Singapore

Study finds charities with more diverse boards do better financially

A study of the management boards of charities has found that greater diversity of board members leads to better financial performance for the charity.

The study by Conjunct Consulting, a charity that provides consultancy services to charities and social enterprises, collected data on the board composition and financial performance metrics of 204 Institutions of a Public Character, or IPCs - charities that are allowed to collect tax-deductible donations.

It did the study as there was none done on board diversity and organisational performance of charities here, said Conjunct's executive director Yasmine Tan.

The study focused on financial indicators as IPCs span a range of sectors from the arts to social services to sports, and it is hard to find other common indicators to measure organisational performance or impact.

Ms Tan said: "As board members are tasked with the crucial role of guiding the charity's strategy and direction, we believe it is imperative for the board to possess a diversity of backgrounds, skills and experience to guide the charity towards a sustainable future.

"A more diverse board can in fact help charities to broaden their networks to find other suitable board members and to fund-raise better."

The study - presented during a panel discussion last month on board diversity of charities - found that:

• Greater gender diversity is associated with greater financial sustainability, which is described as the charity's ability to build reserves.

• Greater ethnic diversity is associated with greater financial sustainability and greater financial independence, which is the ability to generate income other than that from grants and donations. This could include income from services provided and investment returns.

On the state of diversity here, Conjunct found that women comprised a third of the boards studied.

However, diversity is "strikingly" lacking when it comes to ethnic representation.

More than 80 per cent of board members are Chinese, while Malays account for only 3 per cent even though they comprise about 15 per cent of Singapore's population.

COMMUNITY ISSUES