board of directors

Is everyone and their mom on a non-profit board?

 
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TL;DR

  • There are over 38,000 non-profits in Washington, with over 6,000 in Seattle

  • 69% of WA non-profits do not have annual revenue

  • We estimate 5% and 7% of Washington and Seattle adults, respectively serve on a non-profit board

In our day-to-day work (and as board members ourselves), we run into a lot of people who serve as non-profit board members. This led us to wonder: just how many people serve on boards actually?

In order to answer this question, we needed to know the full scope of the non-profit sector in Washington. According to IRS data on tax-exempt organizations from February 2019, there are over 38,000 tax-exempt, non-profit organizations in Washington.  Of these, over 6,000 are in Seattle.

 
 

We also looked at how non-profits vary by revenue, with a working hypothesis that greater revenue equates to larger boards.  (We also thought you would be interested, dear reader, in the revenue distribution).  Interesting finding: only 31% of Washington non-profits had positive revenue, based on most recent tax filings (something to investigate in a future post!)

Contrary to our initial thinking, board membership did not vary greatly by revenue size.  According to a 2017 BoardSource Survey, the average non-profit board has 15 members, with about 14 board members on average for non-profits with revenue below $1 million and 17 members for those above $1 million.

Now to answer our original question.  To calculate the proportion of the population on a board, we can take a weighted average of board membership by revenue, multiplied by the number of non-profits.  If we assume that the average board member serves on two boards and divide by the adult population of Washington and Seattle, respectively, we get the following:

 
 

(One caveat from the analysis above – this assumes non-profit boards with $0 or negative annual revenue have equal board sizes to organizations with revenue.  One could make an argument that non-revenue generating non-profits would have smaller boards, which would imply a slightly lower proportion of the population on boards.)

Point / Counter-point

After reading the BoardSource analysis (referenced above), our team starting talking about what the right board size is – are there too many or too few people serving on boards?  We didn’t come to a consensus in the end, but thought it was worth sharing our thoughts as you, the folks playing at home, form your own opinions.

Here’s the SparkNotes version of our conversation:

Marc’s take: too many people on boards

At its core, a board of directors ensures robust governance (e.g. fiduciary responsibilities) and provides support to the organization’s leader(s).  These are big responsibilities that require each prospective and current board member to evaluate whether their personal and professional lives, along with the talents they possess, can add value to a board.  In my opinion, too many people serve on boards who are more interested in the resume building and networking opportunities, or in making themselves feel like a good citizen, than the hard work of governance and leader support.  Seeing the results from this analysis reminds me of the folks who may not be serving on boards for the right reasons.

Andy’s take: too few people on boards

Similar to corporate boards, non-profit boards should include diverse voices and perspectives, and should ensure sufficient representation from the communities they serve.  Too often though, boards are led by a majority white (often male) panel that looks nothing like the organization’s constituency.  According to the same 2017 BoardSource report, only 16% of board members identify as a person of color.  (I say this recognizing my own position as a white male who serves on a non-profit board.)  If we assume that the majority of board members serve for the “right” reasons and are adding value (per Marc’s comments above), then executive directors and board chairs should consider increasing their board size to make sure diverse, community voices are included.

 

What’s your take?  Drop us a note at contact@kineticwest.com or leave a comment below to continue the conversation.

Until next time.