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Opinion: Nonprofit organizations facing critical crossroads for staff

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Many of the unsung heroes of our area are those who work at nonprofit organizations. Day after day, you’ll find them feeding the hungry, cleaning streams, educating children, fighting for justice and standing up for victims. Their work, often unrecognized, is a key element of healthy, thriving communities.

The current global crisis and compounding issues have had a crippling effect on nonprofits. Health restrictions have caused the cancelation of in-person fundraising events and have hampered face-to-face services to individuals in need.

As COVID-19 variants rage, nonprofits are being asked to do more than ever. But another crisis has emerged: a staffing crisis.

A report by Johns Hopkins University says the nonprofit sector lost about 1.64 million jobs in the first three months of the pandemic. Since then, around 70% of those have been recovered. While that is good news, the nonprofit sector still needs 485,000 more employees to equal pre-pandemic numbers.

Each year, BKD publishes the State of the Nonprofit Sector Report. This year’s study, to be published in the spring, provides data on the nonprofit workforce. Of the more than 875 organizations in the nationwide survey, nearly all are experiencing staffing shortages. All sizes and types are in the same predicament – small organizations with annual budgets of under $250,000 to large ones with budgets over $100 million.

Public/societal benefit groups (community foundations, civil rights, community improvement, etc.) and religion-related organizations had the highest total percentage of vacancies. Health and education were next. 

Many organizations have been forced to shutter programs or reduce working hours because of an inability to recruit and hire enough employees.

The nonprofit industry had a human resources issue long before the pandemic. Low pay and high turnover have plagued organizations for decades. In addition, a wave of baby boomer retirements has accelerated the number of leadership vacancies. There are several other factors contributing.

  1. Lack of readiness for vacancies, in part, because of weak or nonexistent HR practices. Organizations pour their heart and soul into ambitious missions with skeleton staff and scarce resources. In our study, the largest representation was from small organizations with annual budgets between $150,000 and $249,000 – most with two or three employees.

It’s no wonder executive directors struggle to devote time to this area.

In fact, leaders have been indirectly discouraged from spending time on such issues because of the antiquated idea that the best organizations allocate at least 80% of resources toward programs and 20% or less on overhead or administrative functions.

  1. Lack of a formal succession plan. Boards often struggle with executive transition. In some cases, there is a fear the current executive director will be offended at the idea of planning for their replacement. Founding and long-tenured leaders may recoil at a plan for the future that excludes them.

A study by Robert Morris University found only 28% of organizations have an updated leadership succession plan in place.

  1. Lack of leadership development. Most organizations do not invest in management capacity. Hiring is frequently from outside, leaving internal candidates with little promise of growing within the organization.
  2. Lack of competitive wages and benefits. Companies like Costco Wholesale Corp. and Hobby Lobby Stores Inc. now offer starting salaries around $18-$20 an hour. Walmart and Amazon offer 100% tuition reimbursement.

Nonprofit leaders, boards, foundations and business leaders must make addressing this issue a priority. Here are a few ideas:

  • Embrace innovation. Organizations must be resilient, flexible and willing to try new approaches. Regularly assess structure and processes to make sure they’re current and mission-true.
  • Offer competitive salaries and benefits. It is unfair, if not unethical, to ask employees to sacrifice their personal well-being simply because they choose to work in a helping industry. An investment into employees is an investment into the mission and ultimately into the community.
  • Develop the right culture. A diverse and inclusive workplace culture that establishes shared beliefs and focuses on employee well-being is one of the best tools to recruit and retain quality individuals.
  • Don’t delay succession planning. This ensures organizational stabilization and continuity. Waiting too long can jeopardize sustainability and, possibly, an organization’s very existence.

Nonprofits are at a crucial juncture. As this region continues to grow, we need well-prepared leaders who can guide the organizations that do such important work for our community.

Dan Prater is a senior managing consultant for companies and nonprofit organizations with BKD LLP in Springfield. He can be reached at dprater@bkd.com.

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