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Leadership in the Third Sector
by Carolyn Love Ph.D.

Nonprofit organizations are being asked to take on more responsibility for the welfare of society than ever before in the history of the sector. Traditionally, these type of organizations fill the “gap” between the services provided by the government and the products and services available in the private sector. As the needs of society become greater, the nonprofit sector is being asked to do more, especially at a time when resources are dwindling.

Also, too, they are being threatened by a shortage of seasoned professionals who can assume a leadership role in a broad spectrum of organizations. A 2004 Survey of Colorado Nonprofit Executives revealed that nearly half of the executive’s surveyed plan to leave their posts within the next five years. This alarming fact was also confirmed at the national level. According to an article written by Thomas J. Tierney in the Summer 2006 issue of the Stanford Social Innovation Review “over the next decade nonprofits will need to find some 640,000 new executives, nearly two and a half times the number currently employed.”

I believe there are three primary reasons for the leadership crisis: executive directors that are part of the baby boom generation are planning to retire; the compensation and benefits package for nonprofit executives is not as strong as compensation and benefit packages in the public and private sectors; and lastly, burnout – as an executive director of a small to midsize organization, you are responsible for fund development, board development, program planning and implementation and at times copying, stapling and other miscellaneous duties which can’t be assigned. While the passion for the cause is strong among executive directors, the ability to carry the burden of leadership is becoming far too great. People are leaving the sector in search of different ways to fulfill their life purpose. As people leave their post they tend to leave the sector instead of moving to a different executive director position.

The question then becomes what can be done to counteract this trend? As baby boomers are leaving the nonprofit sector, they are also leaving the private and public sectors. There are people who have enjoyed a successful career in corporate American and are now seeking an opportunity to fulfill their life’s mission. The nonprofit sector may be just the place for their advanced skill set(s). Marketing to this group may yield leaders who are skilled, dedicated and willing to work in exchange for doing something that adds value to our society.

Currently, the profile of a leader in the nonprofit sector has predominately been White female. The Denver Foundation is leading ground breaking work to ensure the leadership pipeline is filled with people of diverse backgrounds. This model may prove useful to other nonprofit organizations. 

I, myself, had been an executive director for three nonprofit organizations. I understand from experience the “dance” around the issue of money and benefits. In the struggle to keep overhead costs low and return on investment high, personal development tends to get ignored. However, it is this investment that will attract and retain the leadership talent needed to meet the leadership demand. The thinking amongst the nonprofit community is people are attracted to the sector because of the “cause.” People want to feel what they do in life will make a difference in the world.

While this is noble thinking, people still need to be able to earn a living that enables them to live comfortably and have access to healthcare and retirement benefits. Nonprofits need to get creative and think of ways to provide security for its employees. Foundations and others in the funding community will need to rethink how operational expenses are funded. What is reasonable in small, mid-size and large nonprofit organizations? We must get past the notion that nonprofit executives earn six figure salaries and have special access to private jets. Over fifty percent of nonprofits in the U.S. have an annual budget less than $100,000. They operate on a “shoe-string” and in most cases money goes directly to the delivery of services and not towards the personal benefit of the staff.

As mentioned earlier people who work in the nonprofit sector do so because of the commitment they have to the cause and population being served. Nonprofits frequently operate in a state of funding crisis with some barely keeping the doors open from month to month. The constant cycle of fund development, board development and design and delivery of services can be fatiguing. People can grow weary of always working in an environment where change comes at a slow pace. Taking time for self becomes secondary to meeting the needs of the constituent group being served. Placing personal needs ahead of the needs of the organization may be considered selfish.

However, taking the time to renew one’s spirit allows you to give more not less to your organization. One organization in Denver, Colorado now requires its employees to schedule time for self on a regular basis. It actually has become part of their performance review. People must show evidence of what they are doing to nurture themselves. This is an excellent way to demonstrate the commitment to those in service of others.