By Debi Ghate
This post was originally published by The Philanthropy Roundtable on October 8, 2020.
Our readers know that The Philanthropy Roundtable has been watching legislative and legal actions in California carefully regarding corporate board governance. While the nonprofit sector has yet to be directly impacted, it’s simply a matter of time. The sector is clamoring for “disrupting philanthropy.” In fact, I was at a conference this week where a speaker had the confidence to tell the crowd that we needed to throw a Molotov cocktail of equity at current board structures because they are an establishment phenomenon holding down nonprofits. They may mean it.
California has started the process of forcing these changes. Gender quotas were first. Those are now being challenged through the courts, and the Roundtable has filed an amicus brief in support of the Pacific Legal Foundation’s case in Meland v. Padilla.
Once the first trial balloon gets successfully floated, it’s time to push forward, which is exactly what California has done. AB 979, signed into law by Gov. Gavin Newsom on September 30, requires publicly held corporations to have at least one director from an “underrepresented community” by the end of 2022. What is an underrepresented community? It’s “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identified as gay, lesbian, bisexual, or transgender.”
Sadly, it is now going to take litigation to challenge this unconstitutional law. Judicial Watch was quick to announce that it has filed a lawsuit on behalf of three California taxpayers. They are asking for an injunction to stop the enforcement of this law on the basis that AB 979 does not meet the strict scrutiny test required under California’s state constitution. (Read more about the case at Judicial Watch’s site.)
Looks like California is intent on throwing Molotov cocktails in the form of legislation at some corporate boards. They are testing the waters, but it is encouraging to see taxpayers stand their ground. The Roundtable will continue to monitor these developments as they occur.
Debi Ghate is the vice president of strategy and innovation at The Philanthropy Roundtable. The Roundtable’s vision is to build and sustain a vibrant American philanthropic movement that strengthens our free society.