Note: As I mentioned earlier, I am taking a few weeks away from the blog to relax and reconnect with the world outside of social change. But I am leaving you in the incredibly capable hands of a rockstar set of guest bloggers. Next up is Kathy Reich. Kathy is Organizational Effectiveness and Philanthropy Director at the David and Lucile Packard Foundation where she helps grantees improve their strategy, leadership, and impact. Here is her guest post…
Philanthropy pundits often exhort nonprofits to “act more like businesses.” Usually I disagree; in fact, I think there’s a great deal that businesses could stand to learn from nonprofits.
In at least one area, though, I admit that all too frequently nonprofits lag their for-profit peers. Nonprofits simply do not invest enough time or money in talent assessment, development, and management.
Major national surveys provide a helpful snapshot of the nonprofit sector’s talent troubles. In the Bridgespan Group’s Nonprofit Management Tools and Trends 2014 survey, which polled almost 500 nonprofit organizations about their current management practices, nearly 60 percent of respondents agreed or strongly agreed that “hiring, training, and retaining staff is one of our greatest challenges.” Yet the survey found that only 40 percent reported using talent assessment and development tools, and just 38 percent said their organizations engage in leadership succession planning.
Similarly, in the Nonprofit Finance Fund’s 2015 State of the Nonprofit Sector survey, which included responses from more than 5,400 nonprofits nationwide, respondents were asked to name the top three challenges facing their organizations. “Ability to offer competitive staff pay and/or retain staff” was ranked in the top three by fully 25% of the respondents, behind only “achieving long-term financial sustainability” as one of the top three challenges facing nonprofits. Yet the same survey found that just 37 percent of respondents had invested money or time in staff professional development in the past year. Only 28 percent had given cost-of-living raises, and 18 percent had given raises beyond COLA.
At the Packard Foundation, program officers tell me that they see signs of this underinvestment almost every day. Some problems that our nonprofit grantee partners routinely report:
- Executive turnover is frequent, and often traumatic.
- Nonprofits have a hard time finding appropriate candidates for senior management roles, including CEO, program executives, development directors, and communications directors.
- The leadership many nonprofits have is not reflective of the leadership that they need, or the communities they serve. In most of the fields in which the Packard Foundation works, nonprofit leadership remains predominantly white, male, and middle-aged, even as our country becomes younger, more diverse, and hopefully, more committed to racial and gender equity.
- Emerging leaders under age 45 report high levels of career dissatisfaction, driven in part by lack of professional development and advancement opportunities. In a 2011 Young Nonprofit Professionals Network survey, only 36 percent of respondents said that their organization invested in “bench strength” to develop emerging leadership. Of that group, less than 47 percent said their organization implemented these investments effectively.
Nonprofits and foundations both have critical roles to play in ensuring that the nonprofit sector has a robust, diverse talent pipeline now and in the future. First, foundations need to step up their financial support for leadership. The private sector spends $12 billion annually, an average of $120 per employee, on developing leaders, investing in their management and technical skills so that they can move up the ranks or excel in their current jobs. In contrast, philanthropy’s investment in nonprofit leadership development totals an average of $29 per employee annually.
Foundations can do much more. Some concrete ways that they can help:
- Fund nonprofit overhead so that nonprofits have enough money to pay their people competitively and can have the operations in place necessary to support their staff and manage their talent. Depending on their size and talent needs, some nonprofits may need to hire a Chief Operating Officer, a Human Resources Director, or a Chief Talent Officer.
- Support nonprofits to develop “right-sized” performance assessment and management systems, as well as meaningful succession plans for key leaders.
- Include funds for staff professional and leadership development in project support grants.
- Incentivize nonprofits to develop cultural competency in hiring and management so that they can attract and retain diverse employees.
But foundations cannot tackle this issue alone. No matter what their size, nonprofit boards and executive leadership need to focus on talent issues and ensure they have appropriate plans in place to manage and develop staff for their organizations. They need to implement thoughtful, intentional strategies and process to ensure that they are identifying their own talent needs, assessing the strengths and growth areas of their staff, and providing ongoing development and feedback to all employees, particularly those with high growth potential. And they need to make the case for talent to their funders, along with concrete examples of how investing in leadership capacity will improve outcomes.
In the nonprofit sector, as in business, leadership matters. Let’s be sure we’re all investing our time, and our money, where it counts.
In today’s Social Velocity interview, I’m talking with Linda Wood, Director of the Haas Leadership Initiative. Over the past decade, the Haas, Jr. Fund has invested over $20 million in strengthening the leadership of more than 75 grantees in its key priority areas– immigrant rights, education equity, and gay and lesbian rights—through the Flexible Leadership Awards program. In that time Linda has become a leading voice on the topic of leadership in the nonprofit and philanthropic sectors. Prior to joining the Fund, she advised senior leaders on strategy, organizational performance and change management at Cap Gemini Ernst & Young.
You can read past Social Velocity interviews here.
Nell: The Evelyn and Walter Haas, Jr. Fund has put a lot of investment behind the development of nonprofit leaders, but you are quite an anomaly in the philanthropic world. Support for leadership development is taken as a given in the for-profit world, but rarely recognized, let alone funded, in the nonprofit world. Why do you think there is that discrepancy in leadership development between the nonprofit and for-profit worlds?
Linda: It really is striking to see how differently the business sector and the nonprofit world view the issue of leadership. I went to business school myself, and spent eight years working as a management consultant in the private sector where it’s basic good practice to invest in the people you’re counting on to move the work forward. Strengthening leadership is seen as part and parcel of what it takes to fuel innovation and success.
On the other hand, in the social sector, a lot of foundations think of leadership development as a luxury–a nice-to-have that’s not linked to impact. That’s reflected in recent estimates that less than 1% of total foundation spending is going to strengthen leadership in the nonprofit sector.
Why? Well, I think we’ve got a lot of myths about leadership in our sector.
One myth is that leadership development is simply not a priority for nonprofit leaders because most don’t ask for it. And, when grantees don’t ask, many foundations assume that there’s no need. But we have not yet created a culture in the nonprofit sector that says it’s ok to invest in yourself and in other senior organizational leaders. We place a high value on self-sacrifice. Given the choice, nonprofit leaders will almost always direct general support to critical services and programs. That’s why actually I think it’s important for foundations to earmark funds for supporting leadership.
Another related myth is that leadership is part of overhead, and overhead should be minimized at all costs. From this perspective, investments in the organization’s leadership are cleaved off from the work and seen as wasteful overhead rather than intrinsic to achieving the organization’s goals.
Nell: You recently curated a blog series on the Stanford Social Innovation Review where funders who have supported nonprofit leadership development articulated its value. How helpful do you think that step was in getting the broader philanthropic community to understand the value of leadership investment? And do you have additional plans to help move leadership development forward among your peers?
Linda: Our goal in putting together the SSIR blog series was to help build momentum around the idea of investing in leadership being a core grantmaking strategy that can catalyze diverse programmatic goals and not just a boutique strategy that only some funders can afford. By featuring perspectives from top-level executives from a half dozen foundations of very different sizes and with very different funding priorities, ranging from the Omidyar Network to the Women’s Foundation of California, we hoped to offer examples that would inspire more foundations to see possibilities for their own work.
To be honest, it’s hard to know whether we are moving the needle. But it does seem like there has been mounting attention to philanthropic underinvestment in leadership lately. Just over the past couple of months GEO and then NCRP have both released major reports making the case for more attention to leadership and talent development. And the Talent Philanthropy Project held a meeting in New York in March that attracted over 60 people including nonprofit leaders, funders, consultants, and intermediaries.
I think the real question is whether increased interest will translate into significant increases in investment—the kinds of sustained, strategic investments in leadership that advance the capacity of organizations, networks and movements to achieve better outcomes. The danger is that we foundations will sprinkle a little leadership development funding here and there, perhaps send a handful of our grantee leaders to a training, and call it a day.
Nell: You recently announced a new initiative to seek solutions to the challenges, which you uncovered in your 2013 UnderDeveloped study with CompassPoint, facing nonprofit fundraising. What are your long-term plans with this initiative and what do you hope to find?
Linda: The UnderDeveloped report caused such a stir across the country. I have heard from so many people—funders, grantees, consultants, board members, etc.—that the report gave voice to concerns they’ve held for a long time. It clearly hit a pain point. And the big question it begs is what to do about it?
At the Haas, Jr. Fund, we’ve decided our next step is to try and refine concrete strategies that will help our grantees, and hopefully others, achieve breakthroughs in their fundraising.
One of our goals is to help organizations be more strategic about their approach to fund development. There’s so much out there. The nonprofit fundraising industry is full of consultants, speakers, large trade associations and technology providers. They offer costly, sometimes contradictory advice, patented approaches, one-off success stories, and a dizzying array of technology tools and platforms for raising money. As a result, our work in fundraising may be less about innovating and more about separating the wheat from the chaff, helping grantees chart a coherent, fruitful course through the thicket of possibilities.
Right now, we’re in the R & D phase. Here are some of the questions we’re exploring:
- What fundraising success stories can be replicated by our grantees? To answer this question, we will conduct “bright spots” research focused on small- to medium-sized organizations who have had sustained success with individual fundraising.
- How can we address the fundraising talent gap? To answer this question, we are conducting a scan of fundraising training and exploring the feasibility of a “fundraising fellowship.”
- One fund development approach that’s attracting attention is developing a “culture of philanthropy.” But what does that mean? And what difference does it make?
- Are there ways to help an entire field of grantees? To identify potential investments that might help a field of grantees, we are testing whether and how donor research can help LGBT grantees with fundraising.
As we tackle these questions, we are sharing what we’re learning along the way through a series of blogs on our website. And we’d love to hear from other people. What questions are missing? What can a foundation’s role be in supporting fundraising capacity?
Ultimately, this isn’t just an intellectual exercise. Our goal is to get better at supporting grantees around fund development, and to that end, we anticipate beginning to pilot some new strategies starting in 2016.
You asked what we hope to achieve with this work over the long term. I think if I could fast forward a couple of years, I would hope we will have made a dent in strengthening the talent pipeline for development directors, and that we are helping organizations bring more skill, focus and success to their fundraising, especially in tapping individual donors.
Nell: Philanthropy has traditionally been less interested in funding capacity building (like leadership development and fundraising). Do you think that’s changing? And/or do you think we will have more hope of changing that as generational shifts take hold in philanthropy?
Linda: Yes, I often feel like there’s a real divide between the folks in philanthropy who are focused on the what and those who are focused on the how.
Obviously, we’re all in this work for the what—to help create a more just and sustainable world. But often in philanthropy, conversations about things like capacity and leadership are disconnected from the conversations about the content of the work. We hold separate conferences; we belong to different affinity groups; we read different articles…
So, as someone who’s a member of the how club (as we sometimes jokingly refer to it among ourselves) I think we need to keep strengthening the connection between building leadership and capacity and delivering programmatic wins. No matter what a given foundation seeks to achieve programmatically–whether that’s community health, environmental justice or education equity–it’s important to ask how they will get from where they are today to where they want to be. What is our responsibility as funders to support the people and organizations who are advancing this work? What kind of staff, board and community leadership will be needed to get where we all want to go? And how can we transmit in words and in concrete actions that we are in this together and that we want to provide them with the resources to do their best work.
Photo Credit: Evelyn & Walter Haas Jr. Fund
Something pretty exciting is going on. Perhaps I’m an eternal optimist, or I’m suffering from confirmation bias, but it seems to me that more funders are starting to talk about investing in the capacity of nonprofits, particularly around nonprofit leadership development.
The Stanford Social Innovation Review kicked off a new blog series this month focused on the topic. Over the next three months, six foundation leaders will blog about why they have made investments in the leadership development of their nonprofit grantees and what the return on investment has been.
This is phenomenal because the more we talk about and demonstrate the return on investment of nonprofit leadership development, and really of any capacity investments, the more likely we will be to see other funders follow suit.
As Ira Hirschfield, president of the Evelyn and Walter Haas, Jr. Fund, points out in the inaugural post in the new SSIR series, less than 1 percent of overall foundation giving went to leadership development between 1992 and 2011, while the private sector allocates billions of dollars to it.
Why are we not investing in our nonprofit leaders? If we truly want to create change to some of our most pressing social issues don’t we need the strongest, most effective leaders possible?
As Hirschfield puts it so well:
Foundations ask a great deal of the organizations we support…in short, we hope grantees will deliver transformational results for the people and places they serve. So it’s striking how seldom we back that up with funds to help organizations develop and strengthen the ability of their leaders to meet those high expectations. People are not born with everything it takes to manage and motivate a team, build coalitions, and lead change…Leaders who have the opportunity to reflect on their strategies and hone their skills make better choices, develop innovative solutions and forge stronger collaborations. This is what leadership development is about—and to the extent that foundations decide it is important and fund it, then we and our grantees will be better positioned to achieve our goals for impact.
In other words, foundation funding will go further if funders also invest in the leaders of those organizations they fund.
It seems like a no-brainer. And it is a no-brainer in the for-profit world. But as we so often do in the nonprofit sector, we are selling the sector, and its leaders short.
But it is not enough (nor are we anywhere near it anyway) for funders to understand the need for investing in nonprofit leaders. Nonprofit leaders themselves need to stop apologizing and start demanding (in a nice way!) investment in their own capacity. And leadership development is only one of the many areas in which nonprofits need capacity investment. Nonprofits also require fundraising expertise and staffing, program evaluation, technology and systems, and the list goes on.
So if we are to have any hope of moving this topic beyond the blogroll, nonprofit leaders and funders need to start having better conversations about what it will really take to accomplish their joint impact goals. Because if, at the end of the day, we are all looking to achieve more impact, then capacity to deliver on that impact must be part of the conversation.
If you want to learn more about capacity investments from both the nonprofit and funder sides, download the Power of Capacity Capital book, and if you want to learn more about nonprofit leadership, download the Reinventing the Nonprofit Leader book.
Photo Credit: Clinton and Charles Robertson
Between my own time away from social media in August, the general end of summer quiet, and of course, the glut of posts about the Ice Bucket challenge (of which I have already said my piece), my list of great reads in August is admittedly slim.
But there was some interesting debate, most notably about “strategic philanthropy” and about ratings agency Philanthropedia. Also, calls for more nonprofit leadership development and for nonprofit leaders to get out of their own way by taking the Overhead Pledge. Throw in a little Mark Twain, some sharing economy, and a dash of Millennial analysis and you have a pretty good month in the world of social change.
So below is my pick of the 10 best reads in the world of social innovation in August. For an expanded list you can follow me on Twitter, Facebook, LinkedIn or Google+. And you can see past months’ 10 Great Reads lists here.
- Leadership development is a woefully underfunded need in the nonprofit sector. Indeed from 1992-2011 only $3.5 billion of the nearly $287 billion dollars granted by foundations went to support leadership. In order to get more foundations investing in leadership development, Rusty Stahl offers case studies of 9 foundations who already do.
- In the summer issue of Stanford Social Innovation Review, the lead article “Strategic Philanthropy for a Complex World” caused quite a stir in the philanthropy world with many arguing that there is not much new there. In August, Alliance Magazine ran a series of editorials by philanthropy leaders as counterpoints. Most interesting among them was Avila Kilmurray’s, former director of the Community Foundation of Northern Ireland, response, in which she said “Can we not just recognize that when any funder sets her/himself the task of addressing complex issues…there needs to be provision for continuous consultation, practice, reflection and change?”
- An interesting article in the New York Times paints the Millennial generation as a very communal-minded one, where “the highest value isn’t self-promotion, but its opposite, empathy — an open-minded and -hearted connection to others.” From working, to eating, to shopping it seems Millennials bake social into everything they do. How will the world be different if that holds true as they age?
- Writing in Forbes, Tom Watson asks whether nonprofits should participate in GivingTuesday. As he puts it, “Is #GivingTuesday a well-meaning marketing promotion – or is it a real, organic movement for change?…[Does it] seek to increase U.S. giving from 2% of GDP (where it’s been stuck for two generations) to some higher point?” Amen to that!
- Rating nonprofit effectiveness is such a tricky challenge. Philanthropedia, one rating system that is driven by crowdsourced feedback from experts, comes under fire from the clean water space for being just “a popularity contest.” But others claim it’s an improvement over previous evaluations.
- Writing in the Chronicle of Philanthropy Nicole Wallace shows the value of sharing data by profiling Crisis Text Line, which gives other nonprofits, researchers and government agencies access to their data of 60,000 counseling sessions with teens in crisis to use in their own programs. It begs the question whether other social change data could be shared and how we make that easier to do.
- Sue Dorsey from Water for People was among a group of nonprofit leaders at the InsideNGO conference who took the Overhead Pledge in August, vowing to fully disclose the true costs of their nonprofits. And she encourages other nonprofit leaders to follow suit. This is exciting because it is not enough for funders to get over the overhead myth, nonprofit leaders must as well.
- I am always a sucker for connecting literature and/or history to social change, and even better both, so David Bonbright’s post about how Mark Twain would have viewed recent trends in business is fascinating. Bonbright argues that Twain wanted American business to fully integrate profit and community. And we are beginning to witness this trend again where companies are “embracing the full implications of what they are – what they mean for the environment, for communities, for the most marginalized people affected by their supply chains…[because] this is best way to remain competitive and successful over time.” Let’s hope!
- The new “sharing” economy is not all good, but not all bad either, as Daniel Ben-Horin argues that “there are enormous opportunities for the social sector to engage with the values-driven segment of the sharing economy.”
- Finally, some guidance on making your nonprofit email marketing more mobile friendly and your website better able to connect people to your cause. It’s all about responsive, engaging design.
Photo Credit: Seth Anderson
I’ve written before about how hard it sometimes is for nonprofit leaders to ask for help. Donors, board members, regulators, and others put enormous pressure on nonprofit leaders to do it all with little (if any) help.
So in an effort to help nonprofit leaders convince those around them about the benefits of getting help, I’ve developed five benefit sheets describing the advantages of building a stronger nonprofit organization.
Whether or not you are interested in working with me, these benefit sheets describe the return on investing in nonprofit organization building efforts like leadership coaching, strategic planning, board engagement. Obviously I feel very strongly that nonprofits need to build stronger, more effective organizations, but that’s often a difficult case for nonprofit leaders to make.
I hope these benefit sheets can help you make that case:
Nonprofit Leader Coaching
But it doesn’t have to be that way. A leadership coach becomes your strategic partner helping you analyze your challenges and concerns, think through staffing decisions, overcome fundraising hurdles, address board management struggles, and brainstorm new approaches. Coaching provides tremendous benefits including: increased board and donor engagement, more productive staff, greater financial sustainability, and clearer strategic thinking. Download the Nonprofit Leader Coaching benefit sheet.
In an increasingly competitive, resource-strapped world, great nonprofit strategy is less a luxury and increasingly a necessity. Without an overall strategy, a nonprofit is relegated to the world of “doing good work,” instead of the world of “making a real difference.” And these days more and more funders, supporters, advocates, partners and decision makers are requiring that nonprofits do more than just good work.
Smart nonprofit strategy can completely transform your nonprofit. It can create momentum, attract deeper funding, filter future decisions, become a management tool, and ultimately realize more social change. Download the Strategic Planning benefit sheet.
It can often seem impossible to get your board’s attention, let alone get them all pointing in the same, effective direction. But if managed strategically, your board can be an unstoppable army moving your nonprofit forward.
If you take a big step back and develop a groundbreaking board, you can dramatically increase your ability to: reach new audiences, grow your programs, forge new external partnerships, raise more money, increase exposure to key decision makers, build community investment and engagement. Download the Board Engagement benefit sheet.
Financial Model Assessment
It happens all the time. A nonprofit leader wants to expand her services to meet growing demand, or is frustrated with a stalled fundraising effort, or doesn’t know where to diversify her fundraising efforts. She wants to raise more money, but doesn’t know how.
A Financial Model Assessment can be game changing. It uncovers how all aspects of your organization contribute to or detract from money flowing through your doors, including strategy, mission & vision, leadership, program delivery & impact, marketing and partnerships. It can give your nonprofit a deep understanding of where you need to focus your efforts and a clear road map for growing your financial sustainability. Download the Financial Model Assessment benefit sheet.
Unlike a traditional fundraising plan, a financing plan is an integrated, thoughtful, and strategic way to help your nonprofit raise enough money to achieve your programmatic and organizational goals. Instead of asking the question: “How much can we accomplish with what we can raise?” you start asking the question: “How much should we raise to accomplish our goals?”
A financing plan galvanizes board and staff to bring enough of the right kinds of money in the door to make your nonprofit’s goals a reality. It creates a sustainable financial model for your nonprofit so that you can survive and thrive. Download the Financing Plan benefit sheet.
If you are trying to make the case for a stronger nonprofit organization download these benefits sheets and share them with your board, donors, staff. And if you would like to talk about these organization building processes in more detail, let me know.
Photo Credit: Johnathan Nightingale