Demand Intensifies From Non-Profits Seeking Senior Talent

August 9, 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.

Continued Demand
“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.”

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.”

In recent Washburn and McGoldrick data on non-profit advancement, 52 percent of respondents cited staff shortages and resignations as major challenges going forward, with burnout/uncertainty and staff morale ranking immediately behind. “And while the pressure to return to the office remains high in the non-profit sector, employees are resisting the return, with the majority seeking flexible hybrid arrangements,” Ms. Taft said. “And it’s important to note that most organizations that instituted aggressive return-to-office policies are not seeing higher productivity results; productivity is proving higher in hybrid work modes.”

“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.”

Ms. Stetson says that Salveson Stetson Group aims to have multiple diverse candidates on every slate, which is true for all executive searches they conduct in the non-profit sector. “Non-profits tend to have a more diverse workforce in general, which is attractive to candidates,” she said. “I wouldn’t say it’s easier or harder to attract candidates for non-profits, but when an organization can provide clarity on its culture, vision, and mission, it’s much easier to match that with a candidate’s passion and purpose. So, finding executive talent to enhance and build on the culture, vision, and mission becomes much easier.”

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,” he 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.”

Mr. Schiffer says that non-profit organizations face a range of challenges that impact their operations, sustainability, and mission fulfillment. He points to key challenges including funding and financial sustainability, as securing consistent resources is often difficult. “The competitive landscape for resources and donor support poses an ongoing challenge, requiring non-profits to differentiate themselves effectively,” Mr. Schiffer said. “Adapting to changing regulations and policies can be demanding, requiring compliance with legal frameworks and reporting requirements. Volunteer recruitment and retention can also be challenging, given evolving societal dynamics and increasing demands on individuals’ time. Furthermore, non-profits often compete with other sectors for talent, making recruitment and retention difficult. Demonstrating impact and measuring outcomes requires robust monitoring and evaluation systems, which can be resource-intensive. Board governance and leadership are crucial, but recruiting qualified board members and fostering effective governance practices can be challenging. Adapting to technological advancements is vital, yet limited resources and digital literacy can hinder progress. External factors such as economic downturns, natural disasters, and public health emergencies can disrupt operations and strain resources.”

“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.”

Non-profits face myriad challenges at both macro and micro levels today, according to Erik Jackson, partner at Perrett Laver. “Many non-profits are still working to recover from the pandemic, which affected parts of the sector in very different ways, from entire shifts in strategy, to the challenge of getting staff to return to the office or embrace new ways of working,” he said. “The trend of populism in many parts of the world has not abated, and there are countries where legal frameworks make it almost impossible to fundraise from abroad, or even register as a non-profit. Fundraising remains a clear challenge for many non-profits, exacerbated by turnover of fundraising staff and donor generosity remains tied to the health of wider economy despite innovations in fundraising.”

“In the U.K., the merger of DFID with the FCO, to create the FCDO in 2020, has left a gap in international funding, and in support of the aid sector as a whole,” Mr. Jackson said. “USAID localization processes and actions seek to put local actors in the lead, strengthen local systems, and be responsive to local communities; however, this is posing new challenges to non-profits who must develop new ways of working with, and through, local partners, handing over power without leaving a power and resource vacuum. Non-profits are increasingly having to wrestle with the need to demonstrate results, while empowering others and giving trust to both internal and external stakeholders. Finally, non-profits have a significant role to play in advocating for their partners and the communities they represent. Again, representative, inclusive and compassionate leadership is vital to success but institutionalized discrimination will take time to address and overcome. We seek to support our clients in taking on these challenges, and finding leaders who will identify the opportunities and solutions to help their organization and the sector thrive in the future.”

“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.”

Diverse Placements
More than half of Diversified’s placements in the non-profit and social impact sector identify as people of color. “We have a strong track record in this area as a result of years of strategic focus on
development diverse networks and internal training and learning around diversity, equity, and inclusion in the executive search process,” Ms. Brennan said. “I don’t think there is a single reason
why a diverse pool of candidates are attracted to one sector over another. Our population is diverse, and therefore candidate pools are diverse regardless of what sector you are looking at. What’s
different is the level of diversity as you move up the ladder in terms or seniority, and there are a wide range of factors that play into that, from systemic racism that has limited opportunities for advancement for certain people to economic realities that make a lower paying job in the non-profit sector less feasible for some.”

“Over the past two years, demand for executive searches across the non-profit sector has increased in volume,” said Ericka Miller, president and CEO of Isaacson, Miller. “While we’re not seeing the intensity of unexpected leadership change that we experienced in 2021 and 2022, 2023 continues to be a strong year for executive search activity across the mission-driven sector. Primary growth drivers include increased demand for leaders who can scale organizations and institutions, a rising call for equitable, diverse, and inclusive leadership that effectively engages internal and external communities, a heightened focus on leadership in healthcare and academic medicine to address our most pressing public health challenges, and an increase in demand for inaugural leaders at STEM organizations focused on innovation.”

Senior leaders who successfully steered organizations through the depths of the pandemic experienced stress and burnout, according to Ms. Miller. “This yielded earlier than planned retirements and departures mid- and post pandemic,” she said. “New leaders are now taking the helm and reimagining what a post-pandemic workplace needs in order to thrive. The racial reckoning across the nation inspired many organizations to focus intently on equity, diversity, and inclusion resulting in the creation of roles to lead these initiatives. With technological innovation advancing at a rapid pace, non-profit organizations at the intersection of science, technology, and society, are calling on executive search firms to fill newly created roles. STEM- focused legacy institutions, higher education institutions, and startups alike must ensure that program offerings and operational procedures align with contemporary needs, while pushing into new frontiers of research and development. Inaugural leaders are in high demand to pioneer these cutting-edge endeavors. Organizations across the non-profit sector are calling on innovative leaders to solve complex problems in our current climate.”

Ms. Miller notes that during and post pandemic, non-profit organizations, especially those across the health and human services sector, saw a greater demand for services. “Alongside an increased need for aid, the current economic climate, thick with rate hikes and inflation, is yielding a decline in donations,” she said. “Many organizations are struggling to absorb increased costs driven by demand while facing declining resources. Higher education institutions are also facing heightened attention to issues of cost and access, and some are confronting declining enrollment. Leadership across the board is facing a greater need to think strategically about potential opportunities for increased revenue from new and expanded programs.”

Keeping Up With Technology
Non-profit organizations across all sectors also continue to race to keep up with advances in technology, Ms. Miller notes. “Higher education institutions are incorporating digital and online tools to drive educational and administrative activities,” she said. “These advances are challenging non-profit leaders across all sectors to adapt and innovate new processes and delivery methods.”

Some non-profit sectors attract and cultivate strong and diverse pipelines of up-and-coming leadership, while others have historically faced challenges with respect to diversity, according to Ms. Miller. “For sectors in which there are a lower number of leaders from underrepresented backgrounds, intentional professional development of managers and C-suite leaders is key,” she said. “With regard to successful executive searches in fields that have historically lacked leaders from underrepresented backgrounds, there must be a strong partnership among the search consultants, the organization’s search committee members, and the decision-maker. A commitment to investing time in substantive conversations with potential candidates and sources of candidate names, sincerity in those conversations, and openness to different professional backgrounds are critical to recruiting diverse leadership across the civic sector.”

“Our executive search non-profit practice has never been more robust,” said Shelli Herman, founder and president of Shelli Herman and Associates. “We are consistently being asked to work with boards to replace C-suite leadership in an ongoing and decisive manner. The pandemic took a lot out of leaders, both those with decades of experience and those new to their positions. Now that organizations are out of the worst parts of the crisis, executives are making the decision to exit either because they are just exhausted or because they want to shift gears in some meaningful way. We are also seeing CEOs decide to retire early or pursue personal passion projects like coaching or volunteer and/or paid board work. Even outside of the strain that global events placed on many non-profit executive teams, boards are asking a lot of leaders! CEOs used to stay 10 or more years in positions; now, five to eight years seems to be the more common tenure in the role. I anticipate the changes will continue to be pretty fluid and many leaders will transition away from their current organizations because of the ever changing and expanding expectations of their boards coming out of COVID.”

“These trends have prompted many organizations to seek outside partnership and to be more intentional when recruiting C-suite talent reporting to the chief executive, as they wisely understand that to be part of succession planning and long-term organizational stability,” Ms. Herman said. “A number of recent searches we have conducted were for repeat clients whose CEOs needed to find candidates who would fill the needs on their teams now, but who the organizations could invest in and cultivate as possible successors. The work has never been more important or more challenging.”

The war for talent at all levels in the sector has never been more pressing and organizations cannot find good people to do even the most basic jobs, according to Ms. Herman. “They cannot keep talent because other organizations lure them away with salary, work from home options, and other perks,” she said.

Ms. Herman recently had a client who had to close one of their most important service delivery sites because they could not find teachers or certified instructors to do the work, it was devastating for this organization, and they are not alone. “Until or unless non-profits start to run as a business or move away from the poverty mindset (meaning, thinking they cannot pay for talent and not seeing that as a necessary investment), this will continue to be a problem,” Ms. Herman said. “Author Dan Pallotta, who wrote Uncharitable, really had it right when he pinpointed the financial restraints on non-profits as the biggest way in which they undermine themselves. Specifically, he talked about paying staff at or below minimum wage as a core challenge in the sector. We are seeing this play out fully and it is disappointing. Funders need to step up to assist and donors need to begin seeing human capital funding as a central way in which these organizations get better and have a greater impact.”

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