The Challenges Business Executives Face When Transitioning to Nonprofit Leadership Roles

Many bridgers — business leaders who venture into the nonprofit world — find it harder to succeed in the nonprofit world than they initially thought. More bridgers than ever followed dreams of doing social good by taking positions in nonprofits during the pandemic and Great Resignation to find that goals are more complex and intangible. It's incredibly difficult to move the needle on heart disease or sustainability. 

While in many ways, leadership styles are universal and business principles are very likely to achieve operational efficiency, prospective crossover leaders should go into the nonprofit sector with their eyes wide open. I talked to five business leaders who made the move to nonprofits to get their insights. The most recent cohort of bridgers mostly say to remember that “Rome was not built in a day” when it comes to taking on the unique challenges in the nonprofit space. Here are the realizations they had after facing unexpected challenges.

1. Organizational Cultures Differ

The culture demands consensus-building and team cohesion. Leaders in the nonprofit space need to be much more consultative, accommodating and inclusive in their decision-making. Here’s why — people are the most important commodities in nonprofits. 

People care deeply about the causes they work for and volunteer to advance. The mission moves forward because leaders galvanize the people in their cause community to act and give generously of their time, treasure and talent. That’s why a consensus-building brand of leadership takes precedent among nonprofit leaders. They must be seen as having a stake in the cause while inspiring others to champion their vision and ideas. 

Some for-profit leaders can find the change frustrating but having an abundance mindset and sharing why you believe in the cause can inspire and motivate teammates to achieve their full potential. 

2. Environments Are Resource-Constrained 

It’s a given that nonprofit organizations often have limited resources, including funding, staff and infrastructure. This means change is a constant and leaders require an entrepreneurial spirit. Nonprofit leaders need to adapt and pivot quickly in response to changing circumstances. 

The crossover leaders I spoke with all agreed that the nonprofit sector’s funding challenges and a shortage of training and coaching make building strong organizations especially hard. The business model is flipped: When nonprofits satisfy their community members, they use resources, but when for-profits satisfy customers, they gain resources. 

Nonprofits are more political than most people think. Fundraising is a critical activity that’s similar to campaigning. Nonprofit leaders must appeal to a broad audience with diverse interests across the cause. That’s why it’s recommended business executives looking to make a move should have some volunteer fundraising experience. 

3. Leadership Manages in a Fishbowl

Even veteran nonprofit leaders can get thrown by the unrelenting scrutiny. Watchdog groups like Charity Navigator rate nonprofits on impact and results, accountability and finance, culture and community, leadership and adaptability, salary allocations, financial reserves, and percentages of dedicated programs, fundraising, and administration. 

It can be dizzying. 

Not fully understanding how these ratings work and losing a star in a rating one year leads at least a year in potential losses in fundraising while rebuilding the organization’s reputation among donors and partners who use these ratings as guides for giving. 

4. Capacity Building Is Lagging

Corporations spend an enormous amount of funding on training. In the nonprofit space, paying for capacity building isn’t a popular area for donors or sponsors. It stands to reason that capacity throughout a typical nonprofit lags in its capacity by comparison. 

The people I spoke with largely agreed that there’s a greater reliance on leaders and CEOs in the nonprofit sector for coaching as most of the training and teaching happens internally. 

5. Not All Nonprofits Are Friends

Public opinion is that nonprofits have a longstanding history of collaborating. One crossover leader cited the biggest surprise was that not all nonprofits love each other. All it takes is to be a smaller-sized nonprofit to feel it. 

Countless nonprofits jockey and gallop their causes on social media as soon as the clock strikes noon Eastern on Nov. 15 when Facebook starts its annual donor match. It’s usually over in the blink of an eye and large organizations that command a wide donor base win the day. While it’s just one example, there are winners and losers in the pursuit of limited resources. Savvy nonprofit leaders work at balancing when to collaborate and when to compete with others while always giving the appearance of cooperation. 

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.