Surging Non-Profit Sector Seeks Senior Leaders
July 26, 2022 – During a time of tremendous societal transformation, not-for-profit organizations provide support and stability for individuals and their communities. These mission-driven institutions create equitable opportunities for all, leverage funds and resources for critical social programs and initiatives, and ensure at-risk and underserved individuals are not left behind, according to WittKieffer. The value of not-for-profits has only intensified as a result of the COVID-19 pandemic and corresponding progressive social movements.
Executive recruiters say today’s not-for-profits face a growing need for exceptional leaders. “Passionate, driven and talented not-for-profit leadership is vital for managing increasingly complex challenges while keeping organizations focused on their central missions,” said WittKieffer. “Without strong executives, non-profits struggle and thus individuals and communities suffer. CEOs, executive directors, and senior teams in the non-profit sector must be able to envision, develop, and execute strategic plans that ensure their organizations can succeed and continue to make a difference in the lives of those they serve.”
Recruiting in the non-profit sector is still in high gear, but there are also high winds and high waves at play,” said Deb Taft, CEO of Lindauer. “The non-profit talent shortage that doubled in the decade preceding the pandemic, as non-profits proliferated, was only exacerbated by the various events of 2020 and 2021. Strong leadership talent is still insufficient to meet demand, and competition is fierce from technology and professional service providers adjacent to the non-profit sector.”
While there is upward pressure on compensation for top talent, boards and HR teams have yet to catch up in accepting these market forces, still believing leading candidates will choose them for their mission alone, according to Ms. Taft. “Multiple offers and counteroffers are common, top candidates want work mode flexibility, and finalist pools melt quickly if organizations hesitate or are not organized to seal a hiring deal in rapid order,” she said. “Add in the sustained, strategic work it takes to create belonging for talent of diverse lived experience, which remains in high demand, and a number of organizations continue to struggle to hire the leaders they need. Organizations that are most successful understand that recruiting is different than hiring, that authentic diversity and inclusion efforts are vital, and that demonstrating flexibility, good culture, and employee-focused policies is winning the day.”
Surging Non-Profit Sector
Lindauer is seeing strength from every part of the non-profit sector in 2022, even in the face of potential recession pressures. Ms. Taft notes that leading non-profits understand that they need to stay focused on driving top strategic priorities and strong talent to be successful in any operating environment. “Education, healthcare, and larger charities are all strong,” she said. “Even arts and culture organizations hit hard by the pandemic are emerging with increased strategic focus and hiring to thrive forward. Perhaps only with smaller non-profits are we seeing recalibrations and struggles, which should result in increased mergers. When mission-based strengths and operations could be stronger together, I urge boards to suspend egos and be bold in exploring smart combinations.”
Ms. Taft notes that non-profits offer senior executives the opportunity to apply all their best executive expertise in environments that simultaneously feed their souls. Lindauer says it has seen a number of extraordinary leaders seeking a transfer from for-profit companies into mission-based organizations, and more “Boards seem more open to these recruitments than ever before,” said Ms. Taft. “The results can be energizing, as long as all parties do the work to ensure success vs. assuming a corporate leader will be an automatic home run. Mission success can be akin to corporate success in many ways, but these new leaders typically need to adjust how they navigate stakeholder engagement, understand power dynamics with non-profit custom- ers, implement process, and communicate.”
The market remains very competitive for top non-profit leaders, according to Diane Charness, co-leader of the non-profit practice at ZRG Partners. “The sector is truly at a crucial time, needing innovative and transformational leaders to scale their organizations,” she said. “This requires a diversity of skills and perspectives. I encourage clients to be open to a range of candidate profiles- including those from industry with the sensibility required to lead a mission-based institution while also leading in a shared governance environment. It takes expertise and experience for the executive search consultant to aptly identify candidates who will make a successful transition, as not all do. Search consultants that him/ herself have worked at the intersection of the public and private sectors are best prepared to understand the talent needs of a growing social impact organization.”
Non-profits are defined by their tax status in the U.S. and have been the stewards of providing much needed services to communities around the country. “With the profound changes we’ve experienced during COVID and expanding social movements, there is an extraordinary opportunity for the private and public sectors to join forces to address society’s most pressing challenges,” said Ms. Charness. “Non-profit organizations that understand this evolving trend will thrive through increased financial support, innovative leadership talent, and improved operational platforms.”
Those successfully leading corporate entities will have built transferable skill-sets and relationships that can benefit mission-based institutions, according to Ms. Charness. “The ability to facilitate and communicate an organizational vision, scale revenue streams, develop impactful products/programs, enhance operational efficiencies, deploy leaders, and create meaningful brand awareness and messaging, are all necessary to driving success of a company, as well as a non-profit,” she said. “Corporate leaders seeking greater impact or meaning to their work, may find themselves seeking opportunities in the non-profit sector. I embrace cross-sector executives and believe these diverse experiences inform the most transformational leaders. However, there are nuances to inspiring and driving the work of non-profits that must be understood, and valued, before making the transition or it will be a rocky road ahead for the leader and the organization.”
James Abruzzo, the long-time global head of the non-profit recruiting practice at DHR Global, notes that in his four decades of recruiting senior leaders to non-profit organizations he has never seen a time of such demand coupled with a dramatic lack of supply of talent. “My phone, and those of my many non-profit practice partners, is ringing constantly with inquiries from current and prospective clients, seeking talent,” he said. “This demand was predicted by Bridgespan and others; however, it was delayed by the pandemic and now, with things somewhat normal, the imbalance between need for talent and the availability of that talent is at crisis level. And the job seekers’ attitudes are changing – high inflation, working from home, and a general existential sense of how important is career in the face of death and disease, is leading individuals to leave jobs either for much higher paying positions or just to reevaluate one’s life.”
Attendance Driven Non-Profits
Mr. Abruzzo says the non-profits that are thriving are often attendance driven. For example, many non-profit arts and culture clients are thriving because there is a pent up demand for live culture. In addition, these organizations have gone through a period of cutbacks and cost-saving combined with significant one-time cash infusions from the PPP and SVOG government funds.
“If we consider a trend toward rethinking work, the trend of senior for-profit executives looking to non-profits is not as popular as it once was,” said Mr. Abruzzo. “However, with the above-mentioned demand, any talented, warm blooded individual can now find work. And board members, who are retired and well-off, are seeing the openings, the lack of talent, and the need for leadership in their own organizations, and some are deciding to take the helm either temporarily or for the long term.”
The Great Reshuffle
“On the surface, there are more senior-level positions open than there are people to fill them,” said Allison Fuller, co-founder and managing partner of Envision Consulting. “Non-profit employers know this, and are responding to the Great Reshuffle by offering flexible work arrangements, providing innovative benefits, and taking actionable steps to strengthen DEI within their organization. But at the same time, culture is front and center.”
For every investment employers are willing to make on work schedules and building leadership pipelines, they are also enormously cognizant of workplace dynamics and how the right hire fits into their strategic initiatives, according to Ms. Fuller.
“But because it’s an employee’s market, leaders are scrutinizing their moves just as carefully, and aren’t willing to leave their organizations for a few extra perks,” she said. “These professionals are seeking meaningful jobs and often that means working for an organization that can demonstrate a real commitment toward DEI through its policies and practices. The leaders are out there, and there are matches to be made, but as both sides take a long view of what constitutes success, placements are simply taking more time and our pools have to be more diverse.”
Envision Consulting has worked to take a more data-driven approach to these hiring shifts, partnering with its local non-profit center in Los Angeles to release the Equitable Non-profit Workplace Report. More than just a compensation survey, the study provides a number of data-backed findings on what non-profit employees want, what employers are actually offering, and how that is impacting job satisfaction, retention, and advancement in the non-profit sector. According to the report, one in three employees surveyed agreed that most of their colleagues would have to leave their organization in order to get a promotion.
Approximately one third of employees in their 20s, 30s, and 40s said they did not understand the criteria for advancement in their organizations, and just over one third said they would have to leave their current position and employer in order to get a promotion. The report also shows that while DEI-focused recruiting and conversations have been implemented by more than three quarters of organizational respondents, fewer than one third have adopted an explicit DEI hiring policy.
“Organizations can remove barriers in the hiring process, by eliminating credit checks on candidates, allowing everyone to be able to apply online, adhering to structured hiring processes, and ensuring job descriptions are unbiased,” said Ms. Fuller. “Envision is recruiting from beyond the typical sources, ensuring more than 90 percent of our finalist panels include candidates from underrepresented communities.”
As a consulting firm that works exclusively with non-profits, Envision is seeing that with its clients across the firm’s executive search and strategy services. “Right now, organizations with diversified funding streams who have been able to pivot services during the pandemic have benefitted from increased participation from individual and foundation donors and re-directed COVID funding,” said Ms. Fuller. “The non-profits who will thrive in the long run will likely be the ones that have clear alignment across leadership, particularly on what it looks like for the organization to carry out its mission. So, there’s no question whether the mission is relevant – in fact, it’s probably more critical now than ever before.”
Ms. Fuller notes that the non-profits that are seeking to pivot from COVID-driven emergency services and return to mission-centered programming are asking tough questions: How well does our organization involve philanthropy, legislators and advocates, and businesses? Have we integrated a DEI lens into our strategic planning, conversations about vision and mission, organizational assessments, and outcomes evaluations? Do our decision-making bodies include representation from the community? Should we forge strategic partnerships to expand
our reach and/or work more efficiently? Have we invested enough into technology and do we have adequate cybersecurity? Even non-profits that are in one form thriving by expanding their footprint are facing these questions, according to Ms. Fuller.
Never Been Busier
To paraphrase the CEO of one of the Forbes top 25 executive search firms, recruitment of senior leaders by non-profits has never been busier. “The challenges of navigating COVID brought profound pressure on leaders in just about every non-profit sector,” said Karen Alphonse, a search solution leader and executive coach with ExecSearches.com. “Many organizations, such as education and arts and culture, have had to completely reinvent themselves, and there has become an intense focus on fundraising and day-to-day operations. This hastened the thinking of some leaders already considering retirement, and some organizations continued to rely on interim advisors and existing staff to continue to stay afloat. Now search professionals are finding that they’re reacting to pent-up demand coupled with a diminished talent pool fueled by the Great Resignation, and much of the candidate pool is thinking very differently about work and what they’re interested in doing. For many there’s a quest to find professional satisfaction and work-life balance. COVID threw a spotlight on quality of life, health, comprehensive benefits, and social issues.”
Organizations not already distinguished by diversity, equity, and inclusion are instilling it into the operations and are attracting leadership, staff, and donors who share them, according to Ms. Alphonse. “Non-profits want their leaders to have a sophisticated understanding of the issues and there is increased demand for leadership to reflect the communities,” she said. “This has created a stampede to recruit accomplished leaders who bring perspectives that represent a full spectrum of economic, social, cultural, gender, and educational backgrounds, just to name a few. To facilitate this, many organizations have created C-suite DEI officers.”
Although different entities define thrive in a variety of ways—be it by profit, growth, total assets and even popularity—across the board the non-profit sectors that are prospering are those involved in healthcare, human services, advocacy, human rights, and the environment, according to Ms. Alphonse. “COVID put tremendous and immediate demands on hospitals, clinics and emergency health facilities, all of which stressed internal systems, causing non-emergency services to take a backseat,” she said. “These kinds of facilities have had to re-examine their services to find ways to generate a profit during a period of shifting priorities and uncertainty. In the education sector, the maze of COVID restrictions, options and vaccination put pressure on universities, schools and learning facilities to abandon the old-way-of-doing things. The change in the political and social landscape has caused a lot of upheaval.”
Non-profits that champion diversity are also enjoying a new lease on life. “Social activism, at an all-time high in the wake of George Floyd, the overturning of Roe v. Wade, and attacks on the rights of immigrants and the LGBTQ+ community, has given rise to focused thinking,” said Ms. Alphonse. “At the international level, so has the political unrest in the Ukraine, Middle East, and Africa. Organizations that give voice to our collective angst about the future of the democracy and the fate of the planet have been re-energized by recent geo-political events. Based on international unrest, we can foresee that refugee-friendly, resettlement, and international aid organizations will experience a resurgence.”
“So will domestic organizations that provide safe havens for immigrants on the run due to political repression, poor economics, and disrupted infrastructure in their countries of origin,” she said. “Never has messaging and branding been more important, and leaders who can identify and voice those strategies are in unprecedented demand.”
Many business sectors across the globe are experiencing a job seekers market, and the non-profit arena is no different, according to John Toolan, vice president at Bryant Group. “Those seeking leadership positions understand that there are more quality opportunities available than there are qualified people to fill them, which allows them to be more selective,” he said. To help organizations stand out, Bryant Group encourages employers to focus on what makes their organization impactful and lean into that.
“Keeping the mission at the forefront of each conversation and interview to ensure that there is mission alignment between the candidate and the organization will create a more enjoyable interviewing process for both sides,” said Mr. Toolan. “Studies have repeatedly shown that employees seek a sense of value in their work. Helping them understand how their contributions during work hours impact the world around them is a powerful recruitment tool. As an additional bonus, it can encourage the candidate to turn down offers from other organizations to join yours.”
Once on board, when staff feel that they are contributing to something larger than themselves, and larger than their organization, they have a sense of fulfillment that aids in their retention. With the large number of positions available, the quantity of opportunities can feel overwhelming to candidates, according to Mr. Toolan. “Using a proactive search firm can help because they market your opportunity to people who are likely to align with your mission,” he said. “Additionally, they connect with people who are open to new opportunities but are not actively seeking new roles. This can lead to a broader and more diverse pool. Often it also reduces the rush to extend an offer before a competitor.”
Bryant Group finds that non-profits that have cultivated a genuine relationship with their constituents fare far better than those that are more transactional. Personal and national economies constantly change, and when they do, charitable giving can be affected. However, stakeholders who receive value in their interactions with the organization remain committed.
“Allowing stakeholders to volunteer, mentor, and involve friends and colleagues in the organization, forms a stronger bond which leads to greater affinity,” said Mr. Toolan. “Creating a sense of community where constituents find joy, comfort, solace, or meaning will ensure their continued participation. Additionally, keeping the organizational mission at the forefront in all communications and conversations keeps donors and potential donors focused on the organization’s impact.”
Profits Still Matter
The public has a common misconception that non-profits don’t need to generate profits. Nothing could be further from the truth, according to Mr. Toolan. “The fact is that non-profits funnel their funds back into the impact areas of the organization rather than compensate shareholders,” he said. “The more income a non-profit generates, the greater its reach and impact. Passionate leaders skilled at evaluating operations and creating efficiencies can propel the growth of non-profits quickly and sustainably.”
Bryant Group finds that many senior executives reach a point in their career when they have climbed the mountains they wish to conquer and now want to contribute to the greater good of society. As an example, Bryant Group recently conducted a search where a leading candidate left his law practice because he was “tired of making billionaires wealthier.” He brought his superior negotiating skills to the higher education sector, where he renegotiated contracts and leases, resulting in significant cost savings.
“In these cases, the executives enjoy bringing their expertise to bear to improve their local or national community or to contribute to causes that they hold dear,” said Mr. Toolan. “This brings more diverse thought into the organization and can lead to other forms of diversity. Often the infusion of an executive from outside of the non-profit area aids in identifying roles that allow for transferable skills. This opens the door for others from corporate America to join the non-profit world, experience its benefits, and diversify its workforce.”
While there are some signs of cooling, staff transitions continue at an historic pace and the demand for non-profit executives remains strong, according to Michelle Kristel, managing partner of McCormack+Kristel. “Racially and ethnically diverse candidate panels, a founding principle of our practice, and leaders skilled at creating diverse, equitable, and inclusive cultures continue to be priorities for our clients,” she said. “Well qualified candidates, particularly diverse leaders with track-records of success, are being presented with an abundance of opportunities. We have always advised our clients that interviews are a two-way street, with candidates assessing clients as much as clients are evaluating them. At no time has this been more true. Perhaps related to the profusion of opportunities and increased scrutiny of organizations and boards, we are also seeing an increase in late-stage candidate withdrawals.”
For the sake of organizational stability, many CEOs paused planned departures at the height of the pandemic. As pandemic conditions improve, McCormack+Kristel is seeing an uptick in CEO resignations and a continuation of the generational transfer of leadership that has been unfolding as baby boomers reach retirement age. “For those organizations with the foresight to do succession planning, the leadership transition can often be efficient and relatively painless,” Ms. Kristel said. “For those who haven’t, the search for a new CEO can be long, time-consuming, and perilous, especially when finding the successor to a founder or long-term, respected leader. No one is likely to be a younger version of the departing leader, nor should they typically be.”
For McCormack+Kristel, non-profits with a clear and relevant mission and a mix of funding sources are thriving. “Those who have outlived their mission or who rely too heavily on government contracts are most at risk,” said Ms. Kristel. “In the HIV/AIDS sector, for example, we have seen many smaller service organizations such as HIV prevention organizations merge with primary care providers in their communities. Private sector funders look for synergies and overlapping services among the organizations they support, and they frequently encourage such consolidation.”
Mission has always been the motivating force for non-profit leaders. “The pandemic both exacerbated and exposed inequities in healthcare, housing, and food security,” said Ms. Kristel. “The documented, brutal murders of black men amplified a national conversation about systemic racism. And local and national politics and policies are becoming increasingly hostile to women and LGBTQ people. In the wake of seismic cultural and economic disruptions, organizations advancing equality and addressing injustice in its myriad forms are more attractive than ever to board and staff leaders, volunteers, and donors.”
The Great Reexamination
The Great Resignation has been fueled by a great reexamination, according to Ms. Kristel. “The current state of national and global affairs has caused many to look inward, prompting questions about our purpose, about where we live and how we work,” she said. “In answering these questions, many corporate executives, particularly those looking to write the last chapter of their professional story, are motivated to leverage their accumulated skills in service of a greater societal good. While many executives find fulfillment in volunteer and board service, others, often in what Dante called the middle of life’s journey, making work the primary opportunity to give back is essential for personal satisfaction and emotional health.”