A Growing Leadership Gap

Despite the wave of layoffs washing over the nonprofit world, a study to be released this week predicts that at least 24,000 senior-level nonprofit jobs will be open this year.

Twenty-eight percent of organizations said they intended to make such hires in 2009.

Retirements by baby boomers will account for some of those vacancies, say researchers, but more than a few will be new positions, many of them in finance and fund raising. Human-services and arts groups are expected to have the most need for new leaders, even with the recession’s heavy toll on cultural organizations in particular.

But 60 percent of nonprofit leaders who participated in the study also predicted that they would have a hard time finding qualified candidates to take those jobs, even though the pool of job seekers is deep, as a result of unemployment in the business world.

The data come from the Bridgespan Group, a nonprofit firm, with offices in Boston, New York, and San Francisco, that does recruiting and consulting for philanthropies and charities. The report, a sequel to Bridgespan’s 2006 study of senior-level nonprofit-hiring projections — which found that organizations would need to hire 640,000 additional senior managers by 2016 — says those vacancies may be proliferating at a faster rate than expected. During the 18 months from June 2007 to December 2008, just under 77,000 senior-level jobs were open at nonprofit groups nationwide, a figure 43 percent higher than was forecast in the 2006 study. While one out of every four leadership vacancies was filled from within, 41 percent of new leaders came from other nonprofit groups, while 21 percent came from the business world.

‘Retirement Is Real’

The prediction of 640,000 vacancies over 10 years, from the 2006 study, was actually in the middle of researchers’ range of guesses about future hiring, says Thomas J. Tierney, Bridgespan’s chairman and author of the 2006 report.

“In any future projection, the only thing you know is that it’s wrong,” he says. The actual number of open senior-level jobs could turn out to be more than one million or as low as 300,000, he says, depending on events between now and 2016.

When the 640,000 figure was unveiled three years ago, he adds, “virtually no one came back to us and said that number was crazy.”

The recession is not expected to make a long-term dent in projected senior-level vacancies, says Wayne Luke, who heads Bridgespan’s executive-search department (after a career in for-profit executive recruiting). For one thing, he says, “let’s not forget that many of these organizations are run by baby boomers, and retirement is real. Even though some retirements might have been put on hold these past few months, based on the economy, it might have diminished it somewhat, but it certainly hasn’t eliminated that as a factor.”

Although nonprofit leaders who were polled said that only 12 percent of vacancies that came open during the 2007-8 period covered by the Bridgespan survey were retirements, that share is expected to jump to 35 percent in 2009.

Meanwhile, however, recruiters like Bridgespan have experienced a few hiccups because of the economic downturn, Mr. Luke acknowledges.

As the worldwide financial crisis spread last fall, “everything went into a deep freeze. We were getting news back from nonprofit organizations saying, ‘We’re never going to hire anybody, ever again,’" Mr. Luke says, with a sharp laugh. But by February, he says, his organization was handling more executive searches than usual for that time of year.

“There’s a flight to quality,” he says, “and people are going to be looking to upgrade talent, even in a diminished economy and with diminished budgets, because otherwise they’ll never get done what they need to get done.”

Help Wanted at the Top

As money is poured into charities from the federal economic stimulus package, growing organizations will need to add top managers, says Mr. Tierney. And even new efforts to consolidate charities won’t necessarily reduce their need for seniorlevel hiring. “There’s an argument to be made that two medium-sized nonprofits merging require more management talent, post that merger, than they did independently before the merger, just because bigger organizations are more complicated to run,” he says.

Most of the layoffs at charities in recent months have involved junior, not senior, staff members, notes Timothy J. McClimon, president of the American Express Foundation. which financed the Bridgespan survey.

“Even if they’re cutting back on their budgets and cutting back on their staffs, nonprofits have to have senior leaders to operate,” he says. “As those positions come open, they have to be filled whether there’s a recession or not, if the nonprofit is to survive.”

In fact, widespread layoffs at businesses and charities have, oddly, not made it any easier for charities to fill senior-level nonprofit slots, says Mr. Tierney. “It’s not a matter of quantity, it’s a matter of quality. The job of running these organizations is a really hard thing to do.”

And yet a lot of good people are in that expanding pool of job seekers, says Michael Watson, senior vice president for human resources at Girl Scouts of the USA, in New York. “We are seeing a higher quality of applicant across the board and across the country,” says Mr. Watson, who came to the charity from IBM.

The challenge, he and other recruiters say, is to use the right bait to lure those potential leaders.

Business Skills Prized

The biggest obstacle to filling nonprofit jobs, according to the Bridgespan report, was insufficient compensation, followed by a lack of candidates with specialized skills and a lack of meaningful career paths for managers.

The survey was based on interviews conducted by City Square Associates, a market-research firm in Cambridge, Mass., that interviewed 433 executive directors at charities and foundations nationwide in December, January, and February, focusing on groups with budgets of more than $1-million. Other key findings:

• Seventy-three percent of nonprofit leaders said they valued for-profit experience in job candidates, and 42 percent of executive directors said they had significant business-world experience on their own résumés.

• Online job boards, not professional networks, were the most popular method cited by nonprofit executives as a means to recruit candidates. Forty-nine percent of executive directors said they had used such job sites, 44 percent said they had tapped external networks, and only 13 percent said they had used search firms. However, those professional networks were deemed by respondents as the most effective means to recruit successful candidates.

• Fifty-three percent of nonprofit leaders said they had made adjustments, such as increasing compensation and offering flexible work arrangements, in order to hire desired candidates for senior-level jobs.

• Specific experience needed for a job was called the most important qualification for senior-level employees by 79 percent of nonprofit leaders, while 75 percent cited fitting the culture of a particular organization.

“I think one reason why cultural fit ended up as high as it did among the survey respondents is that they recognize that to succeed in leading a nonprofit organization, people need to understand that it’s mission first, not money first,” says David L. Simms, a Bridgespan partner who oversaw the new survey.

For nonprofit organizations to have greater impact on a wider variety of people and attract the best employees, “we need to be culturally diverse,” says Laura Reeves, chief talent officer at the American Cancer Society, in Atlanta. “So really narrowing in on what used to be that singular cultural fit, I think, is somewhat antiquated.”

But allowing for a more inclusive office culture is not the same as loosening employees’ connections to a charity’s mission, a standard that should not be compromised, she says.

The American Cancer Society, Ms. Reeves says, is also making an intensified effort to create meaningful career paths for managers already employed by the organization. The charity, she says, helps workers identify career goals and outline the steps they need to take in order to compete for those job opportunities in the future.

No ‘Port in a Storm’

For nonprofit groups, says Mr. Luke, the Bridgespan recruiter, it’s especially important to discern candidates’ motivations when recruiting people who hope to switch to a nonprofit career from another profession.

Make sure they are committed to the charitable cause, he says, and not just seeking shelter from a rocky job market.

“The worst mistake you can make,” he says, is to bring in an experienced professional who is “viewing this as a port in a storm.”

Nonprofit jobs that may be especially good fits for candidates from business or government, he says, include chief financial officer, chief operating officer, human-resources manager, and marketing and business-development positions.

Judy Vredenburgh, president of Big Brothers Big Sisters of America, a mentor organization with headquarters in Philadelphia, says her charity hired its chief technical officer from a for-profit company. “We have fabulous social workers,” says Ms. Vredenburgh, who is retiring in June. “But we didn’t have people with technical expertise.”

Candidates who cross over from the business world may include people like Yvonne Petrasovits.

When Ms. Petrasovits was an executive at Aetos Capital, an international investment-management firm in her native New York, she grew more interested in volunteering at charities, including Communities in Schools, a dropout-prevention program whose mission appealed to her.

“I was a near-dropout myself,” she says, “because I wasn’t interested in school.”

When she came upon a series of news articles about the nonprofit world’s looming leadership deficit, a plan emerged: “Why couldn’t I work for a nonprofit full time? I could apply all my business skills,” she says. “Well, it’s a lot easier to think that than do it.”

Today Ms. Petrasovits leads READ NYC, a charity that trains teenagers to help kindergarteners and first graders learn to read. To get there, she had to overcome recruiters’ skepticism — and to take a paycheck less than half the size of the one in her old job.

“I’m much more conscious of how I’m spending my dollars now,” she says.

Paying for Quality

Even job seekers from the business world who are willing to sacrifice financially may experience culture shock. For one thing, they may have difficulty adjusting to the flatter hierarchies of nonprofit workplaces, says Laura Gassner Otting, author of Change Your Career: Transitioning to the Nonprofit Sector (2007).

“The first time they attend a staff meeting and find out the intern has as much to say as a senior staff person — that can be pretty eye-opening,” she says. “A lot of for-profit people get frustrated at the decision-making structure and the pace at which decisions are made.”

Still others may find a home in the nonprofit culture, suggests John Smart. He was hired in September as chief administrative officer at NPower, in New York, a network of nonprofit organizations that provide technological assistance to more than 4,000 charities, after nearly three decades working in finance jobs for corporations.

The nonprofit world’s emphasis on consensus and mission over monetary rewards has proved a welcome challenge for him. “If you can persuade people to do the right thing without the traditional levers of compensation, I think that makes for a better manager,” he says.

Compensation, though, remains a sticking point for many job candidates, as reported in the Bridgespan survey.

Ben Klasky, executive director of IslandWood, an environmental-education center in Bainbridge, Wash., with 75 workers and an annual budget of $5.5-million, says meeting salary demands remains a challenge in filling senior-level spots at organizations like his. He ought to know. During his four years in the job, he has replaced three of the four senior staff members who report directly to him.

On the other hand, the gap between for-profit and nonprofit compensation may be getting smaller. “Nonprofits, particularly mid-sized and larger organizations, are becoming more sophisticated in the total package that they offer,” Mr. Klasky says.

Besides, he says, it doesn’t pay in the long run to pinch pennies in that regard: “Turnover ends up costing you more if you don’t have competitive salaries.”

Hearts and Minds

Richard Leftley, president of MicroEnsure, a for-profit entity within the microfinance charity Opportunity International, which sells low-cost insurance to poor residents of developing countries, hired both a chief financial officer and a chief operating officer who, like himself, came from the for-profit world.

He needed strong business skills at the senior level of his operation as MicroEnsure’s budget grew from $750,000 to $5.5-million this year, thanks to a grant from the Bill & Melinda Gates Foundation.

To attract candidates from the business world, including retirees, says Mr. Leftley, charities have to articulate their goals clearly, in language that business people can understand.

“If you can’t do that, you can tell them the fuzzy stories about how you’re helping these little old ladies in Africa until you’re blue in the face, and you’ll get a hook in them, and you’ll maybe even make them a donor,” he says. “But to get them to say, ‘I’m going to exchange the golf course for sitting behind a desk for these guys, and I’m going to do that for $100,000 a year, which is a pittance compared to what I was earning before I retired,’ you really need to get into their hearts and into their heads.”

To fill the many senior-level jobs that will open up in this and subsequent years, says Mr. Simms, the Bridgespan survey director, nonprofit recruiters need to cast their nets wide.

“It’s external networking, it’s job boards, it’s making sure that you have visible connections beyond just a small circle,” he says. “It serves the organization and serves senior leaders well that they’re tapping into this talented, diverse pool.”

Bridgespan’s report, “Finding Leaders for America’s Nonprofits,” is available free.

Jennifer C. Berkshire and Eman Quotah contributed to this article.