October 15, 2007 Don McNamara
Students work together during break-out discussions at a Blueprint for Leadership session presented by the Center for Nonprofit Management in Dallas.
The future is here.
That’s a good thing, isn’t it?
It is not good if the future is the projected gap, possibly a chasm, between the number of senior-level managers at nonprofit organizations and the numbers of lower-level employees who would be in line to replace them.
The Bridgespan Group, a nonprofit management support organization in New York, Boston and San Francisco, has published a report, “The Nonprofit Sector’s Leadership Deficit,” that presents a gloomy forecast for nonprofit leadership down the road.
The report projects that the number of new senior managers needed would increase from 56,000 to 78,000 between 2006 to 2016. Worse, it projects a cumulative total of 640,000 senior positions that will need to be filled.
Thomas Tierney, founder of the Bridgespan Group and chief author of the report, said he saw the trend more than five years ago, when he worked at the for-profit consultant Bain and Company in Massachusetts. “It became clear in 2000-2001 that many of the organizations we were serving were finding it difficult to build their own organizations. And, most of our clients were trying to do more, serve 5,000 children instead of 1,000, for example,” Tierney said. “When they’re growing, they need more bench depth. Clients were having a hard time finding CFOs and CEOs, and they were having succession problems.”
Money is an ongoing problem for nonprofits. Tierney said he understands that issue, but he didn’t see that as the chief problem. “The three ingredients are money, talent (that is, people) and a plan or strategy,” he said. “The biggest problem was talent.”
Tierney said that the 640,000 figure was reached based not only on the current situation but also on the expected growth in the number of nonprofit organizations. The figure does not include government or educational institutions.
He emphasized that the report refers to new executive jobs. By “executive,” he means the top seven positions, and by “new” he means people who are not in one of those jobs already.
Admitting that the growth of the sector is a variable, Tierney said that a different set of calibrations could move the number as low as 300,000 but that another set could bump it as high as 1.2 million.
“We noticed the gap a few years ago,” said Kala Stroup, president of American Humanics (AH), a national alliance of colleges, universities and nonprofits formed to educate, prepare, and certify professionals to strengthen and lead nonprofit organizations. AH has worked in coordination with Bridgespan.
Stroup added that AH has been working to advance awareness of all facets of the nonprofit sector, including trying to make college students more aware of it.
To that end, AH has established the Initiative for the Nonprofit Sector, based primarily on recruitment and retention issues. Stephen Bauer, director of the initiative, said it offers a certificate in nonprofit management that includes course work and an internship. AH also offers workshops and volunteer opportunities.
It is leading a coalition of 60 organizations that are studying and trying to address three crucial areas:
- Diversity at top and bottom;
- The effect of student debt on the sector (students can’t pay their loans on nonprofit entry-level pay); and,
- A national campaign to promote nonprofit careers.
“We agree there’s going to be a significant shortage (of managers),” said Don Crocker, president and CEO of The Support Center for Nonprofit Management in New York City. “We’re already seeing increasing numbers of senior managers retiring — CEO, CFO, etc. More people than ever are contacting us for interim executives. We’re training interim CEOs. The shortage is happening.”
That sentiment is widespread. “It (the shortage) is now, absolutely,” said Lisa Brown Morton, president and CEO of Nonprofit HR Solutions, an executive search firm in Washington, D.C., that deals only with nonprofits.
To address the issue, she sponsored “Who’s Got Next?,” a symposium held last month in Washington, D.C., (after this issue of The NonProfit Times went to press) to look at the leadership crisis among African-American-focused nonprofits.
Although the looming retirement of the Baby Boom generation is blamed for the upcoming managerial shortage, Brown Morton discerns other factors. “What we’re finding is an increase in the departure of long-term executive directors, founders and other professionals,” Brown Morton said. “They are leaving and there are not sufficient numbers of middle managers because nonprofits are not heavily staffed at middle management.”
Brown Morton attributed this problem to immediate financial constraints, as well as a lack of sufficient funding for capacity building. She also said there is a lack of commitment to human resources support because nonprofits are under tremendous pressure to devote money to programs and not administration.
She also noted that young people considering career options see the opportunity to make greater amounts of money in other sectors. As if all that is not enough, the transition from the for-profit world is not one that can be made automatically.
“I think it is largely a matter of understanding about how decisions are made,” Brown Morton said. “In nonprofits there is more consensus, decisions are made more slowly, decisions can be impacted by lack of resources or involvement of the board. There’s a lack of understanding (among for-profit executives) about involvement and integration of volunteers.”
Gayle A. Brandel, president and CEO of Professionals for Nonprofits, a staffing firm with offices in New York and Washington, D.C., that deals with nonprofits, agreed that the leadership gap already exists. “Nonprofit executive jobs are very hard, quite difficult,” said Brandel. “A lot of people are coming up to retirement age in the sector at the same time and are going to be difficult to replace.
“A lot of nonprofits are small and don’t have succession plans. They don’t have a milieu for their staff to be trained to become the next executive director of the organization. That is the problem,” she said. “There are many people in middle management, and organizations can’t prepare them. They use all their money to provide services, especially with high-risk groups. They just don’t have a lot of money to play with.”
Susan Lajoie Eagan, executive director of the Mandel Center for Nonprofit Organizations at Case Western Reserve University in Cleveland, acknowledged the retirement picture but also saw other difficulties leading to job burnout. “It is very much related to the challenges of fundraising and viability of organizations, also the difficulty of working with boards and volunteers,” Eagan said.
“Also, as financial pressures grow, it’s knowing how the economy could be anticipated. Volunteers are increasingly pressed in the amount of time they can devote. That will create even more pressure. There is difficulty down the line, not just filling positions but retaining people.”
“Succession, that’s a big topic I hear about now,” said Lewis Brindle, director of the George H. Heyman Jr. Center of Philanthropy and Fundraising at New York University. “Nonprofits themselves and boards of nonprofits and administrators are at a certain age, and there’s the fear – I don’t know if it will be true or not – that maybe the mission of the organization might not be in touch with the reality now. That might be a reason why people are not chomping at the bit to take over. I haven’t heard a good reason why.
“Another issue related to that regards the founder in the organization. How do you comfortably move the organization forward while the founder is still around?”
Brindle said there is also a new breed of nonprofit board member, for example people with hedge fund experience, who expect nonprofits to take on new ideas. “Organizations might have to take it up a notch and get in sync with donors,” he said. “Otherwise they’ll be unhappy and they’ll move on.”
The Initiative for the Nonprofit Sector is hoping to help address the deficit by addressing transition. “There is going to be large leadership transition,” Bauer said. “We want to work together to make that transition as smooth as possible.”
Bauer sees hope on the horizon, although he cautions that preparation will be crucial in the sector. “Studies show that younger people want leadership positions but don’t want leadership roles as currently defined,” Bauer said. In other words, they don’t want to spend 60 hours a week on the job; they want to have a life outside work. They value their out-of-office time.
“It is not that they’re less committed, definitely not. But the younger generation has ways of doing things that look a little different but are no less strong. Before, people were defined by the options available to them, but people now are defined by things like mobility, lifestyle and what technology has made possible,” he said.
“Leaders now are more hierarchical, but younger people are more co-worker based. Decision making will be a little different, and organizations are going to have to face that,” said Bauer. NPT