Leadership Diversity in the Nonprofit Sector: Baby Steps, Big Strides, and Bold Stances

A DiverseCity Counts Research Project

Chris Fredette

Carleton University This research was commissioned by DiverseCity: The Greater Toronto Leadership Project as part of its DiverseCity Counts research series. Led by Maytree and the Greater Toronto CivicAction Alliance, DiverseCity is funded in part by the Government of Ontario. More details can be found at www.diversecitytoronto.ca. *The author also acknowledges the support of the Institute for Governance of Private and Public Organizations, Imagine Canada and SSHRC.

Presenting author may be contacted for further details at chris_fredette@carleton.ca

Diversity, Governance and the GTA

• Diversity in this study is measured by visible minority status consistent with Statistics Canada’s approach – Statistics Canada reports that visible minorities make up as

much as 40% of the GTA’s population

• Governance in this study refers to the collection of activities for which the board is responsible: – Fiduciary oversight

– Strategic planning

– Executive and organizational evaluation

– Safeguarding of organizational missions and mandates

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Project Mandate

This study examines four critical questions:

1. How diverse are voluntary and public sector boards in the GTA?

2. Why is diversity in the voluntary sector important?

3. What is the impact of diversity in leadership?

4. What can organizations do to maximize the benefits of diversity?

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This research is based on a series of three field surveys:

1. National Survey of Canadian Nonprofit Organizations – 96 GTA based respondents extracted from sample

2. DiverseCity Counts survey of Individuals and Organizations

– 302 individuals and 152 organizations responded

3. An exploratory examination of Arts, Sports, and Environmental Organizations in the GTA

– 130 organizations responded in total as of May 7th

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Project Methodology

• Organizations responding to our call for participation spanned multiple sectors, including arts and culture (38.9%), sports and leisure (22.2%), social welfare (10.7%), health and wellness (8.0%), and the environment (4.4%), among others

• These organizations largely reported year-over-year stability, and in many cases growth, in areas such as: – Annual budget growth 2009-2012 - 38.5% reporting

growth in excess of 10%, 17.8% growth less than 10%

– Additions to full-time paid staff (37.1%), volunteer participation (45.5%) and clientele (45.5%)

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Project Methodology

How diverse are Voluntary Sector Boards? • Composition – 77.9% with at least one visible minority Implication: Diversity seems less-representative as Whites

occupy 84.41% of board seats

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Among responding organizations we found:

• 420 organizations and 4254 board members

• Only 15.6% are members of visible minority groups – All sub-groups of visible minorities are under-represented,

ranging between .33% (Korean descent), to 3.13% (Black) and 3.41% (South Asian)

– Only 24.2% indicated having at least three visible minority board members, a result that closely mirrors the 24.5% of boards who report having compositions that are 30% diverse or more

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How diverse are Voluntary Sector Boards?

Why care about Diversity in the Sector? • External factors exerting pressure for increased Diversity Implication: Pressure for change is multiplex and wide-ranging

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Why care about Diversity in the Sector? • What is motivating your organization to seek Diversity? Implication: Gains of Diversity are both tangible and legitimating

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What is the impact of leadership diversity?

• Prior studies have shown the impact that leadership diversity can offer in terms of:

1. Governance Effectiveness

2. Board Performance – Creativity, Problem-Solving, and Decision-Making

3. Loyalty and Commitment to the Organization

• This research bolsters and extends these findings in a number of important ways demonstrating both functional and less tangible benefits

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What is the impact of leadership diversity?

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• How has increasing Diversity impacted governance? Implication: Diversity contributes to many functional aspects

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What is the impact of leadership diversity? • How has increasing Diversity impacted governance? Implication: Having a critical mass beyond 30% makes a bigger

difference in the contribution of visible minority board members

What is the impact of leadership diversity?

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• How does increasing Diversity impact board performance? Implication: Diversity improves ideation and network reach

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• How does increasing Diversity impact board performance? Implication: More Diversity equals better governance and more

inclusive boards and organizations

What is the impact of leadership diversity?

What can organizations do to benefit? Leaders need to be aware of practices and policies that stifle diversity and inclusion in favour of expedience

• Make Diversity a Strategic Imperative, not an idealized goal by taking concrete steps to keep it on the agenda – Perform a demographic audit of your board

– Attract, recruit and retain with purpose

– Build a pipeline of talent for the future

• DiverseCity onBoard has more than 1000 qualified and pre-screened potential board candidates waiting for the right opportunity

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What can organizations do to benefit? Develop practices and processes that enable, endorse, and encourage meaningful participation in governance activities

• Stress Functional Inclusion in Leadership and Governance – Align diversity efforts to the mission, mandates and goals of the

organization

– Assign diverse members to special committees and taskforces where creativity and problem-solving are critical

– Mobilize senior organizational leaders as catalysts of change

• Communicate the importance of building and maintaining inclusive board processes that lead to positive board dynamics and result in great governance performance

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Conclusions and Implications Baby Steps, Big Strides, Bold Stances

The results of this research offer both hope and continued reason for pause:

• Participation rates in nonprofit sector leadership continues to progress in Baby Steps with influence and control largely in the hands of its traditional holders

• Of 4254 board positions examined, only 15.59% are visible minorities compared with 40% in the GTA’s population – 77.9% of organizations have at least one visible minority on

the board

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Conclusions and Implications Baby Steps, Big Strides, Bold Stances

• Big Strides can be found in the attention given to the strategic importance of diversity, and the actions taken to formalize diversity practices

• 43.8% report having formal diversity policies – 83.6% include ethnicity, race and colour – 49.4% identify country of origin – 36.3% include immigrant and refugee status

• Executive directors overwhelmingly report benefits of: – Enhanced Fiduciary Oversight – Improved Strategic Planning – Contributions to Overall Board Effectiveness

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Conclusions and Implications Baby Steps, Big Strides, Bold Stances

• A particularly noteworthy Bold Stance in the field is the growing awareness of the role of inclusion as a critical aspect of voluntary sector success

• Diversity contributes to effective governance, and more diversity amplifies these benefits

– The impact of a ‘critical mass 30%’ rule demonstrates that ‘if some diversity makes a difference, more diversity equals more inclusive boards and better governance’

– Champions of ‘critical mass’ diversity emphasize building and maintaining inclusive processes that lead to positive board dynamics and greater governance effectiveness

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Leadership Diversity in the Nonprofit Sector: Baby Steps, Big Strides, and Bold Stances

A DiverseCity Counts Research Project

Chris Fredette

Carleton University This research was commissioned by DiverseCity: The Greater Toronto Leadership Project as part of its DiverseCity Counts research series. Led by Maytree and the Greater Toronto CivicAction Alliance, DiverseCity is funded in part by the Government of Ontario. More details can be found at www.diversecitytoronto.ca. *The author also acknowledges the support of the Institute for Governance of Private and Public Organizations, Imagine Canada and SSHRC.

Presenting author may be contacted for further details at chris_fredette@carleton.ca