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2015 Survey on
Board of Directors of
Nonprofit Organizations
www.gsb.stanford.edu/cgri-research
In collaboration with BoardSource and GuideStar
TA B L E O F C O N T E N T S
Executive Summary and Key Findings............... 1
Review of Findings/Demographic Information..... 4
Methodology.............................................. 24
About the Authors....................................... 25
About Stanford Graduate School of Business,
the Rock Center for Corporate Governance,
BoardSource, and GuideStar......................... 26
Contact Information..................................... 27
2015 Survey on Board of Directors of Nonprofit Organizations 	 1
Executive Summary and Key Findings
Many Nonprofit Boards Need Significant
Improvement
The skills, resources, and experience of directors are not sufficient
to meet the needs of most nonprofit organizations.
Board processes fall short.
Over a quarter of nonprofit directors do not have a deep
understanding of the mission and strategy of their organization.
Nearly a third are dissatisfied with the board’s ability to evaluate
organizational performance. A majority do not believe their fellow
board members are very experienced or engaged in their work.
“Many nonprofit organizations pursue worthy missions,” says
David F. Larcker, James Irvin Miller Professor of Accounting at
Stanford Graduate School of Business and coauthor of the study.
“Our research finds that, unfortunately, too often board members
lack the skill set, the depth of knowledge, and the engagement
required to help their organizations succeed. Nonprofit boards
would greatly benefit from a more rigorous process for setting
goals and measuring performance.”
“Nonprofit organizations need to do a better job attracting board
members with substantive, relevant experience who will deeply
and personally embrace the mission of the organization,” adds
William F. Meehan III, Lafayette Partners Lecturer for 2013-2015
in Strategic Management at Stanford Graduate School of Business
and coauthor of the study. “They need individuals with the depth
of knowledge to set explicit goals, develop sound strategies, and
hold the executive director or CEO accountable for performance.”
“Individuals join nonprofit boards because they want to make
a difference and contribute to the mission of the organization,”
adds Nick Donatiello, Lecturer in Corporate Governance at
Stanford Graduate School of Business. “Holding personal financial
contributions aside, the biggest contribution they can make is to
help their board implement sound governance practices: reliable
financial reporting, concrete organizational performance targets,
CEO performance evaluation, board development and succession
plans, and fulfilling other basic and fundamental obligations that
come with directorship.”
In fall 2014, Stanford Graduate School of Business, in
collaboration with BoardSource and GuideStar, surveyed 924
directors of nonprofit organizations about the composition,
structure, and practices of their boards. “This extensive survey
provides highly informative empirical data which underscores
what many of us have been observing based on personal
experience. In order for a nonprofit to achieve great impact, it
needs a great board. And most nonprofit boards fall far short,”
adds Meehan.1
Key Findings Include:
Too Many Directors Lack a Deep Understanding of the
Organization
Over a quarter (27 percent) of nonprofit directors do not believe
that their fellow board members have a strong understanding
of the mission and strategy of their organization. A third (32
percent) are not satisfied with the board’s ability to evaluate the
performance of the organization.
While almost all (92 percent) say that their board reviews data
and information to evaluate organizational performance, many are
not comfortable with the quality of that data. Forty-six percent
of directors have little to no confidence that the data they review
fully and accurately measures the success of their organization in
achieving its mission.
Over half (57 percent) of nonprofit boards do not benchmark their
performance against a peer group of similar organizations.
“Rigorous performance measurement is the bedrock of good
governance,” says Meehan. “How can the board claim to
understand whether its initiatives are successful unless it is
measuring their impact? Start with a mission-focused theory of
change. Outline a logic model that shows a clear connection
between your initiative and the desired outcome. And then
rigorously measure performance.”
1
	 For more on this topic, see: Kim Starkey Jonker and William F. Meehan, From
Intentions to Impact: A Guidebook for Nonprofit Leaders, Board Members, and
Philanthropists (Stanford University Press, forthcoming).
2015 Survey on Board of Directors of Nonprofit Organizations 	 2
Most Lack Formal Governance Structure and Processes
Nonprofit boards stand to gain from the adoption of sound
governance practices in areas such as financial reporting and audit,
succession planning, and CEO and board evaluations. A significant
minority (42 percent) do not have an audit committee. Many rely
on monthly bank statements to monitor financial performance.
Two thirds (69 percent) do not have a succession plan in place for
the current executive director or CEO. Three quarters (78 percent)
could not immediately name a successor if the current executive
director or CEO were to leave the organization tomorrow. On
average, nonprofit directors estimate that it would take 90 days to
find a permanent replacement.
Most (80 percent) claim to formally evaluate the performance of
the executive director. However, a significant number (39 percent)
do not establish explicit performance targets against which his or
her performance is measured.
Over a third (36 percent) of nonprofit boards never evaluate their
own performance.
Many Directors Are Not Engaged, Do Not Understand
Their Obligations
Two-thirds (65 percent) do not believe that the directors on their
board are very experienced, based on the number of additional
boards they serve on. Almost half (48 percent) do not believe that
their fellow board members are very engaged in their work, based
on the time they dedicate to their organization and their reliability
in fulfilling their obligations.
About half (47 percent) of nonprofit directors believe that their
fellow board members understand their obligations as directors
well or very well.
Fundraising Is Seen as a Central Obligation
Nonprofit directors rank fundraising very high relative to their
other obligations as directors. Forty-five percent of nonprofits
require directors to fundraise on behalf of the organization. Among
those that do, 90 percent of directors believe that fundraising is
as important or more important than their other obligations as
directors.
While many nonprofit organizations (46 percent) do not require
directors to donate each year, almost all directors (92 percent)
personally do so.
Less than half (42 percent) of nonprofits have a “give or get”
policy that requires each board member to donate a minimum
amount each year or raise that amount from others. The minimum
“give or get” varies by size of the organization, and averages
$1,000 for small nonprofits (operating budget less than or equal
to $500,000) and $5,000 for large nonprofits (operating budget
greater than or equal to $5 million).
“Fundraising is an important obligation for many directors,”
observes Donatiello. “However, it should not distract from
other core duties, such as ensuring that the organization is well
managed, the strategy sound, finances healthy, and contingency
plans in place to deal with unexpected disruptions.”
Most Directors Are Satisfied with the Performance of
Their Executive Director/CEO
Almost all directors (92 percent) believe that the executive director
understands the mission and strategy of the organization very
or extremely well. Eighty-seven percent are satisfied with his
or her performance. Few believe that their executive director is
overcompensated, with 51 percent stating that their executive
director is appropriately paid and 42 percent stating that he or she
is slightly or very underpaid.
Executive directors primarily have previous work experience
in the nonprofit sector. Over half (59 percent) worked in the
nonprofit industry immediately prior to becoming the head of
their organization. Only 14 percent had immediate prior work
experience in a for-profit organization. Twelve percent are the
founder of their organization. In terms of education, almost two
thirds (60 percent) have a master’s degree or higher.
… and with the Performance of Their Board and
Organization
A significant majority (85 percent) of nonprofit directors are
moderately or very satisfied with the performance of their
organization. Satisfaction levels are also high for the quality of
financial reporting (82 percent) and financial health (70 percent)
of the organization.
Most directors believe their board is correctly sized (56
percent) or only slightly too large (12 percent) or slightly too
small (24 percent). These results hold true across organizations
of various size.
Approximately half (52 percent) say that their organization has
a “board within a board” where a subset of directors has an
outsized influence on board decisions. Two thirds of these (67
percent) are a formal executive committee, while one third (33
percent) reflect an informal dynamic that evolved over time.
Among those organizations with a “board within a board,” 74
percent say it improves board functionality and decision making.
A quarter (28 percent) of directors report that the founder of the
organization currently serves as a fellow board member. Of these,
68 percent say that the founder is very involved in management
and 78 percent say the founder is very involved as a board
member of the organization. The vast majority (90 percent)
believe that the founder has a positive or very positive impact on
the success of the organization.
2015 Survey on Board of Directors of Nonprofit Organizations 	 3
Still, Most Nonprofit Boards Have Serious Challenges
Over two thirds (69 percent) of nonprofit directors say their
organization has faced one or more serious governance-related
problems in the past 10 years. Forty percent say they have been
unable to meet fundraising targets. Twenty-nine percent have
experienced serious financial difficulty. A quarter (23 percent)
have asked their executive director to leave or had to respond to
an unexpected resignation. Sixteen percent say they have had
extreme difficulty attracting qualified new board members.
“The value of good governance shows up in results,” says Professor
Larcker. “Ultimately, nonprofits will want to implement more reliable
processes and procedures to ensure their organizations succeed.
Good governance will almost certainly help nonprofit directors
maximize their contribution to their social mission.”
To improve governance and board-level performance, the authors
recommend that nonprofits incorporate the following:
Recommendations:
1.	 Ensure your organization’s mission is focused and its skills and
resources are well-aligned with it.
2.	 Ensure your mission is understood and embraced by the
board, management, and other key stakeholders.
3.	 Establish explicit goals and strategies directly tied to achieving
your mission.
4.	 Develop rigorous performance metrics that reflect those goals
and strategies.
5.	 Hold the executive director accountable for meeting those
performance metrics and evaluate his or her performance with
a sound, objective process.
6.	 Compose your board with individuals with the skills, resources,
generosity, diversity, and dedication that address the needs of
the organization. This includes ensuring that there is a small
group of committed and cohesive leaders.
7.	 Define explicitly the roles and responsibilities of board
members to best leverage their leadership, time, and
resources.
8.	Establish well-defined board, committee, and ad hoc
processes that reflect your organization’s needs and
context and ensure optimal handling of key decisions and
responsibilities.
9.	 Regularly review and assess each board member’s leadership
contributions as well as the board’s overall performance. This
includes ensuring that board members view their time as well
spent.2
2
	 These recommendations are consistent with those put forth by Meehan in
previous work. See Kim Jonker and William F. Meehan III, “Better Board
Governance,” Stanford Social Innovation Review webinar (May 21, 2014); and
Kim Jonker and William F. Meehan III, “A Better Board Will Make You Better,”
Stanford Social Innovation Review (March 5, 2014).
2015 Survey on Board of Directors of Nonprofit Organizations 	 4
Results might not equal 100% due to rounding.
Review of Findings/Demographic Information
Demographic Information
1.	 What is the nature of your organization’s primary activities?
Results for all respondents	Percent
	25
Education or research	
	16
Social or legal services
	11
Arts or culture
	10
Health services
	5
Foundation
	5
Civic, social, or fraternal organization
	4
Religious organization
	24
Other
2.	 What are the main sources of funding for your organization?
Results for all respondents	Percent
	71
Charitable contributions
	52
Self-generated fees or revenue
	41
Foundations
	34
Corporate philanthropy
	32
Federal, state, or local governments
	25
Grant-making public charities
	3
Federated funds
	5
Other
2015 Survey on Board of Directors of Nonprofit Organizations 	 5
Results might not equal 100% due to rounding.
3.	 How many years has your organization been in existence?
Results for all respondents	
	37
Mean
	25
Median
	Percent
	11
5 or fewer
	13
Between 6 and 10
	29
Between 11 and 25
	28
Between 26 and 50
	19
Greater than 50
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	
	22
	33
	63
Mean
	15
	25
	50
Median
	Percent
	19
	8
	1
5 or fewer
	18
	11
	5
Between 6 and 10
	34
	32
	20
Between 11 and 25
	22
	34
	30
Between 26 and 50
	6
	15
	44
Greater than 50
2015 Survey on Board of Directors of Nonprofit Organizations 	 6
Results might not equal 100% due to rounding.
4.	 What is the approximate annual operating budget of your organization?
Results for all respondents	
	$50.8M
Mean
	$1.4M
Median
	Percent
	14
Below 100,000
	21
Between 100,001 and 500,000
	10
Between 500,001 and 1,000,000
	29
Between 1,000,001 and 5,000,000
	25
Greater than 5,000,000
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	
	$202K
	$2.1M
	$197.8M
Mean
	$150K
	$1.7M
	$18.0M
Median
	Percent
	40
	0
	0
Below 100,000
	60
	0
	0
Between 100,001 and 500,000
	0
	26
	0
Between 500,001 and 1,000,000
	0
	74
	0
Between 1,000,001 and 5,000,000
	0
	0
	100
Greater than 5,000,000
2015 Survey on Board of Directors of Nonprofit Organizations 	 7
Results might not equal 100% due to rounding.
5.	 How has your organization’s operating budget changed over
the last five years?
Results for all respondents	Percent
	26
Increased by more than 25 percent
	41
Increased between 1 and 25 percent
	16
Stayed about the same
	7
Decreased between 1 and 25 percent
	2
Decreased by more than 25 percent
	4
I don’t know
	3
Not applicable (organization is less than 5 years old)
6.	 What were the main motivations behind your decision to
join the board of this organization? (Select all that apply)
Results for all respondents	Percent
	86
To serve the organization and contribute to its success
	53
To contribute to society
	43
Because the organization asked me to join
	25
To advance my personal interests
	24
To advance my professional interests
	18
To fulfill a need to volunteer
	16
To make professional connections
	12
To make personal connections
	12
Other
Structure of the Board of Directors
7.	 How many directors serve on the board of your
organization?
Results for all respondents	
	15
Mean
	12
Median
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	
	10
	15
	21
Mean
	9
	12
	18
Median
2015 Survey on Board of Directors of Nonprofit Organizations 	 8
Results might not equal 100% due to rounding.
7a.	 In your opinion, is the present number of directors…
Results for all respondents	Percent
	4
Much too large
	12
Slightly too large
	56
About the right number
	24
Slightly too small
	4
Much too small
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	2
	4
	7
Much too large
	4
	14
	21
Slightly too large
	59
	52
	55
About the right number
	28
	27
	14
Slightly too small
	7
	3
	3
Much too small
8.	 How well does the board understand the mission and
strategy of the organization?
Results for all respondents	Percent
	33
Extremely well
	40
Very well
	21
Moderately well
	5
Slightly well
	1
Not at all well
9.	 Which of the following best describes the level of agreement
among board members about the mission and strategy?
Results for all respondents	Percent
	46
Strong agreement
	44
Agreement
	7
Neutral
	3
Disagreement
	0
Strong disagreement
10.	 How well do the members of your board understand their
obligations as directors?
Results for all respondents	Percent
	12
Extremely well
	35
Very well
	38
Moderately well
	10
Slightly well
	4
Not at all well
2015 Survey on Board of Directors of Nonprofit Organizations 	 9
Results might not equal 100% due to rounding.
11.	 How experienced are the directors on your board—based
on the previous and current number of additional boards
that they serve on?
Results for all respondents	Percent
	7
Extremely experienced
	28
Very experienced
	45
Moderately experienced
	16
Slightly experienced
	4
Not at all experienced
12.	 How engaged are the directors on your board—based
on the time they dedicate to your organization and their
reliability in fulfilling their obligations?
Results for all respondents	Percent
	12
Extremely engaged
	39
Very engaged
	37
Moderately engaged
	10
Slightly engaged
	1
Not at all engaged
13.	 How satisfied are you with the board’s ability to evaluate
the performance of your organization (i.e., the extent to
which it is achieving its mission)?
Results for all respondents	Percent
	23
Very satisfied
	44
Moderately satisfied
	12
Neither satisfied nor dissatisfied
	15
Moderately dissatisfied
	5
Very dissatisfied
14.	 Does the founder of your organization currently serve as a
member of the board?
Results for all respondents	Percent
	28
Yes
	72
No
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	38
	28
	12
Yes
	62
	72
	88
No
2015 Survey on Board of Directors of Nonprofit Organizations 	 10
Results might not equal 100% due to rounding.
14a.	[if yes]: How involved is the founder in the management of
the organization—based on the amount of time that he or
she devotes to its daily operations?
Results for all respondents	Percent
	55
Extremely involved
	13
Very involved
	9
Moderately involved
	16
Slightly involved
	7
Not at all involved
14b.	[if yes]: How involved is the founder as a board member of
the organization—based on the amount of time that he or
she devotes to board-related matters?
Results for all respondents	Percent
	48
Extremely involved
	30
Very involved
	15
Moderately involved
	6
Slightly involved
	1
Not at all involved
14c.	[if yes]: What impact does the founder have on the success
of the organization?
Results for all respondents	Percent
	70
Very positive
	20
Somewhat positive
	5
Neither positive nor negative
	4
Somewhat negative
	1
Very negative
The term “board within a board” describes a dynamic where a
subset of directors has an outsized influence on board decisions.
This might include an executive committee—either formal or
informal—that acts on behalf of the whole board.
15.	 Does your organization have a “board within a board”?
Results for all respondents	Percent
	52
Yes
	45
No
	3
I don’t know
15a.	[if yes]: Is this a formal “board within a board” (i.e.,
executive committee role) or an informal “board within a
board” (i.e., just happens)?
Results for all respondents	Percent
	67
Formal
	33
Informal
2015 Survey on Board of Directors of Nonprofit Organizations 	 11
Results might not equal 100% due to rounding.
15b. [if yes]: Does this structure improve board functionality
and decision making?
Results for all respondents	Percent
	74
Yes
	15
No
	10
I don’t know
Informal “board within a board” only
Results for all respondents	Percent
	62
Yes
	26
No
	12
I don’t know
16.	 Does the board of your organization review data
and information to evaluate the performance of the
organization?
Results for all respondents	Percent
	92
Yes
	7
No
	2
I don’t know
17.	 Are these data financial or nonfinancial?
Results for all respondents	Percent
	12
Financial only
	2
Nonfinancial only
	86
Both financial and nonfinancial
18.	 How confident are you that these data fully and accurately
measure the success of your organization in achieving its
mission? (On a scale of 1 to 5, with 5 being “extremely
confident” and 1 being “not confident at all”)
Results for all respondents	
	3.5
Mean
	4.0
Median
	46%
% with confidence level less than or equal to 3
19.	 How often does the board review the strategy of the
organization?
Results for all respondents	Percent
	15
More frequently than annually
	44
Annually
	16
Every two years
	14
Other
	6
Never
	5
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 12
Results might not equal 100% due to rounding.
20.	 How often does the board review financial statements of
the organization?
Results for all respondents	Percent
	55
Quarterly
	8
Semiannually
	8
Annually
	0
Never
	29
Other
	1
I don’t know
Note: “Other” is predominantly monthly, bank statements
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	44
	60
	63
Quarterly
	9
	7
	7
Semiannually
	11
	4
	6
Annually
	1
	0
	0
Never
	34
	28
	24
Other
	1
	1
	0
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 13
Results might not equal 100% due to rounding.
21.	 Does your board have an audit committee?
Results for all respondents	Percent
	55
Yes
	42
No
	3
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	25
	63
	86
Yes
	72
	34
	12
No
	3
	3
	1
I don’t know
Benchmarking is the process by which your nonprofit board
practices are compared to those of other nonprofits, to identify
potential improvements and other comparative benefits.
22.	 Does your organization benchmark its performance against
a peer group of similar organizations?
Results for all respondents	Percent
	36
Yes
	57
No
	6
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	21
	36
	60
Yes
	74
	59
	35
No
	5
	5
	5
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 14
Results might not equal 100% due to rounding.
23.	 How often does the board evaluate its own performance?
Results for all respondents	Percent
	34
Annually
	11
Every two years
	36
Never
	8
Other
	11
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	24
	34
	48
Annually
	9
	10
	13
Every two years
	46
	37
	21
Never
	9
	8
	9
Other
	11
	11
	10
I don’t know
Executive Director/Chief Executive Officer
24.	 How many years has the current executive director/CEO
held the executive director position at your organization?
Results for all respondents	
	6.9
Mean
	5.0
Median
25.	 How many years has the current executive director/CEO
been employed at your organization?
Results for all respondents	
	9.9
Mean
	5.0
Median
26.	 What is the (approximate) age of the executive director/
CEO?
Results for all respondents	
	51
Mean
	53
Median
2015 Survey on Board of Directors of Nonprofit Organizations 	 15
Results might not equal 100% due to rounding.
27.	 What is the gender of the current executive director/CEO?
Results for all respondents	Percent
	48
Male
	52
Female
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	39
	46
	62
Male
	61
	54
	38
Female
28.	 What is the highest level of education that the current
executive director/CEO has achieved?
Results for all respondents	Percent
	1
High school graduate, diploma, or the equivalent
	2
Some college credit, no degree
	0
Trade/technical/vocational training
	1
Associate degree
	25
Bachelor’s degree
	39
Master’s degree
	12
Professional degree
	9
Doctorate degree
	2
Other
	9
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 16
Results might not equal 100% due to rounding.
29.	 Which of the following most closely describes the work
experience of your executive director/CEO immediately prior
to becoming the head of your organization?
Results for all respondents	Percent
	12
Founder of your organization
	15
Employee (below CEO) within your organization
	22
Executive director/CEO at another nonprofit
	22
Employee (below CEO) at another nonprofit
	4
CEO at a for-profit organization
	10
Employee (below CEO) at a for-profit
	15
Other
30.	 How well does the executive director understand the
mission and strategy of the organization?
Results for all respondents	Percent
	73
Extremely well
	19
Very well
	5
Moderately well
	2
Slightly well
	0
Not at all well
	1
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	67
	76
	81
Extremely well
	18
	20
	14
Very well
	7
	3
	4
Moderately well
	3
	1
	0
Slightly well
	2
	0
	0
Not at all well
	2
	0
	1
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 17
Results might not equal 100% due to rounding.
31.	 How often does the board of your organization formally
review the performance of the executive director?
Results for all respondents	Percent
	2
Quarterly
	4
Semiannually
	68
Annually
	6
Other
	14
Never
	5
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	3
	3
	1
Quarterly
	5
	3
	5
Semiannually
	51
	75
	84
Annually
	9
	5
	4
Other
	26
	10
	2
Never
	6
	4
	3
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 18
Results might not equal 100% due to rounding.
32.	 Does the board establish performance targets for the
executive director at the beginning of the year?
Results for all respondents	Percent
	53
Yes
	39
No
	8
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	42
	54
	69
Yes
	51
	39
	22
No
	7
	6
	9
I don’t know
33.	 How satisfied are you with the performance of the
executive director?
Results for all respondents	Percent
	63
Very satisfied
	24
Moderately satisfied
	6
Neither satisfied nor dissatisfied
	5
Moderately dissatisfied
	2
Very dissatisfied
34.	 Does the executive director/CEO receive a salary?
Results for all respondents	Percent
	80
Yes, full-time salary
	7
Yes, part-time salary
	13
No
	1
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	52
	95
	99
Yes, full-time salary
	17
	2
	0
Yes, part-time salary
	30
	3
	1
No
	1
	0
	0
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 19
Results might not equal 100% due to rounding.
34a.[if yes]: In your opinion, is this salary...
Results for all respondents	Percent
	14
Well below what he/she should be paid
	28
Slightly below what he/she should be paid
	51
About the right amount
	5
Slightly above what he/she should be paid
	2
Well above what he/she should be paid
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	24
	12
	9
Well below what he/she should be paid
	31
	32
	20
Slightly below what he/she should be paid
	39
	49
	65
About the right amount
	4
	5
	6
Slightly above what he/she should be paid
	2
	1
	2
Well above what he/she should be paid
35.	 Does your organization have a succession plan in place for
the executive director/CEO?
Results for all respondents	Percent
	25
Yes
	69
No
	7
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	19
	20
	41
Yes
	76
	75
	52
No
	6
	5
	7
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 20
Results might not equal 100% due to rounding.
36.	 If your current executive director/CEO were to leave the
organization tomorrow, could you immediately name a
permanent successor?
Results for all respondents	Percent
	16
Yes
	78
No
	6
I don’t know
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Percent
	19
	11
	18
Yes
	75
	83
	76
No
	6
	5
	5
I don’t know
37.	 If your current executive director/CEO left tomorrow, how
long would it take for the board to name a permanent
successor (in days)?
Results for all respondents	Days
	112
Mean
	90
Median
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	Days
	87
	114
	136
Mean
	60
	90
	120
Median
Donations and Fundraising
38.	 Do you personally donate to your organization?
Results for all respondents	Percent
	92
Yes
	8
No
39.	 Does your organization require that directors donate to it
each year?
Results for all respondents	Percent
	53
Yes
	46
No
	1
I don’t know
2015 Survey on Board of Directors of Nonprofit Organizations 	 21
Results might not equal 100% due to rounding.
39a.	[if yes]: Does your organization have a “give or get” policy
that requires each board member to donate a minimum
amount each year or raise that amount from others?
Results for all respondents	Percent
	42
Yes
	58
No
39b.[if yes]: What is the “give or get” minimum that you are
required to achieve?
Results for all respondents	
	6,336
Mean
	 2,500
Median
	 100,000
Max
Results for nonprofits with operating budget < $500K
Results for nonprofits with operating budget > $500K and < $5M
Results for nonprofits with operating budget > $5M
	
	 2,142
	 5,609
	 11,706
Mean
	 1,000
	 2,500
	 5,000
Median
	 10,000
	 30,000
	 100,000
Max
40.	 Are directors of your organization required to fundraise on
behalf of the organization?
Results for all respondents	Percent
	45
Yes
	54
No
	1
I don’t know
40a.[if yes]: How important is fundraising relative to your other
obligations as a director of this organization? (On a scale of
1 to 5, with 5 being “the most important” and 1 being “not
at all important”)
Results for all respondents	
	3.8
Mean
	 4.0
Median
	 90%
% with importance level greater than or equal to 3
Organizational Performance
41.	 How satisfied are you with the performance of your
organization?
Results for all respondents	Percent
	41
Very satisfied
	44
Moderately satisfied
	4
Neither satisfied nor dissatisfied
	10
Moderately dissatisfied
	1
Very dissatisfied
2015 Survey on Board of Directors of Nonprofit Organizations 	 22
Results might not equal 100% due to rounding.
42.	 How satisfied are you with the financial health of your
organization?
Results for all respondents	Percent
	34
Very satisfied
	36
Moderately satisfied
	9
Neither satisfied nor dissatisfied
	16
Moderately dissatisfied
	5
Very dissatisfied
43.	 How satisfied are you with the quality of financial reporting
at your organization?
Results for all respondents	Percent
	51
Very satisfied
	31
Moderately satisfied
	8
Neither satisfied nor dissatisfied
	7
Moderately dissatisfied
	3
Very dissatisfied
44.	 Which of the following problems or difficulties has your
organization experienced in the last 10 years? (Select all
that apply)
Results for all respondents	Percent
	40
Inability to meet fundraising targets
	29
Serious financial difficulty
	16
Extreme difficulty attracting one or more new board members
	12
Executive director asked by the board to leave
	11
Unexpected resignation of the executive director
	7
Board member asked by colleagues to leave
	5
Unexpected resignation of a large number of board members
	4
Serious accounting restatement
	4
Fraud by internal employees or directors
	3
Serious litigation
	1
Serious threat to tax-exempt status
	13
Other
	31
None of these
	21
% that selected three or more
2015 Survey on Board of Directors of Nonprofit Organizations 	 23
Results might not equal 100% due to rounding.
Other Demographic Information
45.	 What is the total number of nonprofit boards you serve on
(including the one covered by this survey)?
Results for all respondents	
	2.1
Mean
	 2.0
Median
46.	 What is the total number of for-profit boards you serve on?
Results for all respondents	
	0.4
Mean
	 –
Median
47.	 Do you believe that serving on a nonprofit board opens up
opportunities to serve on a for-profit board?
Results for all respondents	Percent
	32
Yes
	 68
No
2015 Survey on Board of Directors of Nonprofit Organizations 	 24
Methodology
In fall 2014, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, surveyed 924 directors of
nonprofit organizations about the composition, structure, and practices of their boards.
2015 Survey on Board of Directors of Nonprofit Organizations 	 25
About the Authors
David F. Larcker
David F. Larcker is the James Irvin Miller
Professor of Accounting at Stanford
Graduate School of Business; director of
the Corporate Governance Research
Initiative; and senior faculty of the Arthur
and Toni Rembe Rock Center for
Corporate Governance. His research
focuses on executive compensation and
corporate governance. Professor Larcker
presently serves on the Board of Trustees
for Wells Fargo Advantage Funds. He is coauthor of the books A
Real Look at Real World Corporate Governance and Corporate
Governance Matters.
Email: dlarcker@stanford.edu
Twitter: @stanfordcorpgov
Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/
david-f-larcker
William F. Meehan III
William F. Meehan III is the Lafayette
Partners Lecturer for 2013-2015 at
Stanford Graduate School of Business and
a director emeritus of McKinsey &
Company.
Mr. Meehan is a regular writer, speaker,
and advisor on nonprofit strategy,
governance, performance measurement,
as well as innovations in philanthropy,
including the role of the internet. At
Stanford, he is a founding member of the Advisory Council of the
Center for Philanthropy and the Civil Society, a faculty member
of the Public Management Program and the Center for Social
Innovation, and a member of the Arts Initiative Council.
He is former chair of the United Way of the Bay Area, chairman
emeritus of GuideStar, a former member of the Board of Fordham
Prep, the National Academy of Sciences’ Board on Science,
Technology, and Economic Policy (STEP), and the California
Roundtable.
Email: wmeehan@stanford.edu
Full Bio: https://www.gsb.stanford.edu/faculty-research/faculty/
bill-meehan
Nicholas Donatiello
Nicholas Donatiello is a recognized expert
in the areas of consumers, media, and
technology. Mr. Donatiello is president
and CEO of Odyssey and a lecturer at
Stanford Graduate School of Business
where he lectures on the roles,
responsibilities, and performance of
boards in public, early-stage private, and
not-for-profit companies. Mr. Donatiello is
a director of the Schwab Charitable Fund
(AUM in excess of $7 billion), one of the nation’s largest grant-
making charities, distributing more than $1 billion in annual
grants to charities, where he serves on the Investment Oversight
Committee and chairs the Compensation Committee. Mr.
Donatiello is the former Chairman of the Board of KQED, Inc.,
which owns and operates five public radio and television stations
in Northern California.
Email: donatiello@stanford.edu
Twitter: @nickdonatiello
Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/
nicholas-donatiello
Brian Tayan
Brian Tayan is a member of the Corporate
Governance Research Initiative at Stanford
Graduate School of Business. He has
written broadly on the subject of corporate
governance, including the boards of
directors, succession planning,
compensation, financial accounting, and
shareholder relations. He is coauthor with
David Larcker of the books A Real Look at
Real World Corporate Governance and
Corporate Governance Matters.
Email: btayan@stanford.edu
Acknowledgements
The authors would like to thank Michelle E. Gutman of the
Corporate Governance Research Initiative at Stanford Graduate
School of Business for her research assistance on this study.
2015 Survey on Board of Directors of Nonprofit Organizations 	 26
About Stanford Graduate School of Business, the Rock Center for
Corporate Governance, BoardSource, and GuideStar
About Stanford Graduate School of Business
The Corporate Governance Research Initiative (CGRI) at
Stanford Graduate School of Business.
The Corporate Governance Research Initiative focuses on research
to advance the intellectual understanding of corporate governance,
both domestically and abroad. By collaborating with academics
and practitioners from the public and private sectors, we seek to
generate insights into critical issues and bridge the gap between
theory and practice. Our research covers a broad range of topics
that include executive compensation, board governance, CEO
succession, and proxy voting.
gsb.stanford.edu/cgri
The Center for Social Innovation (CSI) at
Stanford Graduate School of Business.
CSI is dedicated to creating social and environmental change in
the world. Through research, education, and experiential learning,
CSI strengthens the capacity of individuals and organizations
to develop innovative solutions for poverty alleviation, access
to healthcare and education, sustainable development,
environmental protection, human rights, and more. We envision a
networked community of leaders actively working across frontiers,
sectors, and disciplines to build a more just, sustainable, and
prosperous world.
http://csi.gsb.stanford.edu/
About The Rock Center for Corporate Governance
The Arthur and Toni Rembe Rock Center for Corporate
Governance is a joint initiative of Stanford Law School and
Stanford Graduate School of Business. The Center was created to
advance the understanding and practice of corporate governance
in a cross-disciplinary environment where leading academics,
business leaders, policy makers, practitioners, and regulators can
meet and work together.
www.rockcenter.law.stanford.edu
About BoardSource
BoardSource is a recognized leader in nonprofit board leadership
and serves as the national voice for inspired and effective board
service. It provides leadership and support to a growing network
of more than 100,000 nonprofit leaders, and offers an extensive
range of tools and resources to increase board effectiveness and
strengthen organizational impact.
https://www.boardsource.org/
About GuideStar
GuideStar is the world’s largest source of information on nonprofit
organizations. More than 7 million people use GuideStar data
every year. GuideStar data is used to make more intelligent
decisions about the social sector. These decisions drive social
innovation and help make the world a better place.
http://www.guidestar.org/
2015 Survey on Board of Directors of Nonprofit Organizations 	 27
Contact Information
For more information on this report, please contact:
Heather Hansen
Assistant Communications Director
Stanford Graduate School of Business
Knight Management Center
Stanford University
655 Knight Way
Stanford, CA 94305-7298
Phone: +1.650.723.0887
hhansen@stanford.edu
Copyright © Stanford Graduate School of Business and the Rock Center for Corporate Governance | 2015 Survey on Board of Directors of
Nonprofit Organizations
www.gsb.stanford.edu/cgri-research
In collaboration with BoardSource and GuideStar

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2015 Survey on Board of Directors of Nonprofit Organizations

  • 1. 2015 Survey on Board of Directors of Nonprofit Organizations www.gsb.stanford.edu/cgri-research In collaboration with BoardSource and GuideStar
  • 2. TA B L E O F C O N T E N T S Executive Summary and Key Findings............... 1 Review of Findings/Demographic Information..... 4 Methodology.............................................. 24 About the Authors....................................... 25 About Stanford Graduate School of Business, the Rock Center for Corporate Governance, BoardSource, and GuideStar......................... 26 Contact Information..................................... 27
  • 3. 2015 Survey on Board of Directors of Nonprofit Organizations 1 Executive Summary and Key Findings Many Nonprofit Boards Need Significant Improvement The skills, resources, and experience of directors are not sufficient to meet the needs of most nonprofit organizations. Board processes fall short. Over a quarter of nonprofit directors do not have a deep understanding of the mission and strategy of their organization. Nearly a third are dissatisfied with the board’s ability to evaluate organizational performance. A majority do not believe their fellow board members are very experienced or engaged in their work. “Many nonprofit organizations pursue worthy missions,” says David F. Larcker, James Irvin Miller Professor of Accounting at Stanford Graduate School of Business and coauthor of the study. “Our research finds that, unfortunately, too often board members lack the skill set, the depth of knowledge, and the engagement required to help their organizations succeed. Nonprofit boards would greatly benefit from a more rigorous process for setting goals and measuring performance.” “Nonprofit organizations need to do a better job attracting board members with substantive, relevant experience who will deeply and personally embrace the mission of the organization,” adds William F. Meehan III, Lafayette Partners Lecturer for 2013-2015 in Strategic Management at Stanford Graduate School of Business and coauthor of the study. “They need individuals with the depth of knowledge to set explicit goals, develop sound strategies, and hold the executive director or CEO accountable for performance.” “Individuals join nonprofit boards because they want to make a difference and contribute to the mission of the organization,” adds Nick Donatiello, Lecturer in Corporate Governance at Stanford Graduate School of Business. “Holding personal financial contributions aside, the biggest contribution they can make is to help their board implement sound governance practices: reliable financial reporting, concrete organizational performance targets, CEO performance evaluation, board development and succession plans, and fulfilling other basic and fundamental obligations that come with directorship.” In fall 2014, Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, surveyed 924 directors of nonprofit organizations about the composition, structure, and practices of their boards. “This extensive survey provides highly informative empirical data which underscores what many of us have been observing based on personal experience. In order for a nonprofit to achieve great impact, it needs a great board. And most nonprofit boards fall far short,” adds Meehan.1 Key Findings Include: Too Many Directors Lack a Deep Understanding of the Organization Over a quarter (27 percent) of nonprofit directors do not believe that their fellow board members have a strong understanding of the mission and strategy of their organization. A third (32 percent) are not satisfied with the board’s ability to evaluate the performance of the organization. While almost all (92 percent) say that their board reviews data and information to evaluate organizational performance, many are not comfortable with the quality of that data. Forty-six percent of directors have little to no confidence that the data they review fully and accurately measures the success of their organization in achieving its mission. Over half (57 percent) of nonprofit boards do not benchmark their performance against a peer group of similar organizations. “Rigorous performance measurement is the bedrock of good governance,” says Meehan. “How can the board claim to understand whether its initiatives are successful unless it is measuring their impact? Start with a mission-focused theory of change. Outline a logic model that shows a clear connection between your initiative and the desired outcome. And then rigorously measure performance.” 1 For more on this topic, see: Kim Starkey Jonker and William F. Meehan, From Intentions to Impact: A Guidebook for Nonprofit Leaders, Board Members, and Philanthropists (Stanford University Press, forthcoming).
  • 4. 2015 Survey on Board of Directors of Nonprofit Organizations 2 Most Lack Formal Governance Structure and Processes Nonprofit boards stand to gain from the adoption of sound governance practices in areas such as financial reporting and audit, succession planning, and CEO and board evaluations. A significant minority (42 percent) do not have an audit committee. Many rely on monthly bank statements to monitor financial performance. Two thirds (69 percent) do not have a succession plan in place for the current executive director or CEO. Three quarters (78 percent) could not immediately name a successor if the current executive director or CEO were to leave the organization tomorrow. On average, nonprofit directors estimate that it would take 90 days to find a permanent replacement. Most (80 percent) claim to formally evaluate the performance of the executive director. However, a significant number (39 percent) do not establish explicit performance targets against which his or her performance is measured. Over a third (36 percent) of nonprofit boards never evaluate their own performance. Many Directors Are Not Engaged, Do Not Understand Their Obligations Two-thirds (65 percent) do not believe that the directors on their board are very experienced, based on the number of additional boards they serve on. Almost half (48 percent) do not believe that their fellow board members are very engaged in their work, based on the time they dedicate to their organization and their reliability in fulfilling their obligations. About half (47 percent) of nonprofit directors believe that their fellow board members understand their obligations as directors well or very well. Fundraising Is Seen as a Central Obligation Nonprofit directors rank fundraising very high relative to their other obligations as directors. Forty-five percent of nonprofits require directors to fundraise on behalf of the organization. Among those that do, 90 percent of directors believe that fundraising is as important or more important than their other obligations as directors. While many nonprofit organizations (46 percent) do not require directors to donate each year, almost all directors (92 percent) personally do so. Less than half (42 percent) of nonprofits have a “give or get” policy that requires each board member to donate a minimum amount each year or raise that amount from others. The minimum “give or get” varies by size of the organization, and averages $1,000 for small nonprofits (operating budget less than or equal to $500,000) and $5,000 for large nonprofits (operating budget greater than or equal to $5 million). “Fundraising is an important obligation for many directors,” observes Donatiello. “However, it should not distract from other core duties, such as ensuring that the organization is well managed, the strategy sound, finances healthy, and contingency plans in place to deal with unexpected disruptions.” Most Directors Are Satisfied with the Performance of Their Executive Director/CEO Almost all directors (92 percent) believe that the executive director understands the mission and strategy of the organization very or extremely well. Eighty-seven percent are satisfied with his or her performance. Few believe that their executive director is overcompensated, with 51 percent stating that their executive director is appropriately paid and 42 percent stating that he or she is slightly or very underpaid. Executive directors primarily have previous work experience in the nonprofit sector. Over half (59 percent) worked in the nonprofit industry immediately prior to becoming the head of their organization. Only 14 percent had immediate prior work experience in a for-profit organization. Twelve percent are the founder of their organization. In terms of education, almost two thirds (60 percent) have a master’s degree or higher. … and with the Performance of Their Board and Organization A significant majority (85 percent) of nonprofit directors are moderately or very satisfied with the performance of their organization. Satisfaction levels are also high for the quality of financial reporting (82 percent) and financial health (70 percent) of the organization. Most directors believe their board is correctly sized (56 percent) or only slightly too large (12 percent) or slightly too small (24 percent). These results hold true across organizations of various size. Approximately half (52 percent) say that their organization has a “board within a board” where a subset of directors has an outsized influence on board decisions. Two thirds of these (67 percent) are a formal executive committee, while one third (33 percent) reflect an informal dynamic that evolved over time. Among those organizations with a “board within a board,” 74 percent say it improves board functionality and decision making. A quarter (28 percent) of directors report that the founder of the organization currently serves as a fellow board member. Of these, 68 percent say that the founder is very involved in management and 78 percent say the founder is very involved as a board member of the organization. The vast majority (90 percent) believe that the founder has a positive or very positive impact on the success of the organization.
  • 5. 2015 Survey on Board of Directors of Nonprofit Organizations 3 Still, Most Nonprofit Boards Have Serious Challenges Over two thirds (69 percent) of nonprofit directors say their organization has faced one or more serious governance-related problems in the past 10 years. Forty percent say they have been unable to meet fundraising targets. Twenty-nine percent have experienced serious financial difficulty. A quarter (23 percent) have asked their executive director to leave or had to respond to an unexpected resignation. Sixteen percent say they have had extreme difficulty attracting qualified new board members. “The value of good governance shows up in results,” says Professor Larcker. “Ultimately, nonprofits will want to implement more reliable processes and procedures to ensure their organizations succeed. Good governance will almost certainly help nonprofit directors maximize their contribution to their social mission.” To improve governance and board-level performance, the authors recommend that nonprofits incorporate the following: Recommendations: 1. Ensure your organization’s mission is focused and its skills and resources are well-aligned with it. 2. Ensure your mission is understood and embraced by the board, management, and other key stakeholders. 3. Establish explicit goals and strategies directly tied to achieving your mission. 4. Develop rigorous performance metrics that reflect those goals and strategies. 5. Hold the executive director accountable for meeting those performance metrics and evaluate his or her performance with a sound, objective process. 6. Compose your board with individuals with the skills, resources, generosity, diversity, and dedication that address the needs of the organization. This includes ensuring that there is a small group of committed and cohesive leaders. 7. Define explicitly the roles and responsibilities of board members to best leverage their leadership, time, and resources. 8. Establish well-defined board, committee, and ad hoc processes that reflect your organization’s needs and context and ensure optimal handling of key decisions and responsibilities. 9. Regularly review and assess each board member’s leadership contributions as well as the board’s overall performance. This includes ensuring that board members view their time as well spent.2 2 These recommendations are consistent with those put forth by Meehan in previous work. See Kim Jonker and William F. Meehan III, “Better Board Governance,” Stanford Social Innovation Review webinar (May 21, 2014); and Kim Jonker and William F. Meehan III, “A Better Board Will Make You Better,” Stanford Social Innovation Review (March 5, 2014).
  • 6. 2015 Survey on Board of Directors of Nonprofit Organizations 4 Results might not equal 100% due to rounding. Review of Findings/Demographic Information Demographic Information 1. What is the nature of your organization’s primary activities? Results for all respondents Percent 25 Education or research 16 Social or legal services 11 Arts or culture 10 Health services 5 Foundation 5 Civic, social, or fraternal organization 4 Religious organization 24 Other 2. What are the main sources of funding for your organization? Results for all respondents Percent 71 Charitable contributions 52 Self-generated fees or revenue 41 Foundations 34 Corporate philanthropy 32 Federal, state, or local governments 25 Grant-making public charities 3 Federated funds 5 Other
  • 7. 2015 Survey on Board of Directors of Nonprofit Organizations 5 Results might not equal 100% due to rounding. 3. How many years has your organization been in existence? Results for all respondents 37 Mean 25 Median Percent 11 5 or fewer 13 Between 6 and 10 29 Between 11 and 25 28 Between 26 and 50 19 Greater than 50 Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M 22 33 63 Mean 15 25 50 Median Percent 19 8 1 5 or fewer 18 11 5 Between 6 and 10 34 32 20 Between 11 and 25 22 34 30 Between 26 and 50 6 15 44 Greater than 50
  • 8. 2015 Survey on Board of Directors of Nonprofit Organizations 6 Results might not equal 100% due to rounding. 4. What is the approximate annual operating budget of your organization? Results for all respondents $50.8M Mean $1.4M Median Percent 14 Below 100,000 21 Between 100,001 and 500,000 10 Between 500,001 and 1,000,000 29 Between 1,000,001 and 5,000,000 25 Greater than 5,000,000 Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M $202K $2.1M $197.8M Mean $150K $1.7M $18.0M Median Percent 40 0 0 Below 100,000 60 0 0 Between 100,001 and 500,000 0 26 0 Between 500,001 and 1,000,000 0 74 0 Between 1,000,001 and 5,000,000 0 0 100 Greater than 5,000,000
  • 9. 2015 Survey on Board of Directors of Nonprofit Organizations 7 Results might not equal 100% due to rounding. 5. How has your organization’s operating budget changed over the last five years? Results for all respondents Percent 26 Increased by more than 25 percent 41 Increased between 1 and 25 percent 16 Stayed about the same 7 Decreased between 1 and 25 percent 2 Decreased by more than 25 percent 4 I don’t know 3 Not applicable (organization is less than 5 years old) 6. What were the main motivations behind your decision to join the board of this organization? (Select all that apply) Results for all respondents Percent 86 To serve the organization and contribute to its success 53 To contribute to society 43 Because the organization asked me to join 25 To advance my personal interests 24 To advance my professional interests 18 To fulfill a need to volunteer 16 To make professional connections 12 To make personal connections 12 Other Structure of the Board of Directors 7. How many directors serve on the board of your organization? Results for all respondents 15 Mean 12 Median Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M 10 15 21 Mean 9 12 18 Median
  • 10. 2015 Survey on Board of Directors of Nonprofit Organizations 8 Results might not equal 100% due to rounding. 7a. In your opinion, is the present number of directors… Results for all respondents Percent 4 Much too large 12 Slightly too large 56 About the right number 24 Slightly too small 4 Much too small Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 2 4 7 Much too large 4 14 21 Slightly too large 59 52 55 About the right number 28 27 14 Slightly too small 7 3 3 Much too small 8. How well does the board understand the mission and strategy of the organization? Results for all respondents Percent 33 Extremely well 40 Very well 21 Moderately well 5 Slightly well 1 Not at all well 9. Which of the following best describes the level of agreement among board members about the mission and strategy? Results for all respondents Percent 46 Strong agreement 44 Agreement 7 Neutral 3 Disagreement 0 Strong disagreement 10. How well do the members of your board understand their obligations as directors? Results for all respondents Percent 12 Extremely well 35 Very well 38 Moderately well 10 Slightly well 4 Not at all well
  • 11. 2015 Survey on Board of Directors of Nonprofit Organizations 9 Results might not equal 100% due to rounding. 11. How experienced are the directors on your board—based on the previous and current number of additional boards that they serve on? Results for all respondents Percent 7 Extremely experienced 28 Very experienced 45 Moderately experienced 16 Slightly experienced 4 Not at all experienced 12. How engaged are the directors on your board—based on the time they dedicate to your organization and their reliability in fulfilling their obligations? Results for all respondents Percent 12 Extremely engaged 39 Very engaged 37 Moderately engaged 10 Slightly engaged 1 Not at all engaged 13. How satisfied are you with the board’s ability to evaluate the performance of your organization (i.e., the extent to which it is achieving its mission)? Results for all respondents Percent 23 Very satisfied 44 Moderately satisfied 12 Neither satisfied nor dissatisfied 15 Moderately dissatisfied 5 Very dissatisfied 14. Does the founder of your organization currently serve as a member of the board? Results for all respondents Percent 28 Yes 72 No Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 38 28 12 Yes 62 72 88 No
  • 12. 2015 Survey on Board of Directors of Nonprofit Organizations 10 Results might not equal 100% due to rounding. 14a. [if yes]: How involved is the founder in the management of the organization—based on the amount of time that he or she devotes to its daily operations? Results for all respondents Percent 55 Extremely involved 13 Very involved 9 Moderately involved 16 Slightly involved 7 Not at all involved 14b. [if yes]: How involved is the founder as a board member of the organization—based on the amount of time that he or she devotes to board-related matters? Results for all respondents Percent 48 Extremely involved 30 Very involved 15 Moderately involved 6 Slightly involved 1 Not at all involved 14c. [if yes]: What impact does the founder have on the success of the organization? Results for all respondents Percent 70 Very positive 20 Somewhat positive 5 Neither positive nor negative 4 Somewhat negative 1 Very negative The term “board within a board” describes a dynamic where a subset of directors has an outsized influence on board decisions. This might include an executive committee—either formal or informal—that acts on behalf of the whole board. 15. Does your organization have a “board within a board”? Results for all respondents Percent 52 Yes 45 No 3 I don’t know 15a. [if yes]: Is this a formal “board within a board” (i.e., executive committee role) or an informal “board within a board” (i.e., just happens)? Results for all respondents Percent 67 Formal 33 Informal
  • 13. 2015 Survey on Board of Directors of Nonprofit Organizations 11 Results might not equal 100% due to rounding. 15b. [if yes]: Does this structure improve board functionality and decision making? Results for all respondents Percent 74 Yes 15 No 10 I don’t know Informal “board within a board” only Results for all respondents Percent 62 Yes 26 No 12 I don’t know 16. Does the board of your organization review data and information to evaluate the performance of the organization? Results for all respondents Percent 92 Yes 7 No 2 I don’t know 17. Are these data financial or nonfinancial? Results for all respondents Percent 12 Financial only 2 Nonfinancial only 86 Both financial and nonfinancial 18. How confident are you that these data fully and accurately measure the success of your organization in achieving its mission? (On a scale of 1 to 5, with 5 being “extremely confident” and 1 being “not confident at all”) Results for all respondents 3.5 Mean 4.0 Median 46% % with confidence level less than or equal to 3 19. How often does the board review the strategy of the organization? Results for all respondents Percent 15 More frequently than annually 44 Annually 16 Every two years 14 Other 6 Never 5 I don’t know
  • 14. 2015 Survey on Board of Directors of Nonprofit Organizations 12 Results might not equal 100% due to rounding. 20. How often does the board review financial statements of the organization? Results for all respondents Percent 55 Quarterly 8 Semiannually 8 Annually 0 Never 29 Other 1 I don’t know Note: “Other” is predominantly monthly, bank statements Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 44 60 63 Quarterly 9 7 7 Semiannually 11 4 6 Annually 1 0 0 Never 34 28 24 Other 1 1 0 I don’t know
  • 15. 2015 Survey on Board of Directors of Nonprofit Organizations 13 Results might not equal 100% due to rounding. 21. Does your board have an audit committee? Results for all respondents Percent 55 Yes 42 No 3 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 25 63 86 Yes 72 34 12 No 3 3 1 I don’t know Benchmarking is the process by which your nonprofit board practices are compared to those of other nonprofits, to identify potential improvements and other comparative benefits. 22. Does your organization benchmark its performance against a peer group of similar organizations? Results for all respondents Percent 36 Yes 57 No 6 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 21 36 60 Yes 74 59 35 No 5 5 5 I don’t know
  • 16. 2015 Survey on Board of Directors of Nonprofit Organizations 14 Results might not equal 100% due to rounding. 23. How often does the board evaluate its own performance? Results for all respondents Percent 34 Annually 11 Every two years 36 Never 8 Other 11 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 24 34 48 Annually 9 10 13 Every two years 46 37 21 Never 9 8 9 Other 11 11 10 I don’t know Executive Director/Chief Executive Officer 24. How many years has the current executive director/CEO held the executive director position at your organization? Results for all respondents 6.9 Mean 5.0 Median 25. How many years has the current executive director/CEO been employed at your organization? Results for all respondents 9.9 Mean 5.0 Median 26. What is the (approximate) age of the executive director/ CEO? Results for all respondents 51 Mean 53 Median
  • 17. 2015 Survey on Board of Directors of Nonprofit Organizations 15 Results might not equal 100% due to rounding. 27. What is the gender of the current executive director/CEO? Results for all respondents Percent 48 Male 52 Female Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 39 46 62 Male 61 54 38 Female 28. What is the highest level of education that the current executive director/CEO has achieved? Results for all respondents Percent 1 High school graduate, diploma, or the equivalent 2 Some college credit, no degree 0 Trade/technical/vocational training 1 Associate degree 25 Bachelor’s degree 39 Master’s degree 12 Professional degree 9 Doctorate degree 2 Other 9 I don’t know
  • 18. 2015 Survey on Board of Directors of Nonprofit Organizations 16 Results might not equal 100% due to rounding. 29. Which of the following most closely describes the work experience of your executive director/CEO immediately prior to becoming the head of your organization? Results for all respondents Percent 12 Founder of your organization 15 Employee (below CEO) within your organization 22 Executive director/CEO at another nonprofit 22 Employee (below CEO) at another nonprofit 4 CEO at a for-profit organization 10 Employee (below CEO) at a for-profit 15 Other 30. How well does the executive director understand the mission and strategy of the organization? Results for all respondents Percent 73 Extremely well 19 Very well 5 Moderately well 2 Slightly well 0 Not at all well 1 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 67 76 81 Extremely well 18 20 14 Very well 7 3 4 Moderately well 3 1 0 Slightly well 2 0 0 Not at all well 2 0 1 I don’t know
  • 19. 2015 Survey on Board of Directors of Nonprofit Organizations 17 Results might not equal 100% due to rounding. 31. How often does the board of your organization formally review the performance of the executive director? Results for all respondents Percent 2 Quarterly 4 Semiannually 68 Annually 6 Other 14 Never 5 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 3 3 1 Quarterly 5 3 5 Semiannually 51 75 84 Annually 9 5 4 Other 26 10 2 Never 6 4 3 I don’t know
  • 20. 2015 Survey on Board of Directors of Nonprofit Organizations 18 Results might not equal 100% due to rounding. 32. Does the board establish performance targets for the executive director at the beginning of the year? Results for all respondents Percent 53 Yes 39 No 8 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 42 54 69 Yes 51 39 22 No 7 6 9 I don’t know 33. How satisfied are you with the performance of the executive director? Results for all respondents Percent 63 Very satisfied 24 Moderately satisfied 6 Neither satisfied nor dissatisfied 5 Moderately dissatisfied 2 Very dissatisfied 34. Does the executive director/CEO receive a salary? Results for all respondents Percent 80 Yes, full-time salary 7 Yes, part-time salary 13 No 1 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 52 95 99 Yes, full-time salary 17 2 0 Yes, part-time salary 30 3 1 No 1 0 0 I don’t know
  • 21. 2015 Survey on Board of Directors of Nonprofit Organizations 19 Results might not equal 100% due to rounding. 34a.[if yes]: In your opinion, is this salary... Results for all respondents Percent 14 Well below what he/she should be paid 28 Slightly below what he/she should be paid 51 About the right amount 5 Slightly above what he/she should be paid 2 Well above what he/she should be paid Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 24 12 9 Well below what he/she should be paid 31 32 20 Slightly below what he/she should be paid 39 49 65 About the right amount 4 5 6 Slightly above what he/she should be paid 2 1 2 Well above what he/she should be paid 35. Does your organization have a succession plan in place for the executive director/CEO? Results for all respondents Percent 25 Yes 69 No 7 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 19 20 41 Yes 76 75 52 No 6 5 7 I don’t know
  • 22. 2015 Survey on Board of Directors of Nonprofit Organizations 20 Results might not equal 100% due to rounding. 36. If your current executive director/CEO were to leave the organization tomorrow, could you immediately name a permanent successor? Results for all respondents Percent 16 Yes 78 No 6 I don’t know Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Percent 19 11 18 Yes 75 83 76 No 6 5 5 I don’t know 37. If your current executive director/CEO left tomorrow, how long would it take for the board to name a permanent successor (in days)? Results for all respondents Days 112 Mean 90 Median Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M Days 87 114 136 Mean 60 90 120 Median Donations and Fundraising 38. Do you personally donate to your organization? Results for all respondents Percent 92 Yes 8 No 39. Does your organization require that directors donate to it each year? Results for all respondents Percent 53 Yes 46 No 1 I don’t know
  • 23. 2015 Survey on Board of Directors of Nonprofit Organizations 21 Results might not equal 100% due to rounding. 39a. [if yes]: Does your organization have a “give or get” policy that requires each board member to donate a minimum amount each year or raise that amount from others? Results for all respondents Percent 42 Yes 58 No 39b.[if yes]: What is the “give or get” minimum that you are required to achieve? Results for all respondents 6,336 Mean 2,500 Median 100,000 Max Results for nonprofits with operating budget < $500K Results for nonprofits with operating budget > $500K and < $5M Results for nonprofits with operating budget > $5M 2,142 5,609 11,706 Mean 1,000 2,500 5,000 Median 10,000 30,000 100,000 Max 40. Are directors of your organization required to fundraise on behalf of the organization? Results for all respondents Percent 45 Yes 54 No 1 I don’t know 40a.[if yes]: How important is fundraising relative to your other obligations as a director of this organization? (On a scale of 1 to 5, with 5 being “the most important” and 1 being “not at all important”) Results for all respondents 3.8 Mean 4.0 Median 90% % with importance level greater than or equal to 3 Organizational Performance 41. How satisfied are you with the performance of your organization? Results for all respondents Percent 41 Very satisfied 44 Moderately satisfied 4 Neither satisfied nor dissatisfied 10 Moderately dissatisfied 1 Very dissatisfied
  • 24. 2015 Survey on Board of Directors of Nonprofit Organizations 22 Results might not equal 100% due to rounding. 42. How satisfied are you with the financial health of your organization? Results for all respondents Percent 34 Very satisfied 36 Moderately satisfied 9 Neither satisfied nor dissatisfied 16 Moderately dissatisfied 5 Very dissatisfied 43. How satisfied are you with the quality of financial reporting at your organization? Results for all respondents Percent 51 Very satisfied 31 Moderately satisfied 8 Neither satisfied nor dissatisfied 7 Moderately dissatisfied 3 Very dissatisfied 44. Which of the following problems or difficulties has your organization experienced in the last 10 years? (Select all that apply) Results for all respondents Percent 40 Inability to meet fundraising targets 29 Serious financial difficulty 16 Extreme difficulty attracting one or more new board members 12 Executive director asked by the board to leave 11 Unexpected resignation of the executive director 7 Board member asked by colleagues to leave 5 Unexpected resignation of a large number of board members 4 Serious accounting restatement 4 Fraud by internal employees or directors 3 Serious litigation 1 Serious threat to tax-exempt status 13 Other 31 None of these 21 % that selected three or more
  • 25. 2015 Survey on Board of Directors of Nonprofit Organizations 23 Results might not equal 100% due to rounding. Other Demographic Information 45. What is the total number of nonprofit boards you serve on (including the one covered by this survey)? Results for all respondents 2.1 Mean 2.0 Median 46. What is the total number of for-profit boards you serve on? Results for all respondents 0.4 Mean – Median 47. Do you believe that serving on a nonprofit board opens up opportunities to serve on a for-profit board? Results for all respondents Percent 32 Yes 68 No
  • 26. 2015 Survey on Board of Directors of Nonprofit Organizations 24 Methodology In fall 2014, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, surveyed 924 directors of nonprofit organizations about the composition, structure, and practices of their boards.
  • 27. 2015 Survey on Board of Directors of Nonprofit Organizations 25 About the Authors David F. Larcker David F. Larcker is the James Irvin Miller Professor of Accounting at Stanford Graduate School of Business; director of the Corporate Governance Research Initiative; and senior faculty of the Arthur and Toni Rembe Rock Center for Corporate Governance. His research focuses on executive compensation and corporate governance. Professor Larcker presently serves on the Board of Trustees for Wells Fargo Advantage Funds. He is coauthor of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: dlarcker@stanford.edu Twitter: @stanfordcorpgov Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/ david-f-larcker William F. Meehan III William F. Meehan III is the Lafayette Partners Lecturer for 2013-2015 at Stanford Graduate School of Business and a director emeritus of McKinsey & Company. Mr. Meehan is a regular writer, speaker, and advisor on nonprofit strategy, governance, performance measurement, as well as innovations in philanthropy, including the role of the internet. At Stanford, he is a founding member of the Advisory Council of the Center for Philanthropy and the Civil Society, a faculty member of the Public Management Program and the Center for Social Innovation, and a member of the Arts Initiative Council. He is former chair of the United Way of the Bay Area, chairman emeritus of GuideStar, a former member of the Board of Fordham Prep, the National Academy of Sciences’ Board on Science, Technology, and Economic Policy (STEP), and the California Roundtable. Email: wmeehan@stanford.edu Full Bio: https://www.gsb.stanford.edu/faculty-research/faculty/ bill-meehan Nicholas Donatiello Nicholas Donatiello is a recognized expert in the areas of consumers, media, and technology. Mr. Donatiello is president and CEO of Odyssey and a lecturer at Stanford Graduate School of Business where he lectures on the roles, responsibilities, and performance of boards in public, early-stage private, and not-for-profit companies. Mr. Donatiello is a director of the Schwab Charitable Fund (AUM in excess of $7 billion), one of the nation’s largest grant- making charities, distributing more than $1 billion in annual grants to charities, where he serves on the Investment Oversight Committee and chairs the Compensation Committee. Mr. Donatiello is the former Chairman of the Board of KQED, Inc., which owns and operates five public radio and television stations in Northern California. Email: donatiello@stanford.edu Twitter: @nickdonatiello Full Bio: http://www.gsb.stanford.edu/faculty-research/faculty/ nicholas-donatiello Brian Tayan Brian Tayan is a member of the Corporate Governance Research Initiative at Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including the boards of directors, succession planning, compensation, financial accounting, and shareholder relations. He is coauthor with David Larcker of the books A Real Look at Real World Corporate Governance and Corporate Governance Matters. Email: btayan@stanford.edu Acknowledgements The authors would like to thank Michelle E. Gutman of the Corporate Governance Research Initiative at Stanford Graduate School of Business for her research assistance on this study.
  • 28. 2015 Survey on Board of Directors of Nonprofit Organizations 26 About Stanford Graduate School of Business, the Rock Center for Corporate Governance, BoardSource, and GuideStar About Stanford Graduate School of Business The Corporate Governance Research Initiative (CGRI) at Stanford Graduate School of Business. The Corporate Governance Research Initiative focuses on research to advance the intellectual understanding of corporate governance, both domestically and abroad. By collaborating with academics and practitioners from the public and private sectors, we seek to generate insights into critical issues and bridge the gap between theory and practice. Our research covers a broad range of topics that include executive compensation, board governance, CEO succession, and proxy voting. gsb.stanford.edu/cgri The Center for Social Innovation (CSI) at Stanford Graduate School of Business. CSI is dedicated to creating social and environmental change in the world. Through research, education, and experiential learning, CSI strengthens the capacity of individuals and organizations to develop innovative solutions for poverty alleviation, access to healthcare and education, sustainable development, environmental protection, human rights, and more. We envision a networked community of leaders actively working across frontiers, sectors, and disciplines to build a more just, sustainable, and prosperous world. http://csi.gsb.stanford.edu/ About The Rock Center for Corporate Governance The Arthur and Toni Rembe Rock Center for Corporate Governance is a joint initiative of Stanford Law School and Stanford Graduate School of Business. The Center was created to advance the understanding and practice of corporate governance in a cross-disciplinary environment where leading academics, business leaders, policy makers, practitioners, and regulators can meet and work together. www.rockcenter.law.stanford.edu About BoardSource BoardSource is a recognized leader in nonprofit board leadership and serves as the national voice for inspired and effective board service. It provides leadership and support to a growing network of more than 100,000 nonprofit leaders, and offers an extensive range of tools and resources to increase board effectiveness and strengthen organizational impact. https://www.boardsource.org/ About GuideStar GuideStar is the world’s largest source of information on nonprofit organizations. More than 7 million people use GuideStar data every year. GuideStar data is used to make more intelligent decisions about the social sector. These decisions drive social innovation and help make the world a better place. http://www.guidestar.org/
  • 29. 2015 Survey on Board of Directors of Nonprofit Organizations 27 Contact Information For more information on this report, please contact: Heather Hansen Assistant Communications Director Stanford Graduate School of Business Knight Management Center Stanford University 655 Knight Way Stanford, CA 94305-7298 Phone: +1.650.723.0887 hhansen@stanford.edu Copyright © Stanford Graduate School of Business and the Rock Center for Corporate Governance | 2015 Survey on Board of Directors of Nonprofit Organizations