In 2009, foundations made $42.9 billion in grants mostly to nonprofits (PDF). Who actually makes the decisions about foundation grants? Foundations controlled almost over $580 billion in assets, much of it invested in U.S. corporate equities. Who directs foundations’ investments? And do these people reflect the communities their foundations work in?
The trustees or board members who are legally entrusted to make the grant and investment decisions for foundations are not very well known to the public or even to the nonprofit sector that seeks foundation support. Every once in a while a study captures the picture of foundation board diversity, or the lack of it, that should result in a call to action. Some foundations are answering that call with explicit efforts to bring more diversity into their governing boards, but there is a long way to go before foundation trustees begin to approximate the diversity of the communities they serve.
Annually, the Council on Foundations collects information on the COF members that agree to complete a detailed survey on their management and compensation practices. It isn’t a large proportion of the membership, only 517 reporting on their 2009 conditions, out of the approximately 2,000 foundations counted as members (PDF).
Since the Council’s membership is predominantly larger foundations, the information on the tens of thousands of smaller foundations, mostly family foundations, is not reflected here. But the profile of foundation leadership is not a picture of America’s racial, ethnic, and income diversity. Some of the more interesting facts in the Council’s latest survey are these:
It’s a Man’s World on Foundation Boards
Most people think of philanthropy as dominated by women, particularly with the large proportion of women serving as foundation program officers and even as CEOs. For example, among New York foundations, women account for 70 percent of all staff and 63 percent of CEOs (PDF). In California foundations, white women were 41 percent of foundation staff and women of color 28 percent (PDF). But on the boards, men rule. Women comprised only 38 percent of board members compared to 62 percent for men.
The gender balance is a little closer for men (52.5 percent) and women (47.5 percent) among COF’s family foundation members. Some of the bigger institutional foundations are somewhat more male dominated in terms of board composition. For example the male/female imbalance is eight to three at the W.K. Kellogg Foundation, nine to three at Atlantic Philanthropies, seven to five at the Ford Foundation, and eleven to eight at the California Endowment. the Rockefeller Foundation and the California Wellness Foundation boards on the other hand have seven to seven and three men to four women ratios respectively.
Maybe the gender composition of foundation boards shouldn’t concern nonprofits and the public. Maybe there is no relevant distinction between what men and women bring to foundation deliberations. But that argument doesn’t sound convincing.
Few People of Color on Boards
No one is all that surprised that foundation boards are largely male or comprised by men and women a little long in the tooth (74 percent over the age of 50), but the racial ethnic composition may be a bit more surprising. For all 517 foundations responding to the race/ethnicity questions, the board world is predominantly white—85 percent non-Hispanic white. Whites are overrepresented in foundation boards and American Indians roughly comparable to their proportion of the population (1 percent), but others are underrepresented as compared to their proportion of the U.S. population:
- 7 percent of the 6,672 board members of the reporting foundations are Black/African-American compared to 12.8 percent of the U.S population in 2008 (13.5 percent as black alone and black in combination with other races)
- 4 percent of the board members Latino/Hispanic compared to 14.8 percent of the U.S. population in 2006
- 2 percent Asian/Pacific Islander compared to 4.5 percent of the population in 2008 classified as Asian alone (5.1 percent Asian alone and Asian in combination with other races) and 0.2 percent Native Hawaiian and Pacific Islander alone (0.4 percent in combination with other races)
The Council report notes that the minority proportions of foundation boards were lower for smaller foundations.Given that the Council membership is comprised of significantly larger foundations on average than the tens of thousands of nonmember foundations, the Council survey leads to an impression of greater foundation board diversity than the reality.
Would it surprise Americans to learn that the boards of the nation’s top foundations, or at least those willing to answer the Council on Foundations survey, were certainly no more diverse, in terms of racial/ethnic minorities, than the boards of the Fortune 100 corporations? In 2008, 15.42 percent of Fortune 500 board members were minorities according to the Alliance for Board Diversity (PDF), though corporate boards, with 82.93 percent of board seats occupied by men, were even more male-dominated than big foundation boards. A 2010 survey by Senator Robert Menendez of Fortune 500 corporations (with 219 responding with data) found minorities occupying 14.5 percent of board seats. Exacerbating the problem on corporate boards is the “churning” of minority board members, with minority board members frequently sitting on the boards of two or more corporations. It is hard to imagine that similar churning doesn’t occur among foundation boards.
Does Board Diversity Matter in the Foundation World?
Does it matter to the citizens of the United States that corporations and foundations are so lacking in ethnic and racial diversity? Listen to Senator Menendez’s comments about the lack of diversity on corporate boards and see for yourself the importance of questioning diversity in foundations:
“American corporations need to do better when it comes to having the board rooms on Wall Street reflect the reality on Main Street. We need to change the dynamic and make it commonplace for minorities to be part of the American corporate structure. It is not just about doing what’s right, but it’s a good business decision that will benefit both corporations and the communities they’re tapping into and making investments in.”
In other sectors, the importance of a diverse board is the credibility and effectiveness of the organization. In the hospital sector, where only 12 percent of board seats are occupied by minorities, an affiliate of the American Hospital Association dedicated to increasing board diversity makes this argument: “It’s vital that [board members] look like the people who are being served . . . Not only does the community relate better to the institution, but the hospital has a greater chance of understanding and meeting the needs of its patient population.”
Some foundations clearly take diversity of their governing boards as seriously as they do the composition of their program officers. At the Jessie Ball DuPont Foundation (PDF), the CEO, Sherry Magill, has made a significant effort to address the problem of an all-white foundation board at a foundation operating in the Southeast. In the Foundation’s case, it required going to the Fourth Circuit Court of Florida – and members of Mrs. duPont’s family – for permission to expand the size of the board. The result was adding two African-American trustees. The Jessie Smith Noyes Foundation under President Vic DeLuca has been similarly aggressive in promoting diversity in its governing board—and for that matter, in all foundations. But too many other foundations do not take those kinds of affirmative actions regarding board composition even while they promote diversity within their staff.
Is community competence for foundations important? Some people might say that neither gender nor race/ethnicity matter, that it is instead temperament or socio-economic status that counts when it comes to foundation board members. Assume, however, that it is unlikely that there will be that many working class people serving on foundation boards, that the SES of board members will skew toward the highly educated and affluent. Are those issues so important that racial/ethnic and gender diversity do not matter?
The experts suggest that real diversity, not token demographics, count when it comes to board composition. It is not just the input of board members from different racial and ethnic groups into foundation decisions, as hugely important as that is, that matters. It is also about the message that foundations are sending to their communities and the public at large. As the chairwoman of the Make-a-Wish Foundation recently observed , “When an organization looks at the board and sees a group of people who represent different genders, ethnicities [and] international experiences, it tells them there’s no barrier to them being successful and that the company really walks the talk.” The current numbers on the composition of U.S. foundations’ boards of directors signal that they talk social progress but do not yet fully incorporate this fundamental aspect of social progress in their governance.