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Talk with a nonprofit leader for any amount of time and you will likely hear them say, “It feels like we are building the bridge as we are crossing it.” The latest data backs this sentiment. This is particularly troubling in the sector with the third largest workforce – behind only retail trade and manufacturing. A sector that manages over $3 trillion in assets. And a sector that is the critical safety net, as well as an important quality of life enhancer, in each of our communities. If this were in the private sector, it would be called “too big to fail.”
The data from the Concord Leadership Group’s latest study – out today – pinpoints why. The research shows that:
- up to 49% of nonprofit leaders are operating without a strategic plan;
- 61% of nonprofit CEOs are not having their performance evaluated at least annually; and
- 42% of nonprofits do not have any formal performance evaluation systems at all.
Strategic wishing?
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More disturbingly, the data suggests that what nonprofit leaders call a “strategic plan” is closer to a “strategic wish” or “just a nice idea.” Common organizational leadership agrees that funding plans are critical to responsible organizational planning. Yet 62% of leaders say their nonprofit’s strategic plan does not include a fundraising plan!
When we looked deeper, the data revealed some surprising insights into why a strategic plan even is important to a nonprofit. For example, leaders with a strategic plan are 1.5 times more likely to agree that their nonprofit has a vision shared by all stakeholders. Less than half of those without a plan are able to agree. So the effort of creating a written plan can even help leaders lead with less stress.
Planning to fail?
Another shocking finding is that while over one-third of leaders say their staff turnover is high, more than three-fourths of leaders do not have a succession plan or even a leadership development program in place. Staff turnover is costly to organizations in both hard and soft costs. But in the study many respondents listed “offering benefits” as a “creative recruitment strategy” in their nonprofit. Benefits have become an expectation for job seekers, not a “creative surprise.” With out-of-touch strategies like this and a reported 10,000 Baby Boomers reaching retirement age every day, nonprofits around North America are in for a rough ride. A ride many organizations might not survive.
Too big to fail
Whether in services offered or salaries paid, the nonprofit sector is vital to the fabric of our communities. It really is too big to fail.
But the sector does not need a government bailout. Leaders need to lead. Out-of-date, dysfunctional systems need to be changed.
We offer the 2016 Nonprofit Sector Leadership Report as a tool to arm you with the data you need to have those tough conversations. The report goes into more depth on strategic planning, looks at recruiting and retaining talent, and even examines why nonprofits may not be getting their message out to a wider audience.
See how your nonprofit leadership measures up against the data. Download the full report for free, go to https://concordleadershipgroup.com/report/.
I take issue with the conclusions you draw here that create a negative impression of the non-profit sector to promote the types of services you offer. It’s a destructive way to do business.
The problem with your survey may not be the questions, but how you gathered data, and what you do with this data. You really aren’t comparing things that have the same goals/budgets/missions, etc.
And then you equate the non-profit sector to the corrupt banking system that failed because of sheer greed.
Those are the types of things I object to.
That’s an interesting take, Aaron. I love the nonprofit sector. It’s a sector that I’m dedicated too. And I want it to thrive.
The negative image of the sector isn’t a piece of creative writing. It’s in the negatively skewed reporting on Wounded Warrior, and even worse in the reporting and politics in the UK.
I was actually hoping our research would prove the anecdotes about dysfunction in the sector was a myth. The data surprised me. Especially, according to the data, how central a written strategic plan is. I’m not particularly wedded to strategic plans. But leaders with them report much more confidence and a willingness to navigate the challenges we face.
Thanks so much for your passion and commitment to our sector.
How many people surveyed asked for or got a government bailout? This is an absurdly simplistic take on a complex problem, no doubt meant to promote the importance of the types of services you offer. And denigrates the incredibly thoughtful work of many skilled leaders, and brings down our industry as a whole, in the guise of trying to help.
Thanks, Aaron. I’ve seen alot of “fluff” pieces that are thinly veiled excuses to market a company’s services too. I can’t stand them. That’s why we worked seven organizational partners and two academics familiar with research in the nonprofit sector as we constructed the 38-question survey too.
I share your passion for nonprofits, but I’m surprised that you found any part of the 30 report “simplistic” or insulting to the great work being done in the sector. Nonprofit leaders are working hard. It’s important that we look at these tougher questions so we can help them in their work. Thanks for your provocation and adding to the discourse.