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Why Is It Important to Have Diversity on Boards?

Why Is It Important to Have Diversity on Boards?

When Jane Scaccetti, one of the signors of the Open Letter asking the IRS to require large public charities to disclose the composition of their governing boards, was the only woman on the board of a for-profit business, the board was considering the features it could provide and promote for a 24-hour towing service for stranded motorists.  The men talked about their towing capabilities and the company’s ability to repair the cars towed in.

Scaccetti reminded them that a woman stranded in a broken-down car at 2 a.m. in the morning is probably concerned more about her immediate personal safety than whether the towing company could fix the car the next day.  A woman might be more concerned that the company lot was well lit, with 24-hour security cameras operating while she made arrangements to get home.

“I brought a lived experience to that discussion that the men on the board just didn’t have,” she says.  “If you don’t have a diversity of experience on a board, you run a real risk that important factors won’t be considered and that the ultimate decisions will not be as well thought through as they could be.”

Scaccetti is a certified public accountant in Philadelphia and is currently Ambassador at a top-twenty accounting firm Armanino.  She has run her own accounting firm and has served as a director on several for-profit and large nonprofit boards.  She has frequently seen situations in which diversity of opinion has resulted in significant changes in operations.

As chair of the board of a major health system, she and the CEO decided they needed a Quality Committee for the system, she said.  The initial agendas were all financial, focused on things like the cost of lawsuits and insurance premiums.  With support from another woman on the board, she began to ask different questions and the agendas began to focus more on the quality of the care, about mortality rates, emergency room statistics, patient to nursing ratios and reactions of patients.

She also tells about a university board discussion of reporting requirements under the Clery Act dealing with charges of sexual harassment on campus.  She noted that it was the mothers on the board who first raised concerns about the impact that reporting might have on innocent male students, not the men who were fathers.

“When you have a board composed of people who all have roughly the same background, it’s easy for everyone to assume an answer,” she says.  “They might ultimately get to the right place, but they also may not know what they do not know.”

Her experiences echo the findings of the 2020 study on “Increasing Gender Diversity on the Boards of Nonprofit Eds and Meds” co-published by Nonprofit Issues® and the Women’s Nonprofit Leadership Initiative in Philadelphia.  Women often tend to ask questions or pursue issues that men are less likely to ask or pursue, the report says.  Scaccetti is a member of WNLI and the Coalition asking the IRS to include a question on the Form 990.

Scaccetti says an IRS question on diversity would have two separate benefits.  First, she says, it will emphasize the importance of the board’s composition.  She tells about a student advisory committee given authority to recommend investments for a University’s investment portfolio.  “When I first got involved with the committee many years ago,” she says, “I asked why none of the 10 or so students were women or people of color.  The woman professor running the group said it was hard to find female and students of color to join. 

“I was also struck by the ‘sports’ language and lingo the students used in the presentation. Nothing felt gender inclusive to me.  We talked about how to attract women and people of color.  Over the next two years, they increased to 20% and now are at 50% female members, and 20% people of color.  That’s what can happen when you pay attention to an issue.”

“Ironically, we still get the same kind of excuse when urging more diversity on boards today,” Scaccetti noted.

Second, she says the answers will give her, as a supporter or consumer of the services of these organizations, a chance to understand the composition of the boards and know who to hold accountable for their decisions.  “If I believe diversity is important,” she says, “the answer to an IRS question would help me decide whether or not to support the organization.  We simply don’t have that type of transparency today.”

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