Charity is everybody's business - do we know enough about the leaders?

Press release from the David Hume Institute

7th February 2022

New research shows a lack of diversity in Scotland’s top charity leaders.

Scotland’s leading independent think tank, the David Hume Institute, today publishes new research finding a lack of diversity in Scotland’s highest income charities.

The top 300 charities by income represent just 1% of the total charities in Scotland and control over £10 billion each year - 73% of the sector's total annual income - but their leaders are not representative of the communities they serve.

The research, which analyses the backgrounds of the chairs and chief executives of the 300 highest income charities in Scotland, finds that:

• Only 1 in 3 leaders (34%) are women and only 1 in 50 (2%) are black or Asian, compared to 10% female and 1% people from ethnic minorities in business and investment leaders

• 1 in 25 (4%) hold a top leadership position in another one of the top 300 charities. 

The research showed the picture is not uniform across the top 300 charities which include universities, colleges, housing associations, fee-paying schools, health and social care charities. 

Researchers also found it harder to find information about some organisations and their leaders than for other sectors in Scotland. There was less diversity and transparency for religious organisations and school leaders.

Susan Murray, director of the David Hume Institute, says:

“In a sector that is often associated with bake sales rather than billions in income, many will be surprised at the scale and the range of charities analysed in this research. 

“We thought we would find it easier to find out about leaders in this sector and that was not the case across the board.  

“Charitable status comes with high levels of public trust and tax breaks, as well as the legal responsibility to deliver public benefit. But not all organisations are open about who is in control. It is hard for the public to hold people to account if they don’t know who they are.” 

Unlike businesses, there is no searchable public register of who is making the decisions and it is difficult to find out when an individual is connected to multiple charities. Before the creation of Scottish Charitable Incorporated Organisations) many more charities were limited companies and were required to declare their directors.

The research recommends an extension of the Scottish Charity Regulator’s (OSCR) powers to create a publicly searchable register of charity trustees to bring them in line with company directors. This change will increase transparency and enable monitoring on diversity. 

The research found one significant difference to the recent analysis of business leaders; there was a wider range of experience in the two key leadership positions, often with the Chair and CEO having professional backgrounds. In both roles, the public sector was the most common background at 18% and 19% respectively:

Susan Murray, Director of the David Hume Institute, continued:

“Scotland needs all its current top leaders to actively champion diversity and provide the opportunities to ensure faster progress. 

“Increasing diversity of thought is in everyone’s interests as it helps avoid the pitfalls of group think, and improves risk management and productivity. More equal societies have higher productivity, and high productivity allows more investment to create more equal societies. 

“Charity leaders are no different and if anything, have more responsibility to champion diversity given their legal duty to deliver public benefit.”

Blog: To field our best team we need a more diverse squad

Blog by Susan Murray, the David Hume Institute

6th September 2021

As the football transfer deadline day passed last week, many teams made key appointments to their squads. Player’s data and match statistics underpinned transfer decisions. It’s no different in business: data matters and should affect the choices being made. 

However, new data from the David Hume Institute shows that business leaders are limiting Scotland’s potential by not prioritising diversity in their top decision makers.  Diversity of thought increases resilience, productivity and innovation as well as improving risk management.  Scotland’s top team is missing out.

The research investigated investment and angel investment leaders in Scotland.  Scotland’s investment companies have less diversity at the top than companies elsewhere in the UK. Although angel investment leaders are more diverse than the bigger companies.

The data on who is, and isn’t securing business investment and who can access the resources to grow is shocking - and again, limiting potential.

The data shows those with resources and connections are more able to reach the top.  This limits the pool of top decision makers and risks group-think - a risk Scotland should be aware of after the last financial crisis.

Business and investment leaders lag behind other sectors, and are not responding to the data linking diversity of thought with successful outcomes.  

So why isn’t change happening faster? 

Studies from around the world show overt and covert bias is limiting the pool - so this is a great opportunity.  Awareness is the first step - just like players on a football pitch, knowing your own statistics helps improvement.  Leaders have the power to champion and deliver change in Scotland.

Three out of ten of the top 50 business leaders also hold positions on other boards, meaning they can influence change beyond their own companies.  Similarly, the power to decide who gets investment is in the hands of the investment leaders.

Why does this matter? Improving gender diversity alone could add up to £250 billion of new value to the UK economy, if women’s new businesses were invested in and scaled up at the same rate as men’s. If women’s participation rates matched men’s there would be the potential of c.35,000 more direct jobs in the Scottish economy.

The leaders have the power to bring change. The country has big challenges ahead and leaders need to rise to those challenges.  Scotland needs its top team on the pitch.

The IOD conference last week challenged Scotland’s Directors to think about the IPCC code red: “the costs of inaction on climate change are greater than the cost of action.  There needs to be a bias towards change rather than a bias against it.”  

The same is true of diversity of thought.  The benefits are widely known and there are costs to inaction.  It's time for Scotland’s top business and investment leaders to bring more breadth to their squad and champion change.

This piece was originally published in The Times on 6th September.

New research shows business and investment leaders are limiting Scotland's potential

Press release from the David Hume Institute

6th September 2021

The David Hume Institute is challenging business and investment leaders to embrace change to realise the benefits of greater diversity in top leadership roles.

Scotland’s leading independent think tank, the David Hume Institute, today publishes new research finding a shocking lack of diversity in the top 200 business and investment leaders, less than in previous sectors analysed by the Institute.

Faster growth in diversity at the top level is needed if Scotland is going to benefit from a wider spectrum of thought leadership to maximise the country’s ability to overcome challenges such as increasing  productivity, innovation and improving risk management.

The research analysed the leaders of top businesses, investment companies, angel investors and family businesses in Scotland. The analysis found: 

• There are still more leaders called John than there are female leaders (7% John and 5% female)

• One in four (26%) have held positions at four services companies (Accenture, EY, McKinsey, PwC)

• 2 out of 3 (65%) of investment company leaders attended an elite university with 1 in 5 of these attending Oxford or Cambridge.  This compares to 49% of Angel Investment leaders who attended an elite university.

• 9% of investment company leaders are female - falling behind the UK average (13%)

• 1 in 5 (20%) of angel investor leaders are female - higher gender diversity than others in the business sector

With 31% of the top business leaders also holding positions on other boards, this narrow pool of decision makers has significant influence beyond their own companies.  

Understanding the diversity of who is making investment decisions in Scotland is critical as access to capital is cited as one of the barriers for increasing entrepreneurs from female and minority backgrounds. 

The research also found

• Three out of ten (31%) top leaders have postgraduate qualifications with 39% of these are MBAs.  

Postgraduate education is becoming the norm for top leaders, so decision makers need to be mindful of who has access to postgraduate education if they want to reap the benefits of diversity of thought.

Susan Murray, director of the David Hume Institute, says:

“The David Hume Institute’s research clearly shows limited diversity of Scotland’s top business and investment leaders. Scotland needs its business leaders to not only champion diversity across their organisations.  They need to be open to more immediate change at the most senior level to reap the benefits of more diverse thinking now.

“Currently those with resources and connections are more able to reach the top.  This limits the pool of top decision makers meaning organisations are risking group-think.  Diversity of thought helps risk analysis, innovation and productivity.

“Every business leader must choose to prioritise diversity of thought as we recover from the pandemic if Scotland’s businesses are to increase productivity and resilience to future risks.  For Scotland to be in the Champions’ League for business and investment we need a more diverse squad.”

Blog: The new Parliament is not business as usual

Blog by Lucy Higginson, David Hume Institute

May 2021

With sanitiser stations, record postal votes and social distancing stretching queues to vote long into the distance, the Scottish Parliament 2021 election was very much not business as usual. The next term of Parliament won’t be either.

The 2021 Scottish Parliament election was billed as being one of the most diverse yet. History was made twice in Glasgow with Pam Duncan-Glancy being the first wheelchair user and Kaukab Stewart and Pam Gosal being the first two women of colour to be elected to the Scottish Parliament. Also striking was the number of international perspectives from candidates who had left Scotland as young children but returned to settle as adults.  

Pam Duncan-Glancy’s 45-minute wait outside of the counting hall when security didn’t believe that she was a candidate brought home the level of change still needed.  In the last session, Jeremy Balfour was the only MSP with a physical disability.  Pam, Jeremy and Kaukab are trailblazers but Parliament is still not representative of wider society. 

In our 2020 analysis of Scottish Parliament less than 2% of MSPs were from a minority ethnic background and of these, all were educated at fee-paying schools. As we analyse the 2021 intake there is a shift, but there is still more to do. 

There is other good news: turnout and engagement in the election was high. There were big changes at Holyrood this year as a number of longstanding MSPs stood down. Many of their replacements only entered politics in recent years and come with a wide range of life experience which will help add to diversity of thought.

As we welcome new and returning MSPs, Scotland must unite to build forward better from the pandemic. Our latest research shows that 3 in 4 people want to take action by being kinder to one another. People are helping neighbours and making more conscious choices with money. Through research conversations apathy with politics and constitutional arguments was passionately voiced. Despite that apathy, high turnout in this election shows high engagement.

Community featured strongly in acceptance speeches, along with sign language from one candidate to send a message to her dad. Listening and learning from the communities they serve will be critical for politicians of all persuasions and they will need to work together for Scotland’s future.

As we emerge from Covid, it leaves us with stark inequalities. Diversity of thought will be critical to recovery.  New decision makers at Holyrood are an indication of progress but much, much more needs to be done for Scotland’s economy to benefit from increasing diversity in the labour market and wider society. There is a clear link between high levels of equality and high productivity in countries like Denmark and this should not be ignored.

We will be publishing a full briefing on diversity in the Scottish Parliament later in the week, once all the data is analysed. (Update: read the briefing here).

Challenge for Change - diversity and economics

Challenging misconceptions about economics is essential to attract more diverse people into the profession. It’s time to bin the assumption that economics is just maths and a bit of money, and recognise the role it plays in changing our society. 

Dr Arun Advani and Mairi Spowage discussed at a recent David Hume Institute event the current lack of diversity in economics - both in economists and the subjects of economics research.  

Dr Advani’s research investigates diversity of academic economists and the topics of research papers compared to other social science subjects. For instance, economic papers related to race by volume of publications are at the same level political science was 30 years ago and where sociology was 40 years ago. The research also highlights how economists overestimated how much research was undertaken related to race. 

Arun and Mairi discussed how lack of different life experiences can lead researchers to make assumptions and not thoroughly interrogate data.  Increasing diversity of thought in the profession will help ensure rigorous research questioning and help to reduce the risk of bias.

Arun and Mairi also discussed the need to change the perception of economics as an area of study. Too often economics is painted as a field of maths or a subject solely focussed on money, rather than a social science open to interpretation. Economics can be about all areas of social policy and human behaviour - and is virtually limitless in the topics it can analyse.

The challenge is to shake off the old image and encourage more people into the profession both from school and career changers.  Mairi herself followed an unusual route into the profession with her early career being in statistics.

Watch the full event again here:

Find out more about David Hume Institute’s work on diversity of leaders in Scotland. 

Blog: Are we picking the right top team?

by Lucy Higginson, David Hume Institute

8th October 2020

Have you ever looked around a meeting room and noticed lots of similar people?  The David Hume Institute’s latest research shows that the top leaders in Scotland do not reflect the diversity of the country. 

Diversity of thought and different life experiences can help problem solving and the ability of organisations to face shocks and build sustainably.

Lack of diversity in leaders is a threat which can lead to groupthink.  Investment companies like Baillie Gifford and Blackrock are increasingly analysing leadership diversity because of the links to increased profit and innovation. 

If I am honest, I thought the data would have shown more change in the five years since the Institute first undertook research with the Social Mobility Commission. 

We know work by organisations like the ICAS Foundation and the Law Society of Scotland is broadening entrants to their professions. Changing the Chemistry has been championing diversity of thought on boards since 2012 and the National Advisory Council on Women and Girls is now in its third year. Initiatives like Pass the Mic and Equate Scotland’s speaker lists are helping to broaden the voices heard in the media.

But this week the issue at the top of the legal profession was highlighted by Supreme Court Judge Lord Reed’s comments on the lack of diversity in our top courts. And, last month the experience of barrister Alexandra Wilson highlighted unconscious bias in the legal profession in England.  Law along with Business were the two sectors we found least diversity in the top leaders in Scotland.

Change is happening but it needs to happen faster at the top.

At the current rate, I will be retiring before the top leaders in Scotland are representative of the population.  

Why does this matter? 

We have big challenges on the road ahead.  The aftermath of Covid-19 and the immediacy of climate change means business as usual is not an option.  There is no time for fixed mindsets, leaders need to be open to being challenged.  Digital disruption means many new opportunities but there will also be risks. We need every leader to be on their a-game.

The challenges ahead mean Scotland needs all of our current top leaders to actively champion diversity and proactively provide the opportunities to ensure faster progress for everyone’s benefit.

It is time for deeds not words.