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Addressing the Elephant in the Boardroom

Posted: 9/8/2021

Click here to read on NonProfitPRO.

By Jai McBride Calloway, J.D.

There is an elephant in boardrooms across national and international lines that can no longer be ignored. That elephant is named discrimination and most frequently it takes the form of racial discrimination. Too many boards lack diversity.

On Aug 6, 2021, the Securities and Exchanges Commission (SEC) took a bold leap of faith and equitable progress by voting to approve the new listing rules submitted by Nasdaq that aim to advance board diversity. The rule requires companies listed on its exchange to report their board diversity and have on their board — or at least explain why they don't have — at least one person who identifies as a woman and one person who identifies as an underrepresented minority or LGBTQ person.

Although this noticeable problem exists in both corporate and nonprofit sectors, the nonprofit sector is increasingly being impacted to a larger degree than its corporate counterparts. A recent BoardSource report showed that nonprofit boards are no more racially and ethnically diverse than they were two decades ago and "current recruitment priorities indicate this is unlikely to change."

New Days, Old Patterns

While most nonprofit leaders and board members say they are extremely dissatisfied with this gap, they struggle to correct it. There is a perpetual cycle that ignores remedies, like simply prioritizing demographics in recruitment practices, particularly racial and ethnic diversity.

Instead of opting for placing prioritization and commitment around these areas, many nonprofit organizations aim to increase racial and ethnic diversity solely amongst community-facing, lower-positioned staff members. Comparatively, board members recruit and advance similarly to their own cultural and ethnic background. In turn, this yields a continued cycle leading to a deepened disconnect between nonprofit governance and the constituent-base served.

A New Approach

Indeed, the lack of diversity amongst board members in the nonprofit sector is a problem. However, it is a problem that can be fixed by shifting the narrative and thought process. For developing effective narratives, framing diversity as both a moral imperative and a strategy for organizational effectiveness can be helpful. Research on diversity shows that diverse boards are more likely to have effective governance practices, including policies and procedures that promote a sense of shared purpose for collective action.

In addition, board members and executives should communicate a clear vision and plan to achieve the goal of leadership diversity. With social pressures that ignite moral and financial demands on organizations, now more than ever is the time to push for organizational change.

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