Executives from the adjacent nonprofit sector are accessible and untapped talent for the company boardroom.
When it comes to diversity in boardrooms across America, the growing calls to include female directors and directors from underrepresented communities appear to be moving the needle. In October 2023, a U.S. appeals court upheld Nasdaq’s board diversity rule, requiring companies listed on the exchange to have women and minority directors on their boards—or justify why they do not. And, according to a report released by Deloitte, women and underrepresented racial and ethnic groups hold 46.5% of Fortune 100c and 44.7% of Fortune 500 board seats—reaching an all-time high. But breaking down historical systemic barriers takes time, and even as we celebrate this progress, women from underrepresented racial and ethnic groups hold only 7.8% of board seats across Fortune 500 companies.
At this critical inflection point—where progress continues to take shape—we must expand our vision of what diversity in the boardroom looks like, as well as our solutions, in order to make lasting and meaningful changes.
Discussions about exactly how to increase boardroom diversity have included many good ideas—including adding a new seat, given the low turnover on most boards—there’s one source for board talent that has been largely untapped: nonprofit executives.
From talent, scale and performance, nonprofit and for-profit industries are more alike than most people realize, yet nonprofits leaders remain mainly outside of for-profit business networks, think differently and are more proximate to society’s challenges.
Centered on the beneficial value and organizational need for diversity at all altitudes, the nonprofit sector is also overhauling its inequitable practices and processes to embrace leadership that, at the very least, represents the constituencies they serve. Thus, an untapped pipeline of seasoned nonprofit executive officers across this country stand ready to bring their savvy business acumen to company boards while increasing their diversity on every axis.
Nonprofit executives are skilled at leading during times of uncertainty—particularly critical in times of market growth as well as environmental changes and subsequent restructures. As mid-cap and small-cap company brands seek to develop community tie-ins, embrace diversity and create positive work culture, there’s no better place to look for board members with the acumen to achieve those things and more than nonprofit executives across the country.
Below are the top five qualities of high-performing nonprofit executives, making them the perfect candidates for the company boardroom.
Masterful fundraisers. By necessity, nonprofit executives must understand the value propositions of their mission-driven work and skillfully translate that value to others—in written and verbal communications —to attract funding, the lifeblood of nonprofits. Fundraisers at heart, successful nonprofit executives understand how to create strategic engagement plans that identify well-aligned investors/partners who will advance the company’s direction.
Performance-Focused and Results-Oriented Leaders. Because the nonprofit sector does not have the luxury of defining success by a profit margin —though revenue matters greatly—seasoned executives create accountability through demonstrable results in creating impact. Leaders rely on a “theory of change” (akin to a business plan) to create iterative cycles to test and improve their results. In the boardroom, this skill set can support a newer company executive to build efficiency and process metrics into early evaluation of employee performance to promote a successful performance culture.
Experienced in Growing Large Companies. Though the origin of funding and the business objective are different in for-profit and nonprofit companies, both sectors need leaders with the ability to take small ideas to scale. Seasoned nonprofit executives of larger organizations have grappled with many of the same issues private sector executives face. A nonprofit executive in the company boardroom can keep an active inquiry on strategic risk management through endeavors of growth and performance as business lines mature and expand to new markets.
“Motivational Paycheck” Experts. Most nonprofits are limited in what they can pay employees, so must create other ways to increase motivation. Given that the Gen Z talent pool cares more about contributing to a cause greater than themselves than traditional employment, nonprofits were ahead of the curve long before the for-profit sector started creating positions such as Chief Wellness Officers. Nonprofits are also savvier about talent acquisition—creating diverse recruiting pools—because they are proximate to the communities they serve.
Strategic Thinkers. New data shows the importance of “diversity of thought” at all layers of business. Creating and nurturing diversity is about bringing in and honoring a multitude of experiences, ideas and backgrounds to force clarity and arrive at better and more comprehensive ideas. By virtue of being motivated by a different trajectory, the experiences and values of nonprofit executives are different from those of their MBA counterparts. Entrepreneurial acumen in the boardroom has traditionally meant someone who is a nimble idea creator but who has to work alongside other leaders to execute their vision effectively.
Seasoned nonprofit executives are an excellent untapped talent source for board leadership because of their fundraising, storytelling, talent management and scaling expertise. And precisely because they are not from the conventional networks of for-profit board members, they are too often overlooked or unconsidered.
Tapping into the diverse pool of talented nonprofit leaders to strengthen company boards is good for business—and it’s about time.
Continuously focused on increasing the efficacy and reach of the nonprofit sector, Aila Malik is the Founder and Co-Principal, Research + Practice, of Venture Leadership Collective, a specialized management consulting firm helping nonprofits implement powerful initiatives to achieve their missions and create larger impact. She has worked extensively at the nonprofit executive/ C-Suite level. In her work founding Venture Leadership Collective, Aila has trained retired for-profit executives to successfully lead nonprofits in the boardroom and within nonprofits at the C-Suite level.