September 5, 2023 – Non-profit organizations in 2023 are facing inflation, declining donations, increased demand for services, workforce shortages, and more. A recent non-profit trends report by Forbes says that the changing workforce is presenting challenges for both for-profit and non-profit leaders. Being ready to consider alternative staffing options would put many of them ahead of the shifting landscape, says Forbes. Fractional staffing possibilities exist from the administrative level through the executive director level, says the report, and may be worthy of consideration for both short-term vacancies and long-term solutions. For senior-level positions, many leading non-profits are turning to executive search firms.
A search for a non-profit executive has much in common with any personnel search, and most boards have members who have hired many people in their careers. The distinctions in the hiring of an executive by a volunteer board, however, create special process issues, and a specialized search firm is best suited to address these, says a report from The Moran Company.
“Poorly executed searches may result in hiring delays, poor selection, loss of good candidates, or a difficult start for the new executive,” the firm said. “A strong search process that is well articulated, adopted by the board, and enforced by leadership of the board prevents these problems. Since by design, a volunteer board relies on management and leadership from paid staff, there’s a natural gap when a board begins its search and the selected firm steps into that gap.”
Search consultants are a valuable resource who have seen it all (almost) and are ready to help navigate troubled waters. “But all boards and searches benefit from a clear process that anticipates every step – and just as important, a search chair with the authority and assertiveness to enforce the process,” The Moran Company said.
“Demand for executive search among our non-profit leaders continues to be very strong,” said Sara Lundberg as managing partner, North America non-profit practice at DHR Global. “Some experienced a modest slowdown in Q1, but have seen continued and strong demand across the sector. We see some clients experiencing dramatic growth, and with those groups, we are being brought on to fill ever-expanding needs, recruiting for multiple roles, particularly to increase expertise at the senior level as organizations – and their needs – become more complex.”
“We are seeing an increased demand for skilled CHROs,” Ms. Lundberg said. “As organizations settle into new ways of doing things, and as continued hybrid work and remote structures pressure leadership to adapt, non-profits are turning to us to help them find more skilled HR leaders who can help them to manage people in new ways, as well as build and grow teams, and the culture that binds them.”
“In general, non-profit employees are liberal in politics and nature, and there are now certain states in the country – Florida, Texas, Tennessee among them – where candidates are reluctant to work,” said James Abruzzo, managing partner, global non-profit practice at DHR. “These are direct responses to the changing political environments and it’s having a serious impact on non-profits, even those in cities with more liberal bents.” “We are seeing much more transparency in search processes,” said Ms. Lundberg.
“Non-profits are increasingly using staff hiring panels to build buy-in for hires. While this addition slows a search process, we are finding that non-profits – and their new hires – benefit from the increased inclusivity and the diversity of views. Candidates are leading with questions about work location and arrangement. Non-profits who have not adopted hybrid or flexible work arrangements are losing out on candidates who grew accustomed to flexibility.”
Because there are fewer non-profit jobs than corporate jobs, and lower compensation in our sector, the current economic environment is having even more of an impact on non-profits, according to Mr. Abruzzo. “Human service jobs in states challenged by soaring homelessness, like New York and California, are becoming harder to fill as the challenges those organizations face feel increasingly insurmountable. During the pandemic, many non-profit executives postponed their retirement and we are now seeing many leaders transition. The sector hasn’t invested in enough in building successors and is suffering as a result.”
Non-profit executive searches are incredibly active right now, according to Deb Taft, CEO of Lindauer. “Talent shortages preceded the pandemic, and competition for leadership talent has only grown more fierce as organizations adjust to the social, cultural, and economic transformations galvanized by the Great Resignation and Great Recalibration,” she said. “The pandemic prompted people to reflect deeply on what they value most and how they might reconfigure their lives to craft an improved work-life approach. Global protests inspired professionals to think expansively about the role institutions play in creating, reinforcing, and perpetuating systemic racism.”
Switching Career Paths
“As a result, fundraisers and C-suite non-profit leaders have been leaving jobs and, in some cases, switching career paths in search of positions or sectors with which they feel more value alignment,” Ms. Taft said. “At the same time, non-profits spent the past few years planning and preparing for ambitious fundraising campaigns and are now moving ahead with initiatives. There is voracious demand to hire and develop advancement staff who will engage donors, raise historic sums, and fuel these aspirations.”
7 Key Trends Impacting Non-Profits
Having arrived at the halfway point of the year, the non-profit and social impact practice at Koya Partners | Diversified Search Group, recently pulled together some key trends they have been seeing. In a new report, managing directors Michelle Bonoan and Marissa Delgado and managing associate Tiara Muse identified seven key themes.
Ms. Taft also notes that non-profits now have critical positions to fill in a very competitive job market. “It is a challenging time, but one that presents organizations with opportunities to evaluate what can be done to engage, retain, and attract top talent,” she said. “Some leaders are taking measures to respond to shifting workforce expectations, creating more flexible hybrid work arrangements. Embracing these policies and practices is a bare minimum, however. On a deeper, systemic level, organizations are finding they must be open to reshaping their cultures to ensure staff have the support they need, feel connected to community and mission purpose, and see pathways to grow as people and professionals.”
Economic uncertainty is very much in the minds of institutional leaders and boards. The 2023 Giving USA Report from The Giving Institute, Ms. Taft says, also highlights some challenging trends in philanthropy. While the non-profit sector expected some giving correction in 2023 from the prior few years, the 13.4 percent drop in giving by individuals and 10.5 percent decrease in overall giving from all sources raised questions about economic trends influencing individuals’ capacity and inclination to support causes they care about. “Longitudinal charitable giving data reveals that non-profits will call upon their creativity, ingenuity, and resilience to move beyond this recent down-cycle,” Ms. Taft said.
“Non-profit environments are not immune to many other global workplace trends,” said Ms. Taft. “Turnover in top leadership remains high, and staff turnover tends to follow suit within one to three years. Enormous resources are going to hiring, onboarding, and organizational realignment and stabilization work. Employees who stay are expressing frustration or quiet quitting in the face of carrying extra burden amidst the churn and staffing deficits, resulting in high burnout and decreases in employee satisfaction.”
“The non-profit sector is highly active right now,” said Sally Stetson, co-founder and managing partner at Salveson Stetson Group. “Much of this is due to the number of CEOs and executive directors preparing to retire. This is a particular challenge for non-profit organizations as they typically do not have a deep bench of talent to access for internal succession candidates. We have also noticed a trend in the non-profit sector around organizations elevating their talent to meet the changing needs of their mission and focus.”
Ms. Stetson also notes that the non-profit sector tends to be attractive to senior executives from the for-profit sector because there is a perception that the work will be more meaningful. “They are seeking that focus in the latter part of their career,” she said. “Many executives believe it will be less demanding, but they are often surprised by the added financial pressures and extended responsibilities of attending and supporting fundraising and other community events.”
Struggling to Identify Talent
The current challenges non-profits are facing aren’t all that different from the past, according to Ms. Stetson. “Financial challenges tend to top the list,” she said. “Non-profits constantly strive to diversify their funding sources and increase their fundraising capabilities. Non-profits also struggle to identify and retain talent while faced with an aging workforce and a limited ability to build a bench of talent. This makes it very tough for non-profits to develop talent strategies and succession plans to support their organizational objectives. Additionally, attracting committed board members who can offer dedicated support and fundraising continues to challenge non-profits.”
Executive search for non-profits is currently driven by several key factors that reflect the changing landscape and evolving needs of the sector, according to Nat Schiffer, managing partner at The Christopher Group. “Firstly, there is a significant focus on leadership succession planning as long-serving executives retire or transition to new roles,” he said. “Non-profit organizations are recognizing the importance of effective succession planning to ensure a smooth transition and maintain organizational stability. Secondly, there is a growing demand for leaders with diverse skills and expertise. As the non-profit sector becomes more professionalized, organizations require executives with business acumen, strategic thinking, financial management, and innovation skills, alongside a deep understanding of the non-profit landscape. Moreover, there is an increased emphasis on diversity, equity, and inclusion within non-profit leadership teams. Recognizing the value of diverse perspectives and experiences, organizations are actively seeking executives from underrepresented backgrounds to enrich decision-making and align with sector values.”
“Additionally, the adoption of technology within the non-profit sector has driven the need for executives with strong digital strategies, data analytics, and technology implementation skills,” Mr. Schiffer said. “Non-profits are leveraging technology to streamline operations, improve efficiency, and enhance their impact. Another driving force in executive search is the growing focus on impact measurement and outcomes. Donors, funders, and stakeholders are placing greater importance on quantifiable results, prompting non-profit organizations to seek executives with a track record of driving measurable outcomes and implementing robust evaluation frameworks.”
“We have seen an increase in the use of executive search for a whole range of roles in the non-profit sector, from program officer positions, through to C-suite, and board member appointments,” said Siobhan Doherty, partner, regional practice head, social impact and environment, Americas at Perrett Laver. “This trend really accelerated during the pandemic, when organizations began experiencing what was widely labelled, the great resignation.”
Non-profit HR’s 2021 Non-Profit Talent Retention Practices Survey found that 42 percent of responding non-profit leaders expected their employee turnover rates to increase in the following year, and 80 percent of respondents said that their organizations did not have a talent retention strategy in place. “The rate of turnover, at all levels within organizations, certainly seemed to come as a shock to the sector, particularly after a number of senior leaders had made the decision to stay in place in 2020 and see their organizations through the initial phases of the pandemic,” Ms. Doherty said. “A range of factors, from burnout to a shift in donor behavior, to the impact of George Floyd’s murder, all served at the macro level to creating more role vacancies. However, these trends are not only having a negative impact on the sector. We have seen an increase in the use of executive search for non-profits as these organizations address the critical need for successful DEI and sustainability practices, which must be driven in part by representative leaders. We partner closely with our non-profit clients and the candidates we are supporting in our searches, to address these challenges, including the glass cliff phenomenon impact leaders of color, in particular.”
“We have seen a slight decrease in demand for search compared to last year, which was an unusual year with unprecedented demand,” said Molly Brennan, global managing partner, non-profit and social impact practice at Diversified Search Group. “I think we are returning to a baseline, healthy level. A significant factor driving demand now is a generational shift in leadership. We are seeing very high numbers of founders and long-time leaders retiring, opening the door for new leaders to step in.”
Ms. Brennan also says that the motivation to align careers with personal values that spiked during COVID is still very strong. “We are seeing a number of leaders for the private sector who are interested in a second career that is more explicitly focused on mission-driven social impact work,” she said.
“One of the most significant and oft-mentioned challenges that non-profit leaders are grappling with right is managing a diverse, multi-generational workforce that continues to expect more from its employers than previous generations – especially around social impact, career development, organizational culture, and work-life balance,” said Ms. Brennan. “We also have noted that leaders are focused on strategically and proactively developing internal talent and planning for successions.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media