Nonprofit organizations have always faced challenges in attracting the best and brightest leaders. As an industry, the nonprofit sector competes with for-profits for highly-qualified talent while balancing budget constraints. Many highly-qualified executives serve in leadership positions at nonprofits primarily because of their passion and commitment to the organization’s mission – not for self-serving financial reasons.
Recent years have only exacerbated these challenges. With historically high inflation, rising interest rates, and the increase in lucrative opportunities available to talented professionals, it’s become increasingly difficult for nonprofit organizations to both attract and retain proven leaders.
Successfully attracting, nurturing, and retaining high-performing leaders is central to the long-term success of any nonprofit organization. This requires a supportive board, an ability to effectively communicate the importance of the nonprofit to the local community, and a commitment to fostering a great employee experience.
Fortunately, there are several steps that organizations can take. In this guide, we explore what these steps look like, sharing tangible strategies that your nonprofit can start implementing today.
Smith + Howard is a national tax, accounting, and advisory firm with a well-established nonprofit accounting practice. With decades of experience advising organizations on every element of finance and accounting, our nonprofit accounting team is equipped to help nonprofit organizations reach their full potential.
In any organization, recruiting top talent is key to success. When hiring new talent, the ability to effectively communicate the mission of your nonprofit is vital. This is particularly true for employees from younger generations, many of whom are less focused on compensation and more concerned about the impact an organization has on its local community.
Attracting top talent is a significant effort, but it’s one that almost always pays off. Over time, any organization run by talented, accomplished professionals will perform strongly. Attracting these leaders is a team sport. There are often a variety of stakeholders involved, particularly for executive-level positions. This might include board members, local community leaders, and even lower-level employees that will report to the new hire.
Hiring decisions are among the most important decisions that any organization makes. The caliber of leader your organization recruits dictates its trajectory for years to come and a comprehensive recruitment process is central to ensuring the most qualified individual is found.
For high-profile positions, it’s always advisable to go through a formal recruitment process that invites applications from both internal and external candidates. Plan to involve a wide variety of stakeholders here: a new leadership hire will become the face of your organization to donors, the local community, and partners, and it’s important to observe how candidates interact with each of these groups. Because of the public nature of a nonprofit leader’s position, the interview process is often more involved than interviews in a for-profit role. In addition to including internal representatives of the organization, board members and outside community leaders may assist in the interview process.
Once your organization has selected the right candidate for the job, an effective onboarding process is vital to ensuring they hit the ground running. If possible, plan for a transition period between a departing executive and their replacement: this allows ample time for the new leader to be introduced to important donors, partners, and employees, as well as to learn about the impact the nonprofit has in the wider community.
If a nonprofit organization already has an established leadership team, retaining this team should be a key focus. When trusted leaders leave a nonprofit they often leave significant gaps behind. Replacing these leaders is far from simple: a nonprofit may have to backfill a position, engage an executive search firm, and hire then train a replacement.
This not only consumes a significant amount of time and energy, but it also distracts from the core mission of the organization, frequently resulting in missed opportunities or declining performance. With this in mind, it’s vital for nonprofit leaders to consider how to best retain their existing talent.
Keeping a pulse on the finger of market compensation is key. Boards should analyze the Form 990s of similar organizations, paying particular attention to compensation for key leadership personnel. If your organization isn’t paying market-rate salaries to its leaders, it’s likely you’ll soon be on the lookout for new leaders. There’s no reason to be cheap: if a key leader leaves, an organization will have to pay a market-rate salary to attract a qualified replacement.
An effective retention strategy is about far more than financial compensation, however. In a nonprofit, it’s crucial to ensure that your team connects with the wider mission and tangibly experiences the impact your organization has on the wider community.
There are other, more tactical steps that can be taken too. Learn what motivates your team most: is it public praise for a job well done? Or perhaps small spot bonuses go a long way in promoting positive morale? Take care to canvas employees regularly on topics such as remote work policies to ensure your organization moves in lockstep with the wants and needs of your employees. You might also consider looking at rankings and comments on your organization by current and former employees on sites such as Glassdoor, Indeed and others.
Ultimately, no matter how strong an organization’s employee retention strategy is, key leaders will leave. It’s important to ensure that your nonprofit can continue to function fully in the event a key leader departs. Cross train employees so that they can backfill employees that leave, make sure critical relationships have multiple points of contact, and maintain job descriptions that can be tweaked when it’s time to hire new talent.
Effectively recruiting, developing, and retaining proven leaders can be challenging for nonprofit organizations. But it’s an issue that nonprofit boards and hiring committees must get right. Throughout this process, the support of an experienced partner can be an indispensable asset.
At Smith + Howard, our nonprofit accounting team is able to advise boards and executives as they make these decisions. We’re available to assist in the hiring process by interviewing candidates to determine their technical knowledge, cultural fit, and understanding of the financial position of the organization. We can also provide job descriptions for a variety of accounting and finance positions.
In the event that finance and accounting professionals leave a nonprofit organization unexpectedly, our team is able to step in to provide continuity and stability. Smith + Howard provides outsourced accounting and CFO services and also has connections to outsourced payroll solutions tailored to the needs of nonprofits. Together, our team works closely with yours to ensure your organization continues to operate seamlessly while moving forward on the recruitment process.
To learn more about how Smith + Howard can support your nonprofit, contact an advisor today.
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