January 18, 2021 – What makes a not-for-profit organization great? Its mission, of course, as well as dedicated staff, volunteers, board members and various stakeholders. But according to executive recruiters, what may be most important is exceptional leadership – especially in such a politically-supercharged climate supported by a challenging economic environment. According to a new report just released by WittKieffer, leadership is ultimately the differentiator between an organization thriving or merely surviving.
What defines an exceptional non-profit CEO or executive director? Several key attributes come to mind, report recruiters who specialize in finding these mission-driven leaders: creative, credible, and communicative; the ability to inspire the ranks, raise funds and ensure long-term sustainability; understanding public policy, public relations, corporate partnerships, operational excellence and, most of all, strategic planning.
Hiring for key roles among charitable organizations took a hit during the pandemic, said leaders of search firms that serve non-profits. But business is starting to pick up. Healthcare and human service organizations, foundations, advocacy organizations, among others, have seen an expanding need for talent in areas like human resources, finance, and external relations – communications, marketing, and fundraising. There has also been a good share of for-profit executives shifting to the non-profit sector – a migration that has been underway but is now accelerating in the middle of a global pandemic and mass social upheaval.
Infusing Purpose and Direction
“Demand for talented CEOs will remain strong among non-profit organizations in 2021,” said Jim Zaniello, founder and president of Vetted Solutions. “Perhaps more than ever before, boards will rely on strong, innovative partners to provide direction and leadership. Boards will continue to look for people who can build capable, committed high-performing teams, and infuse the organization with a clear sense of purpose and direction.” Look for finance to be an area of focus, he said: “proven CFOs, who have the expertise to serve as a true business partner.” In other roles, said Mr. Zaniello, “look for more interest in finding ‘storytellers’ – solid communicators, who can help differentiate organizations in a crowded and busy environment.”
Trade associations and professional societies have been among the most active organizations in overall hiring within the sector, noted Mr. Zaniello. “Talented CEOs are especially sought after, as are key senior staff.” Not surprisingly, he said, dynamic CEOs are in high demand, as well as professionals with campaign and communication expertise who can help foundations and issue-focused non-profits advocate more effectively connect with wider circles of stakeholders.
“Interest in finding talent from the corporate side continues to be strong – especially among organizations that share certain key characteristics,” Mr. Zaniello said. “In part, that’s because non-profit organizations recognize they depend on exactly the same level of capable, inspiring leadership as the commercial business world.” They have committed, therefore, like their for-profit brethren, to finding CEOs and senior staff who are the best of the best, not just comfortable, acceptable candidates, and hires. “These professionals provide the support, compensation and resources leaders need to succeed,” said Mr. Zaniello. “And they demand that their search partners deliver to that level of expectation.”
A variety of factors are driving executives from the corporate side to look at the non-profit world as an attractive career path. Part of it is professional. “Non-profit organizations are growing in size and complexity,” said Mr. Zaniello. “Their reach and role in our society is growing. They demand dynamic, experienced, and committed people. They pose real leadership challenges. In my experience, that attracts the best of the best.”
Vetted Solutions has filled numerous top-drawer, non-profit leadership roles recently. Among them: the president and CEO of the American Peanut Council, the CEO for the CFA Society of New York, and the CEO for the Heart and Lung Society.
Executive recruiters are reporting something new in the world of non-profit talent: The emergence of a generation of leaders who make ‘purpose’ an important part of their career calculations. These executives often seek opportunities to make a real difference and to lead organizations that reflect their personal values and interests. Non-profits offer unique vantage points upon which to build successful leadership careers while actively participating in that process.
The Pandemic Impact
“When the pandemic first hit, there was a sudden slowdown as organizations adjusted to virtual work and the potential of decreased funding due to an economic slowdown,” said Molly Brennan, leader of the non-profit practice at Koya Partners, part of the Diversified Search Group. “This most significantly impacted organizations that were dependent on in-person activities for revenue, such as arts and culture organizations.” But the ensuing social unrest related to a national racial reckoning galvanized donors and progressive non-profit organizations, resulting in increased funding and hiring. “The sector rebounded and adapted to the new pandemic reality with remarkable resilience and creativity, and we expect hiring to remain strong into 2021,” she said.
Ms. Brennan says her firm has noted active hiring across the sector, with a particular increase in organizations focused on progressive issues, such as electoral politics and racial equity. “This was, and is, certainly tied to the election and the surge in financial support for many of these organizations,” she said. “But hiring has rebounded across the sector, including in the organizations initially hit most hard by the pandemic, such as cultural institutions and the healthcare sector.”
The last decade has seen an increase in executives migrating, or “crossing over” from the for-profit to the non-profit sector, and that has continued. “We’ve talked to many executives who feel a personal drive to align their work and their personal values and mission and see this as the right time to take that leap,” said Ms. Brennan. “Non-profits are more focused than ever on strong management skills and business acumen, which makes these candidates attractive in many ways.”
Responding to a Moment in History
The number of “sector-switchers” – leaders who move between the for-profit to the non-profit sectors – has held steady throughout the pandemic, according to recruiters. “But we have seen an increase in people doubling down on the issues and missions that they are most passionate about and positioning themselves for higher levels of responsibility and leadership,” said Ms. Brennan. “The pandemic and the social inequity it has starkly revealed, the election, and the racial reckoning that this country is experiencing have caused many to refocus their energy and commitment on causes that have personal meaning to them as a way of responding to this moment in our history.”
Mary Lee Montague, founder and chief consultant at Montague & Associates, said that many organizations are at a crossroads with a lot of heavy lifting in their future to get back on track, let alone survive, post COVID-19. “Strategic plans are being altered due to the pandemic and if an executive happened to be at a personal crossroad of ‘stay or go’ prior to the pandemic we are finding many now taking this time to pass the reins to the person who will do the necessary heavy lift, develop the new plan and see it implemented,” she said.
More importantly, Ms. Montague said that different management skills and experience have risen to the top of the candidate ‘must have’ list. Key criteria for leaders during and post-pandemic period includes: Empathy; short term strategy vs long term strategy; crisis management; dealing with financial unknowns and the development of contingency plans; creativity, hyper communications; and agility and the ability to think outside the box. “The future holds many tough decisions and not all leaders have the experience to deal with challenging what ifs in a calm, focused manner while managing a virtual team.”
Another set of skills which will finally rise to the top post-COVID-19 is a strong background in mergers, collaborations, consolidations and/or acquisitions, said Ms. Montague. “For many years there has been merger talk with little action. Post-COVID-19 will be the time to make put conversations into action.”
Strategic Hiring is Key
“Recruiting for non-profit executives slowed in 2020, but it’s coming back well as we move into 2021,” said Deb Taft, CEO of Lindauer. “While the pandemic caused hiring slowdowns and freezes last spring and summer, we saw some incredibly innovative recruiting approaches that kept mission delivery and revenue generation on track.” Organizations with strong boards and leaders used 2020 as a time to regroup and stay in good hiring shape, she said. “Top talent is still in demand and willing to make a move, and non-profits that secure that top talent will be in a far better position to emerge strongly from any downturn.”
“Organizations with strong governing boards and sophisticated leaders who have weathered previous downturns remain super focused on strategic hiring,” Ms. Taft said. “In the midst of staff cuts, they are still resourcing key roles and going to market. Revenue-producers; finance and operations leaders; marketing leaders; EVPs of diversity, equity and inclusion; digital evolutions of traditional roles; and, of course, expert chief executives are all strongly in play.”
Successful candidates emerge most often from the corporate arena when an organization is ready for, or truly requires, a leader with business skills and acumen, said Ms. Taft. “Turnarounds, transformations, and mergers are prime opportunities,” she said. “Successful candidates apply their competencies, however, understanding that mission-driven organizations have unique societal mandates. Bottom-line success is not enough, and not the reason for a public charity’s existence. With a healthy financial and operating infrastructure, the delivery of impact for patients, research, youth programming, education, or social service must be achieved,” she added.
As in any economic downturn, executives in 2021 are seeking new career paths in the non-profit sector. And inquiries from career-changers are up markedly, said Ms. Taft. “The strongest candidates have thought through a sector move and aren’t just window-shopping. They bring some experience with mission-driven non-profits and understand the real application of their transferable skills in a non-profit context.”
The continuing pandemic and a sustained focus on racial injustice are forcing executives to reflect on their professional lives in a deeper way, Ms. Taft said. “Leaders want more societal meaning and mission impact in their day jobs and career choices.” That makes non-profits incredibly compelling, she said. “Leaders have many of the same business and organizational challenges that call on their skills, but typically find a richness of community and meaning that was missing in their prior roles.”
No Grace Period for Leaders
“Recruiting at the senior level, especially for C-suite executives within the non-profit sector, has continued to be very active, despite the disruption in the past year,” said Shelli Herman, president of Shelli Herman and Associates. “This is because organizations will always need talent at the top level to provide aspirational and strategic leadership for the entire enterprise. It is not feasible for non-profits to have vacancies in these positions; they require exceptional senior executives to guide the organization and do mission-critical work. Where we have seen slowed activity is at the mid-level or for lower-level positions that are perceived as less essential to achieving mission.”
Non-profit organizations have been actively hiring across the board, but this is especially true for organizations providing on the ground services, she said. “These non-profits are more active now than ever, as they have seen needs increase in the communities that they serve in response to world events.”
In this market, it is rare for viable candidates to emerge from corporate backgrounds, according to Ms. Herman. “Organizations are increasingly looking to hire people who can start providing transformational and effective leadership from day one; there is not much of a grace period for new executives to get up to speed,” she said. “This means that successful candidates are those who are already connected to the work, already understand how to speak to and motivate a mission-driven staff and community, and who have strong knowledge of how non-profit organizations function and can excel.” One functional area where cross-sector hires occur more frequently and quite successfully is in finance roles, she noted, where corporate experience can be translated to non-profit environments.
Ms. Herman said that in the cases where she sees executives looking to move into the non-profit sector from corporate environments, it is primarily people in senior career roles who are looking for a capstone role prior to retirement. “These leaders often begin evaluating non-profit roles when they feel they have a limited amount of time left to their career, expertise to share, and are looking for a way to connect their values to their work in a position where they can give back,” she said.
There are many factors unique to hiring non-profit executives in the middle of a pandemic. “Boards had a chance to witness real leadership or the lack thereof over the past nine or 10 months and some of our clients decided it was time for a change,” said Tim Tolan, CEO and managing partner of The Tolan Group. “This required more use of virtual interviews to evaluate candidates and working with search committees virtually to assess and discuss candidates for each engagement. Our non-profit engagements lately involved search committees making hiring decisions based on the virtual interactions with the candidates along with the other vetting procedures we use. Hiring is definitely picking up now compared to the spring when our non-profit clients were in a holding pattern when the pandemic first hit the U.S.”
Mr. Tolan said that at the executive level, behavioral health and family and human services were actively engaged in recruiting during COVID-19. “We don’t see that slowing down. In some cases, the engagements were already planned as CEOs were retiring and in other cases it was purely a need to top-grade leadership.” In his view, the non-profit sector remains active but not as active as it was pre-pandemic.
“Quite frankly many of our engagements require a broad slate of candidates including former corporate executives,” Mr. Tolan said. “They bring a fresh perspective to the table and tend to be more business savvy when it comes to fundraising and scaling the organization. We therefore generally have candidates with corporate backgrounds in most engagements.”
“We see a large number of candidates from the corporate sector that are looking for ways to make a difference and to find ways to give back,” he said. “Taking the helm at a non-profit is clearly one big way for them to meet that objective. They also come into the role without any bias toward the past and offer a fresh set of eyes on an organization. As such, their impact can be immediate.”
“We would not say hiring has slowed or increased but rather experienced a brief pause during the initial shelter-in-place orders last spring,” said Bill Moran, founder and president of The Moran Company. “Since then, many organizations have been adapting to the changed environment and proceeding with hiring plans. We have seen a variety of non-profit organizations hiring. Associations, in particular, are showing interest in recruiting new leadership as planned retirements take place or as new skills are needed to connect differently with members,” he said.
Mr. Moran has also seen the trends of corporate executives seeking non-profits leadership roles. “We often see applicants from the corporate side applying for non-profit careers, and their success as candidates depends on the opportunity and the individual,” he said. “Beyond ensuring the right skills are present, it is important that expectations are aligned for all parties to aid longevity in the role.”
The non-profit space is also recognizing the importance of human capital strategy similarly to that of the for-profit world – and that is a big shift seen by recruiters across the sector. “CEOs and boards of non-profit organizations at all tiers are working hard to bolster their human capital capability, particularly in light of the fact that they don’t play on a level playing field with the for-profit world,” said Nat Schiffer, managing director at The Christopher Group. “With that said, they have many advantages when it comes to recruiting. They are mission-driven; they offer cultural advantages; they tend to value diversity, equity, and inclusion in a progressive way; and the employment brands tend to be very recognizable,” he said.
Mr. Schiffer said that hiring activity for non-profits increased substantially this past year. “We have seen robust activity from professional associations, foundations, and from government agencies such as the federal reserve banks and national laboratories.” But the two biggest areas for The Christopher Group continue to be academia and healthcare delivery systems.
Mr. Schiffer said that roughly a third of the time he and his colleagues see candidates cross-over from the for-profit world. “It tends to be more demand-driven because the institution has to be comfortable with it to start. The way work gets done in the non-profit world is different. It tends to be more committee and consensus-driven with a heavier diet of governance.” But non-profit organizations are changing the world, he said, “and in the process are making quality of life better for humanity and they play center stage roles in the communities in which they operate.” That makes it much easier to get behind that kind of change and opportunity, he said.
A Call for Transformational Leadership
Associations have been active with CEO recruitments, as have academic medical centers involved in COVID-19 research and treatment, according to Diane Charness, global practice leader for the non-profit and education sector at ZRG. “The pandemic and recent societal crises have accelerated the need for transformational leadership, innovation, and a renewed focus on diversity and inclusion of staff, leadership, boards, perspective, and management practices,” she said.
“Philosophically and based on research findings, I believe strongly that a diversity of experience best informs the development of transformational leaders, regardless of sector expertise,” said Ms. Charness. “In my practice, I work closely with boards and leadership to consider the potential of transitioning executives from outside the sector. These discussions are often robust and can be controversial.” To innovate, she said, non-profits can successfully identify and onboard executives from industry to broaden thought-leadership, “but it must be done with skill and insight to increase the likelihood of a successful transition and onboarding.” The use of emerging data tools can be employed to optimize leadership selection in this regard, she added. “When open, and depending on the role, our executive slates are often comprised of those from other non-profits, along with executives from the corporate and/or government sectors,” she said.
“Hiring slowed dramatically in spring 2020, when non-profit leaders were unsure about the future,” said Kris McFeely, director of executive search at Campbell & Company. “It then picked up again in late summer and fall, as the outlines of how long the pandemic would last had become clear and organizations recognized they couldn’t stay in a holding pattern forever.” But anxiety remains. “On the hiring side, employers are concerned about how to recruit in a pandemic, how to time new hires, what relocation may look like (or if it’s possible at all), and whether it makes financial sense to recruit given the associated economic challenges,” she said.
“Candidates, for their part, have questions about relocation versus working remotely, how to best sense the organization’s culture through video interviews, and the stability of organizations given the economy,” said Ms. McFeely. “In many ways, these factors have made both sides willing to have open, honest conversations during interviews in ways they wouldn’t have before. Still, both hirers and potential hires are also more cautious about making actual changes.”
More recently, we have seen an uptick in executive directors that are choosing to pass the baton,” Ms. McFeely said. “As organizations have tried to fill these positions, they have needed to identify different skillsets for their new leaders, most notably around recruiting and working with boards remotely and being able to manage teams while not in the office. The past year has also increased competition for non-profit roles, partially because so many people have been laid off and partially because more currently employed people are searching for jobs.
Clearer Value Proposition
“Despite the extraordinary pressures of 2020 – and yet in some cases because of those pressures – the non-profit sector remains robust,” said Sam Pettway, founding director of BoardWalk Consulting. “There’s been plenty of pain, of course, but in most cases the need for services has never been stronger, and thus the value of leadership has never been clearer. Everybody has had to rethink how they do what they do, and the resilience and creativity exhibited across the spectrum have been a joy to behold.”
Grantmakers have been understandably focused on supporting organizations and communities affected most directly by the “twindemics” of COVID-19 and racial inequities, and thus many organizations have been left wanting, said Mr. Pettway. “A number of grantmakers we work with reported a decline in the absolute number of funding requests in 2020, but they expect a wave of applications in 2021,” he said. “The competition for funding will be intense, even though generosity seems to have expanded.”
“Unlike the last recession, when many organizations hunkered down and leaders delayed retirements, 2020 was a very strong year for all but the most discretionary roles,” Mr. Pettway said. “CEO and executive director searches have long represented three quarters of our business, and those appointments are not discretionary.” Against all expectations when the pandemic started, 2020 was his firm’s best year ever, and by a significant double-digit margin, he said.
Predicting a Way Forward
The non-profit sector has not been immune to the pandemic and, in fact, the negative impact was swift and the disruption severe in some areas, including arts and culture, recreation, as well as education, said Kimberly Archer, co-leader of the global non-profit practice at Russell Reynolds Associates. “Human service organizations saw significant spikes in demand for service with economic fallout and other stressors. Business models were stressed and reserves tapped to account for costs once off-set by volunteers, convening, fundraising events and entertainment that dried up in days without warning,” she said.
“Organizations were forced to put hiring on hold, manage layoffs/ furloughs and focus on risk mitigation with little insight to predict the path ahead,” she said. “Hiring slowed certainly, however the recruitment of key executive roles continues even in crisis. The response from the sector has been one of resilience and embracing change for the future. The focus is on redesign versus rebuild, with emphasis on establishing more equitable and sustainable models going forward. It is predicted there will be more change and disruption in the non-profit sector in the next few years than there has been in the last 25 years. This will put leadership and talent development at the forefront.”
Ms. Archer notes that hiring is happening in healthcare and human service organizations, foundations, advocacy organizations and across the sector in functional areas such as human resources, finance, and external relations – communications, marketing, and fundraising. “Organizations experienced never-previously-imagined pressures in such rapid succession beginning with the pandemic, followed by a racial reckoning in our nation, to political uncertainty,” she said. “These issues tested leaders like never before, illuminating areas of strength, but also gaps, which force and inform the talent agenda.”
At times, a ‘crossover candidate’ from the private sector is well-suited to a non-profit leadership role and it’s becoming more and more common practice to explore candidates with this background. “Often times, private sector experience is sought after when change management is afoot or for functional and operationally-oriented positions, as skills can be transferable,” said Ms. Archer. That said, there is complexity within non-profit organizations that is often underestimated. “While most organizations seek to validate strong mission alignment, emphasis should be around cultural alignment and core leadership competencies. Understanding how someone works is pivotal to success when considering crossover candidates. We see the best leaders spike in areas such as relationship building and influence to support stakeholder management, but also openness and inclusivity to build and drive strong teams motivated by mission and impact.”