The Challenges of Recruiting Executives in the Nonprofit Sector

The Challenges of Recruiting Executives in the Nonprofit Sector

The Challenges of Recruiting Executives in the Nonprofit Sector

In December 2021, the National Council of Nonprofits (NCN) released a special report assessing the state of nonprofit employment. The results—analyzed from the survey responses of more than 1,000 charitable organizations across the United States—were clear: Nonprofits throughout the country were experiencing a critical workforce shortage.

Of the organizations surveyed by the NCN, 42% reported job vacancies of 20% or higher, and the breakdown of these statistics further underscores the issue. 26% of survey respondents reported job openings for 20%–29% of their positions, and 16% reported a vacancy percentage of 30% or more. Compounding this troubling reality is the fact that nonprofit leadership, which is inextricably tied to the success of mission-driven organizations, is counted among these vacancies.

Over a year later, the findings of NCN hold true. Charitable organizations still find themselves reduced in their ability to recruit and retain nonprofit executives and professionals, generating ripple effects within and without.

Contributing Factors

While a workforce shortage may not be life-threatening for companies and for-profit organizations, the circumstances are far direr for nonprofits. Inadequate nonprofit staffing diminishes an organization’s capacity to achieve its mission and deliver essential programs and services to the community and underserved populations. When nonprofits suffer, so does the greater public.

The COVID-19 pandemic has intensified the need for nonprofit services now more than ever, and yet these organizations find themselves equally wanting. In NCN’s July 2022 Update to their survey on nonprofit workforce shortages, they confirmed, “the challenges nonprofits face in hiring and retaining staff do not appear to be abating.” Their update also identified the final “R” in the trio of nonprofit pain points: replacements. In the nonprofit sector, it appears that hiring replacements is as challenging as recruiting and retaining talent.

While there are several reasons behind this development, one of the greatest factors impacting nonprofit organizations’ ability to hire is salary competition.

Noncompetitive Salary and Benefits

Of the 1,000 charitable organizations surveyed by the NCN, 79% reported salary competition as their main influencer on talent acquisition. Unfortunately, nonprofits are often unable to raise their compensation packages because they simply cannot afford to do so, a problem further exacerbated by restrictive government policies. The expiration of Charitable Giving Incentives (the universal charitable deduction) at the end of 2021, for example, withdrew important funding amidst a pandemic and increased labor and service needs. In addition, the untimely repeal of the Employee Retention Tax Credit (ERTC) withheld resources from the community that they relied upon to keep people working. On top of this, the reimbursement rates offered by government grants and contracts often do not reflect actual costs, adding another financial challenge that nonprofits must face.

These factors are compounded by increased costs (such as inflation and wages) and overwhelming work volumes. Nonprofits, unlike for-profit businesses, cannot raise the costs they charge due to economic realities and governmental policies. Even in the best of times, the pay disparity between for-profit companies and nonprofits means that many charitable organizations have difficulty competing for qualified candidates. Add noncompetitive benefits packages to this equation, and it’s easy to understand why it’s so challenging to recruit and retain staff in the nonprofit sector.

Reduced Services Lead to Employee Stress and Burnout

As the volume of people seeking services increases due to the pandemic and other factors, under-resourced and understaffed nonprofit organizations struggle. They find they are reduced in their ability to provide services in a timely manner, resulting in long waiting lists. Some are even unable to serve new clients at all and are forced to deny services. In fact, 26% of organizations surveyed by the NCN had a waitlist of more than 1 month, and 21% reported an inability to accept new referrals.

With waiting lists growing ever longer, nonprofit employees are being asked to do more when they are already stretched thin from the pandemic’s aftermath. The pandemic has greatly reduced many people’s capacities to navigate and cope with stress, leaving many emotionally incapable of enduring more in an already stressful work environment.

Stress and Burnout Lead to High Turnover and More Organizational Vacancies

Nonprofit careers can be stressful, especially for those serving people in crisis at behavioral health facilities and shelters. Exhaustion and stress from the pandemic, compounded by increased workloads and reduced services, have contributed to premature and high staff turnover. Unfortunately, high turnover generates a greater number of reduced services, which feeds into the cycle of reduced services, burnout, turnover, and more vacancies.

The Baby Boomer Effect on Executive Recruiting

Another factor contributing to the difficulty of recruiting nonprofit executive talent is the effect that Baby Boomers are having and will have on the nonprofit industry. Many charitable organizations are top-heavy with seasoned workers, many of whom are in leadership roles; when they retire, there will be vacancies to fill.

While job vacancies are typical when those that came before retire, the real issue here is in the numbers: Approximately 76 million Americans were born into the Baby Boomer generation, while 55 million were born into Generation X. That’s a difference of 21 million people—a difference that will not go unnoticed as the Baby Boomer generation retires and the next generation steps into these roles. There is no doubt that the difficulties nonprofits face will become more challenging with fewer candidates to choose from.

Increased Popularity of Remote Work

In addition to the contributing factors above, the popularity of remote work is impeding the ability of nonprofits to attract talented candidates. While some positions can be performed remotely, others cannot. Because many nonprofits provide direct services that require on-site staff, it can be difficult to entice nonprofit leadership candidates who have set their sights on remote work. This preference for remote work has also seeped into volunteering. A lack of in-person volunteers has forced some nonprofits to hire staff to replace them, highlighting the current labor shortage.

Scion Executive Search: Your Nonprofit Executive Search Partner

Are you looking for an executive search firm to assist you in identifying highly qualified candidates? Look no further than Scion Executive Search, your go-to source for securing top-tier nonprofit executive talent!

No matter your visionary strategic growth goals or internal challenges, our team at Scion Executive Search thrives in curating strategic leadership acquisitions that fuel the development of nonprofits and world-class teams. When you work with Scion, you work with an incredibly passionate and innovative nonprofit executive recruiting team that is committed to providing your organization with a results-focused, effective, and positive experience. Contact us today to get a search started or visit our website to find out more about us!

About the Author

Jennifer Warren, Technical Writer (she/her/hers) 

Jennifer Warren is an enthusiastic and meticulous technical writer at Scion Executive Search (SES). Committed to excellence and constant growth, she draws on her strong editorial and organizational skills to expedite executive searches for nonprofits and community-focused organizations. Those who work with Jennifer praise her for her initiative, strong language skills, transparent communication, and enthusiasm to support her clients and colleagues. 

Jennifer has spent most of her career in the publishing industry. Before joining SES, she worked at a crafts book publisher for seven years, first as a production editor, preparing manuscripts for print, and then as an associate editor, curating content for new publications. Jennifer has also worked in the nonprofit sector as a grant writer, preparing and submitting applications for program funding. She graduated Summa Cum Laude from California State University East Bay with a Bachelor of Arts in English. 

Jennifer holds a strong appreciation for work that improves the lives and circumstances of others, especially in the areas of mental health; child welfare; and diversity, equity, and inclusion. She has volunteered in California for BRIDGEGOOD (formerly Oakland Digital Arts & Literacy Center) and the Food Bank of Contra Costa & Solano.