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Board Study Slanted Too Much Toward Smaller Charities

July 2, 2007, 11:17 am

A new study of the governance practices of nonprofit trustees uncovers some interesting and disturbing trends.

But the nonprofit finance expert Dan Prives cautions readers not to read too much into the results of the study, which was conducted by the Urban Institute, a Washington think tank.

Mr. Prives, writing on his blog, Where Most Needed,, says the study is flawed because it includes too large of a sample of small-sized organizations. Nearly 85 percent of the 5,115 nonprofits that provided data had expenditures of less than $2-million annually.

“Unfortunately, this study of board practices employs a sampling method that ignores the power law distribution of nonprofit organizations—the fact that a relative handful of very large-scale organizations account for most of the nonprofit activity in the U.S.,” Mr. Prives writes.

That sample is particularly troubling when it comes to measuring the number of nonprofit organizations that pay their board members, Mr. Prives says. Larger groups are much more likely to pay their trustees because of the amount of work that is required from such positions.

“My concern with this is that the study makes paid board service appear to be a marginal and largely irrelevant practice, but it would in fact be a helpful reform for any nonprofit that could afford it,” Mr. Prives writes. “And large- scale nonprofits need it in order to compete for skilled board members against for-profit entities that typically compensate their boards. “

Does the Urban Institute study paint an accurate picture of nonprofit board governance? Click on the comments link below this post to share your thoughts.

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