Nonprofits must invest in their leaders

By Todd Cohen

Nonprofit executive directors and boards, and their funders, need to be smarter about professional development.

Sustaining nonprofits for the long term depends on leadership, which will require that executives and boards invest the time and resources to support, better understand and work with one another.

That investment, including support from funders, is even more critical in the current economic crisis, with 84 percent of nonprofits reporting they are financially weaker from the recession and 26 percent saying they pared their annual operating budgets because of reduced funding, according to Daring to Lead 2011, a new report by CompassPoint and the Meyer Foundation.

Based on an online survey in the fourth quarter of 2010 that generated responses from over 3,000 executive directors, the report also says executive directors are suffering from recession-related anxiety and burnout, and are delaying transitions out of their jobs.

It also finds that a significant minority of executives are “not deeply financially literate.”

And while they reported relatively high levels of financial oversight at the board level, compared with other potential aspects of board engagement such as fundraising or public policy, executive repeatedly said it was a challenge to get boards to full understand their organizations, with 39 percent saying that lack board engagement in strategic decision-making.

“Overall, the recession has underscored the endemic weaknesses in many nonprofit business models,” says a brief following up on the report. “The degree to which board leaders are partnering with staff on fundamental questions of business model and sustainability remains in question.”

While 91 percent of them are very happy in their jobs or have more good days than bad, the report found, executives tend to be more energized by job functions that focus outside the organization, yet they still struggle to spend enough time on them.

And while they had a lot of good impressions about their boards, most executives reported strong board participation in only a handful of areas, and most do not spend much time working with and supporting the board, despite evidence from the report that executive directors’ satisfaction with board performance shows a strong positive correlation with time spent supporting the board.

What is to be done?

A series of briefs following up on the report call for executives and boards, as well as foundation program officers, to improve their own financial literacy, and for boards to expand their role beyond financial oversight to include “deeper engagement in questions of sustainability.”

They also call for nonprofits to integrate into leadership development into the way their do business, including budgeting, mentoring, performance reviews and succession planning.

And they call for executives to invest more time supporting and working with their boards; for boards take steps to improve their performance, such as job descriptions and periodic training; and for funders to increase the attention they pay to boards and to become “more explicit in their expectations around effective governance.”

Nonprofits are serious business, and executive directors and boards need to make it their business to get the training and support they need to better understand their business and make it succeed.

For their part, funders need to understand that investing in the professional development of nonprofit executives and boards is essential if their organizations are going to survive and thrive.