Nonprofit work is hard work. It is complex, adaptive work where the answers are not known in advance — we have to invent them as we go. Most nonprofits are tackling huge problems with few resources and many face deep-pocketed opposition.
Nonprofit work is long-term work. The problems we’re working on — climate change, inequality and injustice — didn’t emerge overnight, and we’re not going to solve them in a couple of years.
Because nonprofit work is hard, long-term work, the nonprofit sector needs to attract the most talented people we’ve got — and keep them around long enough for them to become wise and masterful practitioners.
The skills and talent nonprofits need to solve big social problems are complex . We need to be able to draw in people with a broad range of experiences, skills and talents. Failure to do this not only hurts us tactically, it limits us strategically.
Right now, access to wealth — inherited wealth, earned wealth from a prior career or spouses/partners who are the primary breadwinners in their households — is often an implicit filtering criterion for long-term nonprofit employment. This perpetuates and deepens the structural racism and inequity in our society, even as we say we are working to eliminate it.
The student debt crisis is a huge, largely unacknowledged talent problem in the making for the nonprofit sector. While many millennials are drawn to mission-based work, their student debt will prevent them from entering the sector, or ensure that their stay here is short.
The skills that it takes to build and sustain a successful and effective nonprofit are becoming more varied.
Because of the explosion of nonprofits — and the immediate accessibility of a global audience afforded by the internet — nonprofits must not only be skillful at more things, they must be relatively more skillful at more things if they want to break away from the pack. The bar for success is, paradoxically, rising, even as the barriers to starting a nonprofit are falling.
The skills that nonprofits must master to succeed in the twenty-first century are rapidly converging with the skills that organizations in other sectors must master to succeed.
We can see this most clearly in the area of technology. But it’s not just technology, it’s also finance, leadership, marketing and more.
The rise of mission-based “social enterprise” businesses and B-Corps further exacerbates the nonprofit’s sector’s intensity of competition for talented, mission-minded people.
Nonprofits are therefore competing beyond the sector for talent more directly than ever before and the intensity of this competition is only going to continue to increase.
Nobody expects (or deserves) to get rich working for a nonprofit.
Many nonprofits are (or can be) amazing places to work. People will sacrifice some amount of money for challenge, meaning, flexibility and autonomy.
Despite this, we should not expect nonprofit workers to forgo home ownership, children and a secure retirement in order to work in the sector.
If nonprofits want to successfully compete for talent — and keep good people around for the long haul, they need to pay enough so that money isn’t an issue, then out-compete other employers on meaning, relationships, autonomy and opportunity.
The amount of money that makes “money not be an issue” for the diverse, talented people we need to attract and retain is often more than the median nonprofit is paying right now.
The amount of money that makes “money not be an issue” for the diverse, talented people we need to attract and retain is not insanely large. People who are drawn to and can succeed at the complex, adaptive challenges of nonprofit work tend to have strong intrinsic motivation and are rarely highly materialistic.
There are many roles in nonprofits for which it is believed to be difficult to objectively and fairly evaluate employee performance and/or contribution to either the organization’s bottom line or its mission impact.
Nonprofits rarely cut low performing staff.
Nonprofits rarely if ever pay their top performers significantly more than their median or low performers.
Most nonprofits would rather spend additional dollars growing their team or launching new programs and accept turnover as a “fact of life” than invest in retaining their best people for the long haul.
Nonprofits rarely account for the full costs of turnover: lost relationships, lost knowledge, lost productivity, damage to morale, etc.
Many of the nonprofit sector’s most highly skilled people eventually are forced to leave the sector entirely or go into private practice as consultants in order to meet their financial needs.
The “consultant-ization” of the nonprofit sector has some benefits (e.g. rapid, flexible team formation, deep specialization, diffusion of knowledge, etc.) but also considerable costs.
While nonprofit culture and management practices contribute to some of the sector’s dysfunctions around compensation,
nonprofit board members, donors and funders play a significant role in shaping the sector’s culture and determining how it allocates resources.
Nonprofit boards rarely involve themselves in staff salary structures or policies, restricting themselves to setting CEO compensation and perhaps approving incremental increases to the overall salary pool during the budgeting process.
Foundation program officer salaries often serve as an effective upper bound on nonprofit CEO compensation.
Funders rarely reward their highest-performing grantees with game-changing infusions of general support dollars — and even more rarely do they cut their low-performing grantees to free up resources for their high performers.
Many funders are happy to reward effort rather than results. This is closely tied to risk aversion, because big results require big risks and it is often hard to claim credit for long-term success.
There is no silver bullet solution to these challenges, but the nonprofit and philanthropic sectors must work together to open a more courageous conversation if we are to make progress.