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The Nonprofit Sector's Leadership Deficit

Executive Summary

Written by: Thomas J. Tierney

Whether it is helping a teenage mother learn to care for her child, training an ex-convict to get a decent job, or aiding disaster victims, nonprofits increasingly do the work required to fulfill our desire for a civil, compassionate, and well-functioning society. Like most organizations, their ability to consistently deliver these results depends more on the quality of their people than on any other single variable. Yet today nonprofit organizations struggle to attract and retain the talented senior executives they need to fulfill their missions. Over the coming decade, this leadership challenge will only become more acute.

The Bridgespan Group recently carried out an extensive study of the leadership requirements of nonprofits with revenues greater than $250,000 (excluding hospitals and institutions of higher education). We found that:  

• Over the next decade, these organizations will need to attract and develop some 640,000 new senior managers—the equivalent of 2.4 times the number currently employed.
• If the sector were to experience significant consolidation and lower-than-forecast turnover rates, this number might fall as low as 330,000. On the other hand, given historic trends, the total need could well increase to more than one million.
• By 2016, these organizations will need almost 80,000 new senior managers per year.

The projected leadership deficit results from both constrained supply and increasing demand. The key factors include the growing number of nonprofit organizations, the retirement of managers from the vast baby-boomer generation, movement of existing nonprofit managers into different roles within or outside the sector, and the growth in the size of nonprofits. The chart that follows summarizes the analysis.



The leadership deficit is further aggravated by the sector’s lack of intermediaries to help in recruiting and developing managers. Nonprofits have neither the size nor the resources to develop large numbers of managers internally, as their for-profit counterparts do. The sector also lacks robust management-education and executive-search capabilities.

Addressing the leadership deficit requires, first and foremost, that all participants in the nonprofit sector—from boards and current managers to foundations and individual and corporate donors—recognize the enormity of the problem and make it a top priority. Three difficult but critical imperatives will need to be addressed:

• Invest in leadership capacity. Skilled management is the single most important determinant of organizational success. Nonprofits must invest in building skilled management teams—even if that means directing a greater proportion of funding to overhead. Philanthropy must deliver the operating support required, and boards must reinforce the importance of building management capacity and quality.
• Refine management rewards to retain and attract top talent. To recruit more and better leaders, organizations will have to structure more competitive management packages, particularly in light of the push to hold managers to higher performance standards. The greatest rewards of nonprofit careers will always be intangible, but more attractive compensation is critical in times of labor shortages.
• Expand recruiting horizons and foster individual career mobility. Nonprofits traditionally tend to hire from a small circle of acquaintances. That practice is no longer sustainable. Recruitment efforts will need to expand to new pools of potential leadership talent, including baby-boomers who wish to continue working, mid-life career changers seeking greater social impact, and the young. At the same time, the sector will need to strengthen and expand its mechanisms for attracting and developing managers and enabling talent to flow freely throughout the sector.

The leadership deficit looms as the greatest challenge facing nonprofits over the next ten years. We can use our unprecedented wealth to strengthen the sector’s capacity to meet society’s escalating demands; or we can allow its leadership deficit—with its debilitating consequences—to widen. We are at a crossroads. The choice is ours.

The Nonprofit Sector's Leadership Deficit: Executive Summary

The Nonprofit Sector's Leadership Deficit: White Paper

 

This work by The Bridgespan Group is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Permissions beyond the scope of this license are available on Bridgespan's Terms and Conditions page.

 

 The Leadership Deficit in Nonprofits and What Philanthropists Can Do About It
Thomas Tierney, chairman and co-founder of The Bridgespan Group and Bridgestar, speaks about the Leadership Deficit at the Philanthopy Roundtable's annual meeting.

 

Commentary on "The Nonprofit Sector's Leadership Deficit"

Commentary on "The Nonprofit Sector's Leadership Deficit" written by 14 of the nonprofit sector's top leaders:

Paul Brest
President,
The William and Flora Hewlett Foundation

Geoffrey Canada
President and CEO,
Harlem Children's Zone, Inc.

Jim Collins
Author,
Good to Great: Why Some Companies Make the Leap and Others Don't

Ami Dar
Founder,
Action Without Boarder - Idealist

Kathleen P. Enright
Executive Director,
Grantmakers for Effective Organizations

Marc Freedman
President and Founder,
Civic Ventures

Brian Gallagher
President and CEO,
United Way of America

David Gergin
Professor of Public Service and Director of the Center for Public Leadership,
Kennedy School of Government,
Harvard University

Paul C. Light
Professor,
Robert F. Wagner School of Public Service, New York University

Jan Masaoka
Executive Director,
CompassPoint Nonprofit Services

Jon Schnur
CEO and Co-Founder,
New Leaders for New Schools

Lorie Slutsky
President,
New York Community Trust

Roxanne Spillett
President,
Boys & Girls Club of America

Tom Vander Ark
Executive Director, Education,
The Bill and Melinda Gates Foundation

 

Good to Great and the Social Sectors: Jim Collins on Leadership
Best-selling author Jim Collins discusses the biggest future challenge for the social sectors: leadership. In April 2007 he argues that having the right leaders in the right seats at organizations throughout the social sectors can make the difference between a good and a great society.