Association for Public Policy Analysis & Management

Nonprofit boards are central stones of the organizations and are critical for planning and implementation of financial, legal, and administrative decision making. Nonprofit studies reveal that successful nonprofit boards excel in a variety of functions including strategic planning, stakeholder management, fundraising, building partnerships, and envisioning sustainable future for the organizations and their programs. Evidence shows that nonprofit boards often have to perform intuitively, without set guidelines, and manage stakeholders with conflicting interests. This makes effectiveness of nonprofit board performance difficult to assess. The question of board inclusion is relevant in nonprofit management since the nonprofit leadership is still largely white. Recent reports (BoardSource, 2016) reveal that nonprofit boards are not more diversified in terms of race and ethnicity compared to their composition in the early nineties, and that nonprofit board hiring strategies still do not prioritize race and ethnicity. Women or minority board members are often used as tokens, and in the absence of a critical mass of these demographic minorities, essential decisions are taken by the demographic majority (white, male board members). Given this context, my study examines whether nonprofit board’s effectiveness depends on the board’s inclusive policies and procedures, and inclusive behavior. My study also investigates if an association between board effectiveness and inclusion may be moderated by the presence of a critical mass of women or racial and ethnic minority members on nonprofit boards. Using BoardSource national survey (2016), my study uses responses from almost 2000 CEOs of U.S.-based nonprofit organizations of different types, sizes, missions, and service areas. Results show that the CEOs of nonprofits do not perceive board inclusive policies and procedures or board inclusive behavior to be a significant predictor of overall board effectiveness. Moreover, the interaction effects reveal that the CEO’s perception about the link between board inclusion and effectiveness of nonprofit boards is not likely to be influenced by increasing the proportion of women or racial and ethnic minority board members in these nonprofits. However, results change when three board functions- fundraising, community-building and outreach, and enhancing board diversity- are taken into consideration in measuring board effectiveness. When board effectiveness is measured by the three items that reflect board functions benefited by representative diversity, the results suggest a positive correlation board inclusion and effectiveness. Further, the positive association between board effectiveness and board inclusive behavior and board inclusive policies and procedures is moderated by critical mass of racial and ethnic minorities on board, though the other moderator variable- critical mass of women board members-does produce any interaction effect. These results imply that while board inclusion (behavior and policies and procedures) might not matter in predicting overall board effectiveness, it matters in predicting effectiveness of board performance in those board functions that are benefited by representative diversity. The study concludes by discussing the limitations of the study and the relevance of the findings in both policy and practice.