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Do too many nonprofits lack effective leadership?

Author Rebecca Koenig discusses the just-released 2016 Nonprofit Sector Leadership Report, which suggests that many nonprofits lack essential elements of effective leadership. How does your nonprofit stack up?

By Rebecca Koenig

A high percentage of nonprofits don’t have strategic goals for their organizations or succession plans for their top leaders, imperiling their long-term survival, according to a report released Tuesday.

Nearly a third of respondents said their charities operate without strategic plans, while 19 percent say their strategic plans are not written down.

Sixty-one percent of chief executives don’t receive annual performance reviews. And most respondents said their nonprofits don’t have a plan for replacing their leaders.

The 2016 Nonprofit Sector Leadership Report was published by Concord Leadership Group, a consulting firm that advises nonprofits. About 1,000 people, including board members, chief executives, staff members, and volunteers, took the survey. Although some respondents may work at the same organization, it’s likely that the results represent nearly 1,000 nonprofits, said Marc Pitman, Concord’s chief executive. More than half of respondents have worked at nonprofits for at least a decade.

"What I’m hoping this does is arm people in nonprofits with data to be able to have the tough conversations," Mr. Pitman said.

Troubling Findings

The survey revealed a lack of strategic planning at nonprofits that Mr. Pitman said he finds surprising and troubling. Only 52 percent of board-member respondents said their organizations have strategic plans.

Charities with clear written strategy statements are more likely to collaborate with other nonprofits, have boards open to taking calculated risks, and have formal ways to measure how effective their leaders are, according to the report.

Strategic plans can also help establish a "compelling vision" that unites employees and helps inform decisions, the report states.

Chief executives tended to be optimistic about their organization’s strategic outlook; only 19 percent said their nonprofit lacks a unifying vision. But 41 percent of middle managers said that kind of vision is absent, which means "people who have to enforce decisions" are the "least likely to say a cohesive story exists to defend decision making," Mr. Pitman says.

Succession planning has not been a top priority for nonprofits, the survey suggests. Seventy-seven percent of respondents reported not having a leadership transition or training program, and 65 percent are not using multigenerational teams to provide continuity on their staff and board.

Just as individuals should undertake "end-of-life planning," nonprofits should be ready if anything happens to their leaders, Mr. Pitman said.

He said the importance of succession planning recently became clear to employees at Living Room, a Georgia nonprofit that helps people living with HIV/AIDS find stable housing. After 18 months on the job, the executive director died unexpectedly in December. But with the support of the board, he had been diligently training another staff member to take over his position when he retired, inviting her to meetings and signing her up for leadership training at the Georgia Center for Nonprofits, says Audrey Krumbach, the charity’s director of donor relations.

That staff member, Angela Susten, was named acting executive director in January, and "the organization hasn’t faltered," Ms. Krumbach says. "It has everything to do with good leadership that helps everyone in this office keep doing their job."

Churning Through Staff

More than a third of respondents said their nonprofits suffer from high staff turnover. When asked about "creative ways" their charities compensate employees to compete with higher-paying jobs elsewhere, 32 percent reported that their group did nothing, 21 percent offered performance-based compensation, 20 percent offered partial or total education reimbursement, and 12 percent openly disclosed all salary ranges to all staff.

Only 5 percent reported offering a discretionary sum of money for staff members to use as they see fit. It’s a strategy that Miriam’s Kitchen, a Washington nonprofit that helps homelessness people, used in 2010 and 2011 after chief executive Scott Schenkelberg won a $100,000 award from the Eugene and Agnes Meyer Foundation. He poured the money into the charity’s staff-development budget, and employees were allowed to request grants for professional training, like Spanish immersion programs in Latin America, and personal purposes, like gym memberships.

The opportunity boosted staff morale, he said. He also believes it helped the charity win awards for being one of the best local places to work from the Washingtonian Magazineand the Washington Business Journal.

Mr. Pitman said more nonprofits should consider those kinds of innovative solutions to staff turnover. He was dismayed that some survey respondents left comments suggesting that their "creative" retention strategies include offering benefits and vacations — compensation that most employees expect these days, he says.

Even worse were comments suggesting that fair compensation is not important to employees who "‘work here because they’re committed to the mission,’" Mr. Pitman says. "The entitlement and judgment in that statement is just awful."

This attitude may come from nonprofit founders who are out of touch with modern workplace expectations, he says, or who don’t understand why some people aren’t as willing to sacrifice for their causes as they are.

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