Why Still So Few Women CEOs? Here’s the Answer

By Otis Fulton and Katrina VanHuss, NonprofitPro

Last year, NonProfit PRO’s cover story, “The Rise of Women in Philanthropy” reported the happy news that, “it’s becoming increasingly more common to see women hold leadership roles at nonprofit organizations.” It goes on to say that women now make up 75% of the labor force, and because they now represent 51% of the total wealth in the U.S., women are challenging male-dominated control of the nonprofit sector from within and without.

Aside from pushing our gender-fairness buttons, why is this such good news? It’s good news for nonprofits because, despite the existence of pervasive stereotypes about gender and leadership (read: men are better leaders than women), there is a significant body of research that indicates that women score higher than men in most leadership skills.

As reported by the Harvard Business Review, “While the differences were not huge, women scored at a statistically significantly higher level than men on the vast majority of leadership competencies we measured.” When surveyed, women are perceived by their managers – particularly their male managers – to be slightly more effective than men at every level and in every functional area of an organization.

So, we would be right to assume that by promoting women to more leadership roles, nonprofits will enjoy more success and be able to impact their missions in a more significant way. And maybe – just maybe – for once, the nonprofit world will be seen as a model that the for-profit space will want to emulate; not the other way around.

However, there always seems to be an asterisk around anything involving gender equity. The “except” in this case is: except women who lead nonprofits don’t make nearly as much money as men do. On average, male nonprofit CEOs earn more than women CEOs. A lot more. Looking at the numbers, the difference is related to the size of the organization.

Size Matters

An analysis of the 2015 tax returns of 340 human service organizations with budgets of $10 million or more revealed that only 35% had female CEOs, even though women made up the vast majority of their staff. Among nonprofits with budgets of $50 million or more, the share of female CEOs was even lower – 20%.

In 2018, men held the highest paid jobs at nine out of the 10 top nonprofits identified by Forbes as the biggest in the U.S. The only woman leading one of the top 10 was Claire Babineaux-Fontenot at the fourth largest U.S. nonprofit, Feeding America.

Research has shown that the likelihood of a woman being hired as a nonprofit CEO decreases by 0.2 percentage points with each million-dollar increase in its revenue. Putting this in context, a nonprofit with a $50 million budget is 8% less likely to hire a woman as its CEO compared to an organization with a $10 million budget. An organization with a $100 million budget would be 18% less likely to hire a woman as CEO than a group with a $10 million budget.

So, while women are dominating the nonprofit sector in terms of their numbers, they are still underrepresented at the top positions; particularly so in larger organizations. The effect of this – not having many big salary numbers to average in – is that the average pay of women is significantly less than that of men. What can nonprofits do to even this out?

How to Get More Female CEOs

Management researchers believe they have found the key to unlocking the men’s room for women – boards of directors. Nonprofit boards are responsible for recruiting, hiring and firing CEOs. Research has shown that board members tend to hire people who are like themselves. Boards are more likely to hire female CEOs when some board members are women. And an important benefit of having women on nonprofit boards is that organizations bring in more donations.

The solution seems so simple – get more women board members. This has shown to be more easily said than done. So much so, that the state of California last year passed a law that mandates that publicly held corporations are required to have at least one woman on their board. That a law has to be passed somewhere should be a clue for us that this won’t be a quick fix, or one that will happen naturally.

The Sweet Spot

It turns out that nonprofit organizations are 17% more likely to have a female CEO when between a third and half of the board’s voting members are women, compared with when less than a third are female. Interestingly, most progress occurs when women on boards are a minority of the members, as long as they aren’t “tokens.”

As with most issues that involve breaking down stereotypes, overcoming gender inequity in nonprofit leadership won’t be simple. Having equal numbers of men and women on the boards of big nonprofits is no cure-all. It turns out that when a majority of board members are women, the board is no more likely to hire a female CEO than organizations where women account for less than a third of the board.

The first step toward better female representation in the CEO chair is to acknowledge that stereotypes regarding gender exist and that breaking through them will take a sustained, conscious effort. It seems like it’s the same story everywhere you look in our society. We’ve come some distance, but there’s still more runway in front of us than behind.

Need proof? Look at the current state of politics. Despite the progress indicated by the huge influx of women elected into Congress last fall, we’re still skeptical that the U.S. is ever going to elect a woman to the country’s highest office. Remember Amy Klobuchar? Remember Kamala Harris? At the very least, either would make a great CEO for your nonprofit.