The Investment Summit for Endowments, Foundations and Families focused on diversity in charitable organizations. It’s a critical and complex issue.

With a growing body of research suggesting that diversity on boards improves the performance and effectiveness of organisations, many charity organisations are looking to include more members of different races, genders and social classes in their governing bodies. 

At J.P. Morgan’s Investment Summit for Endowments, Foundations and Families held in London in April, an expert panel discussed some of the obstacles that have prevented boards from facilitating greater diversity amongst their members and explored pathways to a more inclusive approach.

Diane Whitty, Global Head of The Philanthropy Centre at J.P. Morgan, began the discussion by highlighting the importance of good governance for the health, wealth and growth of an organisation. In outlining the scope of the challenge, she cited a 2017 survey by the Association of Charitable Foundations and the Cass Business School across 19,000 Trustees in the UK, which found that male trustees outnumber women by two to one, only 8% were from Black, Asian and other non-white (BAME) minority backgrounds (falling to just 1% for the Foundations community), and 58% are over 64 years of age.

She asked the panelists why the Trustees survey makeup does not reflect the general population, and why change is so important.

Fozia Irfan, Chief Executive of the Bedfordshire and Luton Community Foundation, said “the lack of diversity was a presenting symptom” of larger cultural issues. It is, in her view, the “tip of the iceberg.”

She added that one of the main reasons for the lack of diversity on boards is that the problem is treated as a “silo” issue. When charities want diversity, their solution is often to simply bring someone “different” onto the board, but this doesn’t really resolve anything. “Board structures and formalities make it very difficult for someone who is different to integrate properly and feel adequately included,” she said. “‘Tokenism’ isn’t an effective way to bring about change or diversity.”

Yet diversity is crucial, she said, because without it there is a “disconnect” between the life experiences of foundation boards and the populations they serve, and that can undermine the charitable mission. “There needs to be an understanding of the community to make the grantmaking effective,” she concluded. “Diversity is about improving performance and effectiveness.” 

Jake Hayman, chief executive officer of Ten Years’ Time, added that the gap was not just between the trustees and the communities they serve, but between the entire staffing of organisations—which tends to be middle class and professional—and the populations being served.

According to Hayman, one significant problem is the multiple levels of personnel involved in deciding how money is spent, “and not a word from the communities” they serve. “And that is just a formula for terrible decision-making.”

So what are some avenues for attacking this entrenched problem?

Panel of JPMorgan Speakers at the Investment Summit in London

Vikas Pota, chairman of the Varkey Foundation, a family foundation, says that when people start foundations they often de facto start a board in their own image. But over time, they can become “conscious of their own biases and that can lead to change.” 

The Varkey Foundation focuses on education, for example, but Pota said it took time to realise it would benefit from more teachers in the governance structure.

Listening and learning from others is also helpful, he said. “The most useful conversations I’ve had in recent years involved speaking with other institutions—to learn from them.”

Hayman said that concrete targets are also necessary. “By putting numbers behind goals, it makes things happen. Currently, we have a pledge to ensure that by 2027, 40% of our board members will come from the communities we serve.” 

This goal won’t be achievable, he acknowledges, unless charities taking the pledge fire current board members or bring extra seats to the table. He recommends the latter.

Irfan agreed that philanthropists and foundations should implement accountability mechanisms such as hard goals. She pointed to a piece of proposed legislation in California which mandated that grant-giving foundations disclose the makeup of their boards, staffs and even that of the organisations receiving their grants.  While the bill didn’t pass, she said, even the possibility of that information becoming public acted as a catalyst for change.

Still, she added that accountability metrics alone will not be enough. “Intentionality by the board is vital,” she insisted. 

“Within the foundation sector there is an air of complacency,” Irfan said. Many institutions handle governance in a set way simply because that is the way it has been handled through generations.  “We have to move away from the Victorian model of philanthropy,” she concluded.

Several panel members discussed their own experiments in change that included making board positions open for application to anyone with a relationship to the organisation. The searches turned up people with skills and perspectives quite different from typical board members, they said, but the new recruits then required extensive mentoring and training.

Whitty concluded the discussion by explaining that diversity is a broad concept. “Diversity encompass many things, such as age, gender and ethnicity—but also diversity of thought, skills, expertise and influence. These are important elements to help drive better board governance and an inclusive culture.