Nonprofit leadership faces transition

As the Maine economy continues to shift to a service economy, we should not be surprised that charitable nonprofit organizations are increasingly becoming the largest employers in our communities. While hospitals, colleges and a few familiar organizations capture our attention, the fact is that more than 70,000 people in Maine are employed by nonprofits – more people than all local governments combined and just about as many as the state’s entire manufacturing sector. These organizations and their employees touch all of us in one way or another – providing our health care, educating our children, caring for our neighbors, and improving our overall quality of life.

We should all be concerned, then, with a recent study by the Meyer Foundation and CompassPoint Nonprofit Services (the full report, “Daring to Lead 2006,” is available at www.compasspoint.com), that surveyed nearly 2,000 nonprofit chief executives in eight cities. They found that three-quarters of the respondents plan to leave their jobs within five years and 9 percent are already in the process of leaving.

If those numbers hold true for Maine, it is reasonable to estimate, based upon our current total of almost 2,500 reporting charitable nonprofits, that Maine could see a turnover of 1,500-1,800 nonprofit leaders during the next five years.

While we might regard some turnover in leadership as normal, or even healthy, the potential departure of so many experienced nonprofit leaders is alarming. In this mix are some highly visible nonprofits and their leaders, but many more are the executive directors of tiny community organizations who are expected to accomplish extraordinary feats, save lives, fill gaps in government funding and do it all for pennies on the dollar.

So what is causing so many nonprofit leaders to think about leaving? Too often it is their boards of directors. One-third of the respondents described the support they receive from their boards as “weak” or “modest,” and fewer than one in three thought staff would view the board as “engaged leaders.”

Boards of directors need to understand that their performance as a board – as strategic partners with the executive – can directly impact retention. Boards need to carry their share of the burden, especially when it comes to shaping strategic direction. Only about one-third of the executives reported that their boards regularly use board meetings to discuss strategic issues and debate possible direction.

Boards also need to make sure they are being appropriately supportive, evaluating progress, providing competitive pay and benefits, and ensuring their executive directors are not constantly wondering, “are they really behind me or not?” Uncertainty can be debilitating.

In my own experience, I find that nonprofit executives often put money in their budgets for staff training but then shortchange themselves when it comes to their own training and development. Even the most experienced nonprofit executives can benefit from periodically assessing their skills, considering new approaches, and stepping outside their daily routines to strengthen their leadership and management abilities. However, this requires boards to ensure that dollars are set aside, permission is given, and the value of supporting staff leaders and their development is voiced over and over again.

Boards of directors also need to make sure they are clear on their roles regarding fund raising and, just as importantly, that they are living-up to those responsibilities. When asked what improvement board members could make to be most helpful to executive directors, “stronger fund raising” was the first choice of 73 percent.

While it might be convenient to place all the blame on nonprofit boards, the study was also instructive in describing how foundation, corporate, and individual donors can sometimes negatively impact the lives of nonprofit leaders. By narrowly focusing grants and gifts to specific projects – sometimes without funding annual operating costs – we inadvertently place the nonprofit executive on a fund-raising treadmill that contributes to burnout. When asked what actions donors could take in order to be most helpful to them, “more general operating support” and “more multi-year support” were at the top

of the list.

As donors or grant-makers, we can demonstrate just how deeply we care about our favorite nonprofits and their leaders by not restricting our gifts and grants to special projects or personal interests. In nonprofits where every dollar really matters, the most valuable dollars are those without strings attached – dollars to cover payroll for another week, pay the bills, or help serve clients who are not quite impoverished enough to meet government guidelines. In the nonprofit world, not all dollars are equal.

With expenditures by nonprofits representing almost 15 percent of the gross state product in Maine, and nonprofit employment growing all the time, we can’t afford to underestimate the importance of developing, supporting, and retaining the very best nonprofit leaders. While every board would be wise to engage in an annual succession planning discussion, we should work even more diligently to impact the conditions that appear to be causing this wave of leadership departures to occur.

Boards need to live up to their roles as strategic partners, and the rest of us need to be generous in our support and careful to avoid unknowingly tying the hands of the organizations and leaders we care about so deeply.

Jeff Wahlstrom is the president and a managing director of Starboard Leadership Consulting, LLC in Bangor.