Nonprofit boards suffer from widespread vacancies, fail to tap all potential candidates and have too few members who are minorities or not senior corporate managers, a new report says.
Natural turnover and standing openings total 1 million to 3 million board seats a year among U.S. nonprofits, the report says.
“The shortage of qualified board members is creating a crisis of senior leadership for the nonprofit community,” says Barry Jaruzelski, vice president of Booz Allen Hamilton, the management consulting firm that prepared the report.
“Boards of directors play a critical role in setting a nonprofit’s strategic direction, raising funds and guiding the management team,” he says. “It’s extremely difficult for such an organization to grow without a strong and talented board.”
He also says that big foundations increasingly are assessing the quality of nonprofit boards in deciding whether to make grants.
Filling board vacancies is particularly tough for nonprofits with annual revenues of less than $10 million or 95 percent of all nonprofits, because they lack the name “brand” that makes recruiting easier for larger nonprofits, says Brooke Mahoney, executive director of Volunteer Consulting Group, a nonprofit that works to boost nonprofit boards and has launched a Web site at boardnetusa.org to connect candidates and nonprofit boards with one another.
The U.s. has more than 1.5 million tax-exempt organizations, including 819,000 classified as 501c(3) charitable nonprofits that are required by the Internal Revenue Service to set up a formal board of directors to keep their tax-exempt status, the report says.
It says nonprofits are not recruiting 1 million to 1.4 million director candidates from groups that are typically overlooked, such as rising managers and non-managerial technical and functional experts.
Among those groups, only 15 percent to 20 percent of potential director candidates serve on boards, and less than half of all potential “independent” candidates – such as self-employed and retired persons – actually are serving.
Hispanics and Latinos, representing 12 percent of the U.S. population, hold only 3 percent of nonprofit board seats, while Asian-Americans, who represent 4 percent of the population, hold 2 percent of seats.
Men hold 57 percent of board seats, while women hold 43 percent, and the average board member is 50 years old, the report says.
Forty-two percent of board members work full-time for corporations or other businesses, while 19 percent work for nonprofits, 14 percent are self-employed, 12 percent are retired and 9 percent work for government.
The report says senior managers of nonprofits would need to evaluate more than 9 million potential candidates just to fill open seats arising from natural turnover, a process that would take more than 36 million person-hours, while filling all open seats would take more than 60 million person-hours.