Saturday, July 19, 2008

Urban Institute Reports on the Peculiar Needs and Challenges Facing Mid-Size Nonprofits

Francie Ostrower recently wrote, "Boards of Mid-Size Nonprofits:  Their Needs and Challenges" for the Urban Institute.  The report discusses the peculiar needs and challlenges facing boards of mid-sized nonprofit organizations.  Here is the Inroduction:

Nonprofit boards are increasingly a focus of those interested in nonprofit accountability and transparency, including policymakers, the media, researchers, and the public. Yet most of the research has focused on boards of large nonprofits. Likewise, policy proposals and best practice guidelines often seem designed with large organizations in mind, raising concern among representatives of smaller organizations who feel the proposals may be inappropriate for their institutions. This brief helps fill a major gap in our understanding by focusing on governance among midsize nonprofits, identifying certain problem areas and suggesting strategies that trustees, managers, and others engaged with midsize nonprofits may find helpful in strengthening their boards.

The discussion uses data from our Urban Institute National Survey of Nonprofit Governance, the first national representative survey of governance in the United States. This brief focuses on the subset of 1,862 organizations in that survey that have annual expenses between $500,000 and $5 million, hereafter referred to as “midsize” nonprofits. Nonprofits in this size range make up approximately one in five public charities that file the Internal Revenue Service Form 990 (Pollak and Blackwood 2007). This report was funded by the Evelyn and Walter Haas, Jr. Fund, who asked that we employ our survey data to examine this subset of nonprofits. We also refer at points to our survey data on 1,101 larger nonprofits for purposes of comparison.

Comparing midsize nonprofits with their larger counterparts, we find that their boards are less engaged in many basic stewardship responsibilities. Midsize nonprofits’ boards also have greater difficulty attracting new members. These comparisons underscore the need for efforts targeted at midsize nonprofits to help them strengthen their governance. This paper highlights areas in which that need seems greatest and suggests some strategies that may help. In particular, the brief addresses the following broad questions:

  • How actively engaged are midsize nonprofits’ board members, and what factors promote greater engagement?
  • How well do midsize nonprofits perform various responsibilities, and what factors promote stronger performance?
  • Who serves on midsize nonprofits’ boards, and what populations might they target to expand their pool of potential members?

The paper also contributes to a recent discussion about the leadership crisis in the nonprofit sector sparked by the Daring to Lead study (Bell, Moyers, and Wolfred 2006). The study found that a high percentage of CEOs plan to leave their job and pinpointed frustration with board performance, particularly in the fundraising arena, as a key reason. Our findings on CEO ratings of their board’s performance in fundraising resonate with the study and highlight other areas where CEOs view boards poorly. More broadly, our study leads to a more general conclusion: discussions about nonprofit leadership challenges, now focused on CEOs, should be expanded to include boards. Our findings on levels of board engagement strongly suggest that unless measures are taken to strengthen boards and help them attract members—and unless boards start taking a more active role in monitoring their own performance—it is unlikely that they will be able to offer the assistance to CEOs and the effective oversight and governance that they are being called upon to give.

Dr. Ostower also wrote an interesting summary/op-ed piece for the Chronicle of Philanthropy.  Both the report and the op-ed, entitled "A Better Way to Deal With the Leadership Crisis" are well worth reading.


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