Nonprofits Seek to Fill 24,000 Leadership Roles in Downturn

BOSTON, MA, April 20, 2009 — A newly released Bridgespan Group survey of U.S. nonprofit executive directors shows that a leadership deficit forecast in 2006 may have widened last year. Meanwhile, in 2009, despite tightening budgets, nonprofits already foresee a need to fill 24,000 vacant or new roles in areas like finance and fundraising, amid increasing management complexity and baby boomer retirements. Developing leaders within the sector remains critical. In addition, three quarters of respondents saw value in “bridging” talent in from outside the sector to fill the gap, but underscored the need for cultural adaptation. Study findings will be presented at the American Express Nonprofit Leadership Academy taking place from April 27th-May 1st in New York.

American Express commissioned Bridgespan to conduct the survey in order to determine the nature and dimensions of the evolving nonprofit leadership deficit, the training and development needs within the sector, and to look at how managerial skills from the business sector can boost leadership capacity among nonprofits. The leadership vacancy anticipated so far for 2009 includes 24,000 managerial slots. Respondents reported that actual senior job openings in 2008 were running at 77,000, or 43% above a leadership gap forecast in Bridgespan’s 2006 study “The Nonprofit Sector’s Leadership Deficit.”

Twenty-five percent of nonprofit leadership vacancies in the past 18 months were filled through career progression, 41% through in-sector hiring, and 21% via bridging talent in from the corporate sector. Survey respondents highlighted that there is strong competition for the same in-sector talent pool and a lack of resources to find or cultivate new leaders from within nonprofit organizations.

“We recognize the need - now more than ever - to develop leaders within the nonprofit sector who have the power to impact business, the community and society,” said Timothy J. McClimon, president, American Express Foundation. “This survey underscores the importance of an increased focus in this area, and we are committed to helping future nonprofit leaders build and hone their skills to most effectively transition into those leadership positions.”

The study also shows that bridging the leadership gap will call for recruiting beyond the sector. Seventy-three percent of the survey’s 433 respondents affirmed they value private sector skills. Yet, despite a tide of corporate layoffs in the managerial ranks 60% also believe they will face a paucity of qualified candidates.

”It’s a wake-up call that even as the rolls of unemployed executives swell, nonprofits are struggling to fill key positions,” said David Simms, a Bridgespan partner and director of the study. “There is an overwhelming perception that these roles will be difficult to fill due to the need for specialized skills, compensation and funding challenges, competition for the best candidates, and lack of career development opportunities.”

Respondents rated functional skills as their top criteria for qualifying job candidates, signaling opportunity for “bridgers” from corporate roles. Bridgespan Partner Wayne Luke, who directs the firm’s executive search service, points to a dramatic rise in CFO searches in past months.

At the same time, respondents put nearly as high a premium on cultural fit, a good opportunity for those in the nonprofit sector but not always a given for corporate transplants. “Functional skills will get you on the short list,” said Luke, “But only cultural fit can seal the deal.”

Among the key findings of the survey:

* As of January, 28% of nonprofit organizations planned to make senior management hires, translating to 24,000 vacancies in 2009.
* Top barriers to finding suitable leaders included compensation and difficulty finding executives with specialized skills, as well as competition for the same in-sector talent pool and lack of resources to find or cultivate new leaders.
* Projected vacancies are largely the result of retirement, since much of the existing leadership is comprised of boomers. Vacancies also stem from new roles being created due to an increase in organizational complexity based on growth in prior years. The need is especially acute in human services and arts organizations.
* The most important attributes recruiters are seeking not only include relevant experience but also “cultural fit” or shared passion for the mission (68% on average cite fit as a very important asset. That number climbs to 82% in the education field).
* 73% of respondents said that they value for-profit experience in a candidate.
* 53% of U.S. nonprofits with revenue over $1 million have significant for-profit management experience represented on their senior management teams, including 20% in financial roles. Additionally and perhaps surprisingly, 42% of the executive directors surveyed had significant management experience in the private sector.
* 21% of those hired between June 2007 and December 2008 were “bridgers” coming from for-profit entities, while only 15% went in the reverse direction, indicating a net gain for non-profit organizations relative to their for-profit counterparts.
* Surprisingly, for a sector that is notorious for relying on personal relationships, job boards surpassed external networking for first place as a way to reach candidates, with 49 percent of organizations using job boards versus 44 percent using external networking to identify their candidates. 38 percent of respondents also used general print advertising, but it was found to be among the least effective tools. Only 13% of the organizations surveyed employed search firms, but found them highly effective.

In response to a question about why networking nonetheless remained a top recruitment strategy, and underscoring the weight put on cultural fit, one respondent, said:

“Networking and word-of-mouth are generally more effective at making a [cultural] match because potential candidates really need to know more about the organizations they are interested in or who are interested in them. There are so many varieties of nonprofit cultures, that the most appropriate information cannot just be acquired from a website or a job posting.”

Summarizing the survey findings Simms said, “The strong perception of the challenges associated with meeting the leadership need stands out across the board. Although the compensation issue surfaced as expected, the perception that there is a dearth of qualified candidates, especially given the current economic climate, is most notable. This is compounded by lack of resources, in many instances, to invest in leadership development within organizations.

“Function-specific experience is and ought to be the key qualification. However, we found indications of an insular approach to recruiting in some quarters of the nonprofit sector that may throw up unnecessary hurdles. That said, ‘bridging’ is occurring across most nonprofit domains, and the opportunity to educate and facilitate in the midst of this transitional period for nonprofits is considerable.”

To arrange an interview with David Simms or Wayne Luke, or to receive a copy of the Bridgespan 2009 study Finding Leaders for America’s Nonprofits, please contact Jennifer Sauvé, Jennifer.Sauve@bridgespan.org, 617-572-2833.

To arrange an interview with Tim McClimon or learn more about the American Express Nonprofit Leadership Academy, please contact Leslie Berland, leslie.a.berland@aexp.com, 212-640-5142.

About The Bridgespan Group
Founded in 2000 and incubated at Bain & Company, the Bridgespan Group is a 501(c)(3) nonprofit organization that helps nonprofit and philanthropic leaders to make strategic decisions and to build organizations that inspire and accelerate social change. At the heart of our mission is the belief that a strong and effective nonprofit sector can be a powerful force for change as well as a source of human inspiration.

We believe that results are driven by three levers: solid strategy; access to appropriately structured capital; and talent that begins with leaders and senior managers. We exist to apply the best relevant thinking and tools to strengthen these levers and to help organizations deliver on their missions. Our services include strategy consulting, executive search, and philanthropy advising.

The Bridgespan Group’s Bridgestar initiative seeks to help nonprofits attract, connect, and develop strong leadership teams to strengthen the overall performance of the sector.

About American Express
American Express Company (www.americanexpress.com) is a leading global payments and travel company founded in 1850.

American Express launched the American Express Nonprofit Leadership Academy to develop emerging nonprofit leaders committed to working in the sector. The week-long program brings together 24 leaders from nonprofits across the country, who were selected through a competitive application process. Through a series of training sessions and discussions with American Express senior executives focused on career development, business strategy, customer service, brand management and marketing, the program helps build the personal, business and leadership skills needed to run a successful nonprofit organization.