Nonprofit organizations, and our sector as a whole, can't afford for that to happen. We need the values, skills, and resources next-gen donors can bring. To engage them, nonprofit boardrooms need to become welcoming places where real work gets done. Nonprofit executives need to get better at tapping the expertise and networks of their trustees. And boards need to have more serious conversations about impact.

A new generation of donors and philanthropic leaders is coming into its own. Boards need to get ready.