A Look at 3 Unconscious Biases That Affect Nonprofit Board Decision-Making

Welcome to the boardroom jungle, where decisions that shape nonprofits’ futures are made. It’s a complex ecosystem where unconscious biases and heuristics (mental shortcuts) thrive, influencing decisions and relationships in ways we often don’t realize. Here, I’ll explore three unconscious biases and heuristics that make their presence felt in boardroom relationships, their impact and some strategies to manage them.

1. Recency Bias

Recency bias is our tendency to give greater importance to the most recent information we’ve encountered. This can lead to an overemphasis on recent events, trends, or outcomes, overshadowing long-term data and historical performance.

Cyndi Zagieboylo, CEO at the National Multiple Sclerosis Society, noted that things relevant to the organization’s mission often appear in the news. 

“With so much polarization of opinion and emotion on social issues, it seems a lot of news is relevant,” she said. “Ensuring open and respectful discussions about our organization’s social responsibility needs to be prioritized. Setting the stage and making space for thoughtful, respectful conversation is important in the formula for a good board agenda. Writing and processing the organization’s social responsibility principles has helped in decision-making around actions to take in response to social events and media.”

How board members look at revenue can also be impacted. Recency bias can result in decisions overly influenced by the latest quarterly results or recent market trends, ignoring the bigger picture. This can lead to “short-termism,” where strategic planning focuses on immediate gains rather than sustainable growth.

How can our tendency to focus on whatever we heard last be managed? Here’s where your strategic plan comes to the rescue. Regularly review long-term performance metrics alongside short-term results. Encourage board members to look at patterns over time rather than isolated events.

Winning organizations play the long game.

2. Survivorship Bias

Simply stated, survivorship bias refers to focusing too much on successes and overlooking losses. We make overly optimistic assessments while ignoring the lessons that can be gleaned from the failures. This results in conducting our business without a critical evaluation of risk.

Think back 10 years to 2014, the summer of the Ice Bucket Challenge. Remember board members asking about how/when you’d be doing your organization’s version? When will it go viral? Completely ignoring the many, many, challenges whose virality was limited to immediate family members?

GoodUnited is an organization that embraces the learn-lessons-from-failure mantra. 

“Failure was such a core element to what we were doing at the beginning of GoodUnited that it shifted our approach from a ‘we need to succeed now’ mindset to one based in ‘fail often and fail fast,’” Nick Blank, GoodUnited CEO said in his book "One-Click to Give."

Pushing back on survivorship bias involves actively seeking out and analyzing failures as well as successes. Fostering a culture where lessons learned from failures are valued as much as those from successes isn’t easy, but it pays off. 

3. Loss Aversion

Loss aversion is our tendency to prefer avoiding losses over acquiring equivalent gains. In other words, the pain of losing something is felt more acutely than the pleasure of gaining something of equal value. 

How much more, you ask? Imagine that I come up to you and give you $10. Pretty cool, and some of the pleasure pathways in your brain will be activated. Now imagine instead, I take $10 from you. Ouch. The pain you’d experience turns out to be roughly twice the pleasure you would have gotten from getting $10. We really value what we already have.

In the boardroom, loss aversion can lead to overly conservative decision-making. The fear of potential losses prevents taking calculated risks. Inertia sets in, and action is avoided. 

One useful question that will help avoid loss aversion is, “What will happen if we do nothing?” That mindset helps people see that inaction has costs and can be risky, too. 

Why These Biases Are Particularly Problematic in Boardrooms

Nonprofit boardrooms are environments where strategic decisions with long-term consequences are made. Biases like recency bias, survivorship bias and loss aversion can skew these decisions, leading to short-sightedness, overconfidence in certain strategies, and an aversion to taking necessary risks.

The thing that makes unconscious biases so pernicious is in the name — they’re unconscious. This means they operate entirely out of our awareness and are completely inaccessible to us. That’s hard to wrap our heads around. It’s kind of spooky, in fact. 

A study at Princeton University found that even when people accept the idea of unconscious biases, they think it affects others more than themselves. More than 85% of Americans believe they are affected less by unconscious bias than the average American. And less than 1% think they are affected more than average. But somebody’s got to be average. This is now referred to as the “bias blind spot.”   

Understanding and managing these biases is crucial for effective boardroom decision-making. We can mitigate their impact by valuing diverse perspectives, considering long-term data alongside recent trends and balancing risks with potential rewards. 

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.