Our most recent Leadership Matters roundtable discussion took on a question of central importance to organizations across the nonprofit sector today: Are the boards that lead these organizations equipped to do so effectively? Our two outstanding guests argued that in some very fundamental ways, the answer might be no.

Those guests were Anne Wallestad, president and CEO of BoardSource, an organization promoting excellence in nonprofit governance; and Jan Brown, who is both the executive director of one nonprofit, Spirit Works Foundation and the immediate past board chair of another, Faces and Voices of Recovery. Both of these organizations help people travel the difficult path from substance abuse disorder to long-term recovery.

Much of this discussion was grown from a brilliant article that Anne published last spring in Stanford Social Innovation, presenting a model of governance known as “purpose-driven board leadership.” The article is full of provocative ideas—a phenomenal conversation starter—raising questions well worth considering as we try to envision the new post-COVID world we are stepping into together.

I can’t hope to capture all the highlights of our conversation, which was rich and wide-ranging to say the least. However, I want to share several of the ideas—and the questions—that have stayed with me most. I would also invite you to view the recording of the session in full.

First, is it time to reinvent the nonprofit board?

For those who may not find themselves thinking frequently or critically about the role of nonprofit boards, this question may come as a surprise. But a research survey from BoardSource suggests there is good reason to ask it. This study, which included more than 800 nonprofits, found that to an alarming degree, their boards tend to be…

  • Disconnected from the communities their organizations serve.
  • Ill-informed about the ecosystem in which their organizations operate.
  • Significantly lacking in racial and ethnic diversity.

The study also found that boards tend to be “preoccupied with fundraising above all else,” a point that certainly caught my attention as someone who has spent decades working to inspire and support board members in successful fundraising—and continues to do so.

The problem with this focus on fundraising, Anne contends, is that it can conflict with the board’s most essential role, as a strategic body. The same is true of the other key findings above. To the extent that boards are disconnected, ill-informed, or homogeneous, she asserts they are poorly qualified to offer the strategic oversight only they can provide.

Why is “mission-driven” not enough?

In response to the set of problems the research reveals, Anne proposes the idea of a purpose-driven board. What does that mean? Well, first as she says, “It’s one that prioritizes the organization’s purpose over the organization itself.” Board members are ultimately loyal to the cause—the reason the organization exists in the first place. At first, this can sound like a subtle distinction, but the more we explored the idea together, the more profound it became.

With purpose always in mind, a board is more likely to shape the right strategies and raise money for the right reasons and far less likely to fall into the trap of self-preservation at all costs. If a merger is the best way to fight hunger, conserve land, or promote disease research, a purpose-driven board will be open to the idea. Too often, many are not.

Anne describes three other points that define the purpose-driven mindset:

  • Respect for the ecosystem—from the people in the community that the organization serves, to the cast of other organizational players in their space.
  • An equity mindset—open to recognizing and changing the ways an organization’s approach may reinforce systemic inequities.
  • Authorized voice and power—the idea that an organization’s standing has to be founded on authorization of those impacted by its work.

Together, these principles spell out a precise prescription for change for boards that are, as the BoardSource survey found, disconnected, ill-informed, and non-diverse.

How serious is the lack of diversity?

For me, one of the most resonant moments in our conversation was when Jan described the stark tokenism at work when she was first invited to join a board—”the checking of boxes.” Because Jan is a woman, African American, and identifies as LGBTQ, she says, “they got three for the price of one.”

We all hope that our organizations are moving toward a more enlightened and robust approach to diversity, but as the BoardSource data shows, progress has been entirely insufficient. One of the most striking findings in the study is that “78% of the members of all the boards surveyed are white and 19% of the boards studied were all-white.

Circling back to the central focus on strategy, there is no way for boards this homogeneous to engage in the kind of vibrant, multi-perspective strategic exploration needed to resonate with those around them. As Anne says, “We are talking about more than diversity for diversity’s sake.”

Nonprofit CEOs see the negative impact. They cite their boards’ difficulty in understanding their organizations’ operating environments and work challenges; the resulting difficulty in attracting and retaining talent; and their nonprofits compromised standing in the community. Half of CEOs surveyed said they did not have the right board members to establish trust with the communities they serve.

How terribly discouraging that fact is to consider. After all, as Jan so perfectly put it, “We can only lead at the speed of trust.”

But don’t we need to fundraise?

For those of us who have spent a lifetime echoing the expectation that board members are called to give of their “time, talent, and treasure”, the ideas related to purpose-driven board leadership raise fundamental and challenging questions. Unfortunately, I don’t have all the answers.

I would point out that there is room for creative thinking when it comes to including diverse voices and views in leadership and decision making. Organizations can have multiple boards, working groups, and committee structures, all providing different channels of connection with the community and different pathways for people to move into involvement—a point, in fact, that Jan stressed.

I would also point out that many Boards—including those weighted heavily with high-net-worth individuals—have served their organizations with admirable dedication and real effectiveness, most recently as they faced the extraordinary challenges of the pandemic. Clearly, there is much value here to be recognized, and any transition to a new paradigm will have to be gradual and thoughtful. We also need to remember that no single model will work universally; different organizations require and deserve different boards.

We must wonder what the future will hold. Will there still be room for the high-capacity individuals that so many boards depend on today or will we have to find far different ways of securing major philanthropic investments? I truly don’t know, but find the questions meaningful and deeply important. And what more could you hope to take away from a great conversation?

To end with one more pointed and provocative question—this one from Jan: “If you are not on-purpose, then what are you raising all the money for?”