What is the Right Size for Your Nonprofit’s Board?
It’s not uncommon for us to be asked our opinion on nonprofit board size. How many are too many? How many is not enough? Is there a minimum or maximum size? Is there a standard rule to follow?
In this article, we’ll address what various authors have said about nonprofit board size (they pretty much all agree, by the way). We’ll also address how thoughts on board size have changed over the past 20 years, and why new governance and regulatory requirements mean that more nonprofit organizations and charities should look at “right-sizing” their boards.
A consensus on nonprofit board size
There are very few scientific research studies addressing board size and organizational function, whether we’re discussing nonprofit or for-profit corporations. What few studies do exist are somewhat contradictory, so it’s hard to rely on their findings for guidance.
There is no shortage of literature, however, from consultants, academicians, and other experts dealing with board governance. In this literature, little mention is made of optimal board size. Where it is mentioned, discussion of board size considerations occupies less than two pages in a typical book.
Our belief is that the reason for this scant treatment of board size is that most organizations are already in operation and have their boards in place. Most authors assume the organization’s board, as a governance structure, is already in place. These authors spend much more time on how the structure is operated – who to recruit, how they should lead, etc. It’s not surprising that board structure is assumed as a given, since some organizations make it very difficult to amend the governing documents that establish the size of the board. Also, many of these books are written by consultants and executives who have rarely, if ever, been involved in the formation of a new nonprofit.
The simple answer is that most authors agree that a typical nonprofit board of directors should comprise not less than 8-9 members and not more than 11-14 members. Some authors focusing on healthcare organizations indicate a board size up to 19 members is acceptable, though not optimal. [NOTE: the National Association of Corporate Directors (NACD) surveyed their members in 2001. In for-profit corporations, almost 60% of respondents said corporate boards should have 8-11 members. For larger companies, boards typically fall in the 9-12 member range (Biggs, The Governance Factor).]
Some sources argue strongly for an odd number of voting board members, so that tie votes can be all but eliminated. Others note that almost all nonprofit board business is done by consensus, and a board at risk of an even split on an issue is in need of serious remediation.
One significant exception to the board size assessments is arts and cultural organizations, which tend to have larger and more fund development-driven board sizes and structures. Another outlier is associations and other organizations which guarantee representation to constituencies determined by geography, political office, relationship to the organization (e.g., chapters of a larger nonprofit, faculty and/or alumni of a university), or other factors set forth in the organization’s bylaws.
The simple answer of between 8-9 and 11-14 being stated, we can now discuss some of the considerations influencing this widely-held belief.
Pros and cons of large and small boards
Several authors say what Sumption & Wyland has said for years: a board should be large enough to get the board’s work done, yet small enough to work as a single team to communicate, deliberate, and function as a single body. This viewpoint informs most, if not all, of the board size recommendations in the literature.
What happens when boards are too large or too small? Again, the literature is remarkably uniform in observations and admonitions on board size.
When a board is too large, the board’s business is difficult to conduct as a single group. In such situations, the executive committee is often used as the deliberative and decision-making group, and the remaining board members (the “full board”) become a passive, rubber-stamping body seldom asked for input prior to important decision-making. Sometimes, the power positions on the large board may include other committees, such as finance or governance, as well as the executive committee. I remember speaking with a board member for a community health center who had served on the 22-member board for more than 25 years, including three non-consecutive terms on the executive committee, which he referred to as “the real board.”
Small boards may also suffer from cliques and a “two-class” system. If there are too few people on a board, there may be one or two members who are able to intimidate the remaining board members. Intimidation does not need to be physical or emotional coercion; if one board member has specialized knowledge related to the organization’s mission, or s/he has more time than other board members available to review materials, visit with staff, stakeholders, donors, and volunteers, etc., that can be intimidating. Of course, a major donor or a nonprofit’s founder can be intimidating on any board, but this is especially true when the board’s total size is relatively small.
Members of large boards tend to feel their participation is limited, as is their opportunity to exert influence, contribute good ideas, and use their leadership skills to benefit the organization. Especially when board action is ratifying decisions of the executive committee and listening to staff reports, board members become disconnected from the group. This may result in absence from board meetings or lack of effective preparation even when board members attend meetings.
Members of small boards are often asked to take on multiple tasks, from governance to fundraising to decorating the gym for the big event. Too many tasks taking too much time away from work, family, and leisure present a risk to both the board member and the organization that the board member will become exhausted. He or she will begin disconnecting from the board and the organization.
Though the symptoms are different in large and small boards, the results are the same: improper board size leads to board member disengagement. It has been said in several places that boards are the most underutilized resource of an organization, either because board members are not consulted meaningfully or because board members’ time and talents are wasted on secondary tasks and pursuits.
In 2000, the National Center for Nonprofit Boards (NCNB), now known as BoardSource, estimated that the average 501(c)(3) (charitable nonprofit) board of directors had 17 members. By 2007, BoardSource reduced the estimate to 16 members. Given that there are approximately 1,300,000 501(c)(3) organizations in the US in 2017, this means that there are more than 20 million board positions available. It should be noted that this estimate does not include about 350,000 religious congregations, which are not required to apply for tax-exempt recognition from the IRS.
Two things may be inferred from these data: 1) that average board size is slowly decreasing; and 2) the average size is still higher than most experts recommend.
Briefly – The History and Future of Board Size
Historically, nonprofit boards were designed to gather together as much stakeholder support as possible into the governing body. Much effort was devoted to assuring that all constituencies were represented. Some board structures assured equitable geographic representation. Most, if not all, nonprofits sought to have major donors (and those with access to major donors) join their boards. This resulted in relatively large board sizes. In some cases, constituency-based representation results in extremely large boards of 50 or more. This is found when an organization’s chapters, subgroups, or external stakeholders elect or appoint one or more board members in addition to those members recruited by the board itself. Some organizations expanded their boards as additional major donors commit to supporting the nonprofit organization.
This constituency-based and financially-based board structure slowly gave way in recent decades to a model based on identifying board members based on skills, talents, and competencies necessary for balanced representation. There are many books with matrices outlining socioeconomic, professional, personal, geographic, ethnic/racial, age, gender, and other characteristics deemed important to proper board and organizational function. Acquiring and maintaining the right “mix” of board members is a challenging job for executives and boards.
The 21st century has brought with it a new scrutiny and heightened expectations of boards of directors. Rather than being “big names,” “deep pockets,” “the right people,” or signifying comprehensive community participation, boards are now expected to perform governance in accordance with law and regulation. In short, board membership has become serious business.
A few reasons why: 1) reported nonprofit sector scandals; 2) the growth of philanthropic giving and growth of large nonprofit organizations, especially hospitals, universities, and foundations; 3) new IRS regulations (Section 4958 or “intermediate sanctions”) which hold board members and senior managers individually liable for bad acts involving the nonprofit; 4) increased scrutiny and regulation by state attorneys general; 5) increased scrutiny by media and by self-appointed “charity watchdogs”; and 6) Internet-accessible nonprofit IRS forms and other mandated nonprofit disclosures to the public.
It should be acknowledged that nonprofit corporations have always had the responsibility of effective governance, but they were often excused from the expectations placed upon other corporations, governments, and individuals. There are several reasons for this, including reverence for charitable missions, belief that a nonprofit’s staff and volunteers were somehow not as capable as others to govern and manage effectively, and the fact that there are no direct shareholders in a nonprofit corporation, so that inefficient or ineffective operation harms no investor directly. [NOTE: inefficient and ineffective governance and management do harm a nonprofit and those it serves, including the community at large. Our point is that there is no direct correlation with an individual “investor’s” returns in a nonprofit as there would be in a for-profit corporation.]
The excuses for the failings of nonprofits are wearing away, due in large part to the factors mentioned above. More information is available about nonprofit organizations that include real money, real consequences, and personal misdeeds that many find especially appalling owing to the altruistic nature of charity and the favorable tax treatment it receives.
Given this current and emerging climate, the future of board size is influenced by the increasing expectations of board governance. Boards work better when they are neither too large nor too small. Board size influences the willingness and ability of board members to effectively govern the organization. Effective governance is the emerging expectation of regulators, the public, the press, and politicians.
Whatever else the board is tasked with doing, its fundamental purpose is to effectively govern the organization. Therefore, board size ought to be influenced primarily not by fundraising, constituency-building, diversity, or other factors. It must be influenced primarily by the overarching need to provide its stakeholders and community with a well-governed organization with the capacity to fulfill its stated mission. Constituency-building, fund development, diversity in all its forms, and other factors are also important, but effective governance is the top priority. Therefore, nonprofit board size should be designed to assure successful governance function above all else. Fortunately, the consensus of the available literature supports a board size compatible with this emerging requirement.