Building a Business Case for Nonprofit Board Diversity

Diversity in the boardroom continues to be a topic of conversation for all sectors and most definitely deserves to be an area of consistent focus. Does a traditional board of directors have a broad enough range of perspectives and life experiences to come up with new solutions to old problems? Do the majority of boards have the capacity to weather the storms of change and produce plans that will positively impact organizational performance in the midst of a crisis? Can a seemingly homogenous group of people develop the most effective strategies and make the best decisions on behalf of the business or organization they advocate for? It should be of no surprise that diverse and inclusive companies have a competitive edge over their peers.

PROFITABILITY

There is a strong business case for both gender diversity and ethnic and cultural diversity in leadership. According to McKinsey & Company, the most diverse companies are now more likely than ever to outperform and ultimately drive more profit than their less diverse peers. In fact, the top quartile of ethnic and culturally diverse companies are 33% more likely to outperform on EBIT margin with inclusive workplaces outperforming S&P 500 stock performance by four times.*

The research shows that diverse populations aren’t the only ones who benefit from diversity and inclusion; every 1% increase in gender and ethnic diversity yields a respective 3% and 9% increase in sales revenue.**

RESILIENCE

All sectors are facing extraordinary levels of change at an accelerating pace. Responding to rapid external change in a period of disruption can be challenging for the most experienced leaders, but when executed well, adapting and implementing organizational transformation can be a catalyst for future growth.

A board reflective of diverse skill sets will have the tools and vision to adapt to rapid change. Now is the time to develop strategies that address systemic inequities, build resilience into our systems, and embrace change management.

INNOVATION

Simply put, a diverse and inclusive team creates more innovative ideas and solutions. The more diverse teams are, the more likely they are to draw inspiration from different life experiences and environments.***

Companies need creative and innovative ideas that can only come from a diverse group of individuals who are committed to organizations’ missions and are prepared to lead.

Diverse life experiences and viewpoints among board members positively impact organizational performance and the ability to adapt, with problem-solving, innovation, creativity, recruitment potential, and financial strength all elevating as a result.

EMPLOYEE RETENTION

More diverse companies are better able to drive profitability, productivity, and customer experience. But the benefits don’t stop there; diversity is strongly correlated to successfully recruiting top talent, improving employee satisfaction, and reducing turnover.

In fact, diverse and inclusive workplaces report 5.4 times higher employee retention rates than less diverse environments.*** As simple as it sounds, employees perform at a higher level when they personally feel accepted and respected, and they are able to perform at that high level consistently when they see their colleagues are provided that same acceptance and respect.

SHARED GOALS

Does this data translate to the social sector? Absolutely. Nonprofit corporations are in the business of creating societal impact to solve some of our communities’ most pressing needs. For-profit companies are in the business of solving problems and creating value. Impact and value are similarly driven by diverse and inclusive leadership.

Many nonprofit organizations and board chairs recognize diversity as a problem, but struggle to get outside the typical circles of existing board members. Additionally, many nonprofits recruit from the C-suite in an effort to attract large donations and influence. Given the lack of diversity in the C-suite, organizational performance and societal impact is sabotaged.

Leadership in all sectors, reflective of varied life experiences and of the community they represent, can better identify resources, establish collaborative partnerships, and optimally advocate for their respective mission.

WHAT’S THE INVESTMENT?

Your organization needs a diverse and engaged board of directors to propel your mission forward. BoardBuild connects nonprofit organizations with qualified individuals who possess the exact passions, skills, and lived experiences needed by your nonprofit. Simply post your open board position, and we expertly match you with a qualified, trained leader who is ready to serve from day one.

The decision to partner with BoardBuild to both fill open board positions and diversify your board of directors means you are an advocate who is committed to driving financial performance, elevating organizational performance, and fulfilling your organization’s mission. Together we can shape boards and strengthen communities.

Sources: McKinsey & Co Delivering Through Diversity*; Female Quotient**, Great Place to Work***