"Disturbing Levels of CEO Dissatisfaction With Board Performance" at Midsize Nonprofits, Study Finds

Contact: Stu Kantor, (202) 261-5283, [email protected]

WASHINGTON, D.C., May 8, 2008—Most heads of midsize nonprofits give their trustees low marks for fundraising and monitoring board performance, an Urban Institute study of nonprofits with annual expenses between $500,000 and $5 million has found. Sixty-two percent of the chief executive officers say their boards do a fair or poor job raising revenue and 60 percent assign similar marks for boards’ self-examination.

More than a quarter of CEOs rate their boards as fair or poor when it comes to evaluating the CEO, planning, monitoring programs and services, dealing with the community, and educating the public about the organization.
    
Although most CEOs rate their boards as good or excellent in most roles, the only area in which a majority (53 percent) rate their boards as excellent was respecting board-staff boundaries. Just under half (48 percent) say their boards are doing an excellent job of financial oversight. 

“Substantial percentages feel their boards are doing a poor or fair job in many areas,” says researcher Francie Ostrower. “Our findings clearly do reveal disturbing levels of CEO dissatisfaction with board performance.”

Ostrower’s report, “Boards of Midsize Nonprofits: Their Needs and Challenges,” culled 2005 data on 1,862 midsize organizations that participated in the Urban Institute’s National Survey of Nonprofit Governance, the first national representative survey of its kind. Midsize nonprofits make up approximately one in five public charities filing the Internal Revenue Service’s Form 990. Ostrower’s report was funded by the Evelyn and Walter Haas, Jr. Fund.
 
What’s Behind the Dissatisfaction?

The level of board engagement in a particular role is the most influential factor associated with CEOs’ ratings of boards. For instance, the share doing an excellent job monitoring programs rises from 2 percent for those not viewed as actively engaged to 55 percent for those that are. The fundraising rating mainly reflects how actively the board seeks support, along with the percentage of board members making donations and whether members are required to give or fundraise.

Sixty-nine percent of leaders at midsize nonprofits say it is at least somewhat difficult to recruit new trustees. Twenty percent say it is very difficult. This problem is negatively related to performance ratings in all areas. For nonprofit boards that do not have recruitment problems, 24 percent are said to be very active fundraisers, for instance; that figure drops to 12 percent among those that have great difficulty. 

Boards that emphasize a willingness to give time as a recruitment criterion are more likely to be active in every specific board role, and boards that emphasize business and financial skills are more likely to be active in almost every role.

In most midsize nonprofits, the board chair and CEO are very influential in setting the agenda for board meetings. The level of influence given to other board members in determining the agenda is positively associated with greater activity in every board role.

Board Composition 

The demographic profile of board members reveals considerable ethnic and racial homogeneity. On average, 83 percent of trustees are white (non-Hispanic), 9 percent are black, and 4 percent are Hispanic, with the balance from other groups. Thirty-six percent of boards have no minority members. Furthermore, 48 percent of midsize nonprofits say that racial or ethnic diversity is not an important criterion when they select new board members.

Nonprofits whose clientele include higher percentages of ethnic or racial minorities are more likely to include board members from those groups. Still, many nonprofit boards have no minority representation, even among organizations serving a high percentage of minorities.

Other groups underrepresented on nonprofit boards are those under age 35 or over age 65. On average, only 6 percent of board members are under 35 and only 13 percent are over 65.

Recommendations

Ostrower recommends three steps boards should take immediately:

• Carefully assess recruitment criteria and their fit with the organization’s needs. Attract well-rounded members and consider an array of backgrounds and skills.
• Promote a culture that encourages members to help set the board’s agenda rather than concentrate influence solely in the hands of the CEO or board chair.
• Institutionalize a procedure for the board to use to regularly monitor its own performance.

Ostrower says nonprofits must also get help recruiting new members and widening the pool from which they draw.

“Boards of Midsize Nonprofits: Their Needs and Challenges” is accessible at http://www.urban.org/url.cfm?ID=411659.          

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