So what does this have to do with board composition? An interesting report by the National Committee for Responsive Philanthropy (which was later picked up by the New York Times and the Chronicle of Philanthropy in this article) showed the majority of the nonprofits and foundations hit hardest in this scandal lacked adequate board size or diverse board leadership.
“The major lesson is pretty clear,” said Aaron Dorfman, the committee’s
executive director. “Small, homogeneous boards were much more likely to fall
prey to Madoff’s Ponzi scheme.”
In other words, to paraphrase from the Philosophy statement, these boards didn’t have the needed diverse expertise gained through professional or personal experiences to effectively govern the organization.
Now, this Standard is not telling a nonprofit who should sit on its board. Rather it is setting out a process by which a board of directors can assess how it represents its constituency, identify gaps in terms of expertise or experience, and evaluate its capacity to achieve the mission.
We’d be interested in hearing from folks in nonprofits or on boards how (or if) the board of directors looks at itself. How does your organization ensure that it has the varied experience and expertise to govern effectively? How do you go about identifying the constituents you serve and how the board of directors can best reach the community?
Next post: Board Length of Service