To the Editor:
The July 11 Chronicle of Philanthropy Opinion piece “GuideStar ‘Hate Group’ Controversy Should Put Spotlight on Charity Watchdogs” took a twist we didn’t see coming. In the midst of cautionary tales for those who seek to help donors evaluate charities, the authors took issue with the idea that board diversity matters when evaluating a nonprofit’s leadership.
More specifically, they argued that the question BoardSource developed for GuideStar asking boards to indicate whether they have “an inclusive board-member recruitment process that results in diversity of thought and leadership” was inappropriate. They went on to say, “Single-mindedness can sometimes be an asset, too,” and, as such, the board’s composition vis-à-vis diversity should not be used as a measure of board strength.
We must respectfully disagree.
There is significant evidence that boards and other leadership bodies composed of diverse groups of leaders perform better in many critical areas, most notably in innovation, problem solving, and financial performance:
- A 2015 study by McKinsey & Company found that companies with more diverse boards and leadership teams outperform their competitors with less diversity at the top. “The companies in the top quartile for gender diversity were 15 percent more likely to have financial returns that were above their national industry median, and the companies in the top quartile for racial/ethnic diversity were 35 percent more likely to have financial returns above their national industry median.”
- A 2015 analysis of data from the MSCI World Index found organizations with women in leadership positions at the board level performed better financially and were less likely to be involved in governance-related controversies.
Within the social sector, however, limiting the discussion of board diversity to the deliberative or bottom-line benefits is too narrow a frame. Doing so ignores the unique role of the nonprofit sector in addressing critical challenges and inequities in our society.
This is why BoardSource is unapologetic about our belief in the importance of board diversity, not just because we believe diverse perspectives help boards operate more effectively but because we understand the very real risks a lack of diversity can create. Homogeneous boards can fall prey to strategic blind spots in any context, but the stakes are especially high when a board is ill-equipped to understand the impact of its decisions on the communities it seeks to serve.
Of course, the diversity required to lead effectively varies significantly from organization to organization. The “ideal” board composition is not something that can be defined by an outside entity without regard to the mission, work, and history of a particular organization. Indeed, this is why BoardSource’s question on the GuideStar profile is framed so broadly: “Does the board ensure an inclusive board-member recruitment process that results in diversity of thought and leadership?”
The self-reported responses to this question on the GuideStar profile may not tell the full story, but they do tell a story. And if a board struggles to answer “yes” to this question, we think that’s worthy of reflection — both for the organization itself and for those who are considering supporting its work.
Anne Wallestad
President and CEO
BoardSource
Vernetta Walker
Vice president for programs and chief governance officer
BoardSource