What should diversity look like for charities?

Key points

  • This year’s Newton Charity Investment Survey indicates that only 36% of charities feel diversity is adequately reflected on their board.
  • Perceptions of diversity appear to be changing, and there is some uncertainty around what a desirable level may be.
  • There are a number of initiatives that charities could consider to improve diversity, including focusing on skills and lived experience rather than professional tenure, using tech-based recruitment platforms, and implementing term limits.
  • Respondents to our survey are now increasingly likely to demand that their partners, especially their providers and investment managers, demonstrate diversity within their own organisations.

The 2022 Newton Charity Investment Survey revealed that only 36% of charities feel diversity is adequately reflected on their board, down 8% since 2020. This shift is not reflected in the proportion of charities reporting that diversity is not reflected on their board, which has stayed stable, and is instead driving a rise in the number saying they ‘don’t know’.

This could indicate that perceptions of diversity are changing, and that there is some growing uncertainty around what a desirable level may be. We believe that, on the whole, society is developing a more sophisticated grasp of what diversity could mean and what it encompasses, including socio-economic diversity, the LGBTQ community, and neurodiversity.

Some progress has been made, with female representation on trustee boards seeing minor increases compared to last year, but it is not outstripping the increasing expectations around diversity and the desired speed of said progress. Certainly, rising expectations indicate there is still work left to do.

The survey showed that the average proportion of trustee boards that is BME (black and minority ethnic) stands at 12%, which does broadly align with the proportion of the UK population that is BME (currently 13%). However, national averages do not account for regional variations. In addition, charities’ missions vary, and their direct beneficiaries may not be representative of the background population. Charities may therefore wish to consider how their boards might best reflect the communities they are serving, and many are already doing so.

We recently hosted a round-table discussion with representatives from charities. We explored different ways of approaching diversity at board level, which raised some interesting ideas. The charity world is well-networked, and this often means that trustees are recruited through the connections they have, in an informal way; however, there are ways that recruitment could be opened up to find more diverse board members.

Direct experience can sometimes be a significant barrier for diverse candidates, but focusing on skills and lived experience rather than professional tenure could be an effective way to attract more diverse trustees. There are also other places that boards can look to find potential candidates, including tech-based recruitment platforms and non-traditional networks and channels. In addition, while they are already broadly used, term limits offer charities the opportunity to refresh their boards, as well as encourage new ideas and different perspectives.

Another indication of the increased awareness around the importance of diversity in the charity sector can be seen in charities’ expectations of diversity among their partners, especially their providers and investment managers. Respondents to our survey are now increasingly likely to demand that their partners demonstrate diversity within their own organisations.

There is no doubt that the investment industry also has significant progress to make when it comes to diversity. We recognise at Newton that embracing a broad range of perspectives can improve decision-making, cultivate innovation and encourage better understanding of our clients, and we continue to seek to improve the racial diversity of our workforce and close our gender pay gap. While we are conscious that we still have work to do, we have implemented a number of initiatives, including ensuring that final candidate slates for all open positions in the Europe, Middle East and Africa region are a minimum of 50% female and/or ethnically or racially diverse, and we hold regular unconscious bias training for staff. We also run a vocational trainee programme which takes talented A-level students from London state schools and offers them the chance to study for a degree alongside a full-time job opportunity. In addition, we have return-to-work and returning-military programmes.

Diversity is a broad issue, and the responses to our survey highlight that perceptions of what it means are changing, raising the question of what diversity should look like for charities. Could it be having a trustee board that is representative of beneficiaries, or even one where past beneficiaries are board members? It is positive to see that expectations around diversity are growing, and clearly every organisation is different, but encouraging and contributing to discussions around the topic may help push progress in the right direction.

View the findings of the 2022 Newton Charity Investment Survey.

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Sarah Dickson

Sarah Dickson

Charity business development

This is a financial promotion. These opinions should not be construed as investment or other advice and are subject to change. This material is for information purposes only. This is not investment research or a research recommendation for regulatory purposes. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those securities, countries or sectors.

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