Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

May 12, 2008

Big challenges for nonprofits, foundations

Foundations and nonprofits need to get their house in order.

A thriving charitable marketplace is critical to address the urgent social problems America faces, but that marketplace itself faces huge challenges.

Those challenges, spelled out in three new reports, include the need for more effective nonprofit boards, more investment in nonprofit leadership, and more diversity in philanthropy.

While it faces an imminent crisis because of massive turnover expected in staff leadership, for example, the nonprofit sector gets poor grades for the job it is doing to provide leadership training and professional development opportunities to aspiring nonprofit executive directors, according to a report by the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University in Grand Rapids, Mich.

Emerging leaders want and need mentors but worry about making nonprofit work a life-long career because of low pay, burnout, the burden of student loans, and lack of professional development, and generational differences in organizational expectations, the report says.

A second report, by Rockefeller Philanthropy Advisers, says that with public pressure growing “for foundations to be more responsive to underserved and diverse communities,” foundation leaders should “reconsider the many ways to incorporate diverse perspectives into solving our greatest challenge.”

While foundations have made “much progress” in staff and board diversity, and modest progress in the share of grant dollars targeting minority populations, the report says, the number of grants and grant dollars targeting minority populations did not increase in direct proportion to increases in staff and board diversity.

A third report, by the Urban Institute, finds that most heads of mid-size nonprofits give poor marks to their trustees for fundraising and monitoring board performance.

The study calls for more support for board development and for initiatives designed to bring more diversity to the leadership ranks of the nonprofit sector.

To fix the urgent social problems we face, foundations and nonprofits need to fix their own internal problems.

With foundation investment, for example, nonprofits must develop sustainable business and fundraising strategies; build and engage effective boards; find and keep smart leaders and groom the next generation of leaders; unleash the power for productive collaboration; and work to fix flawed policies underlying the symptom sand causes of social problems.

Without greater investment to equip foundations and nonprofits to be more effective, the charitable marketplace will fall short of its underlying mission of making our communities better places to live and work.


  • At 2:05 PM, Anonymous Anonymous said…

    So is our response that non-profits should "be run more like a business" (as many would assert)?

    Well...seems to me that the same problems exist in the for-profit world. Perhaps they're in different proportions, but they're still present.

    So let's throw out "run your NPO more like a business," before we end up importing bad ideas from the for-profit world.

    What's the alternative? NPOs need to do exactly what for-profits need to do to address these issues--start looking at the high-performing organizations (whether non-profit or for-profit) and studying and emulating them.

    Of course, there's always the danger of misinterpretation, of taking away the wrong lessons, so perhaps a knowledgeable guide would be helpful. "Good To Great" (by Jim Collins), perhaps, as a good place to start?

    I'd also recommend learning about Elliott Jaques' "Requisite Organization" theory--it has a lot to say about what organizations need (as opposed to what they think they need) with respect to organizational structure and staffing.

    For more info on that, see the articles at PeopleFit's "Learning Library" at

  • At 9:52 AM, Anonymous Anonymous said…

    The leadership challenge for nonprofits is likely to continue without a change in focus. While their mission is executed through programs and services, many executive directors and board members are stuck in the here and now. Fundraising keeps them one step ahead of closing the doors with little or no time spent on long term financial goals.

    Attracting and retaining the leaders of tomorrow requires sufficient funding to overcome burnout and turnover. The leadership challenge is not likely to change without developing a vision of the nonprofit’s future and a vision future leadership. Communicating the mission and vision to their donor base is necessary in generating the type of gifts necessary for long term fund development.

    In the profit sector, diversity programs abound. Whether or not every company is achieving its goals, nearly all recognize the importance of diversity in their operations and in their marketing. If nonprofits are constantly challenged to keep programs running and are spending every last dollar as it comes in, they are not likely to spend much time on diversity. Including diversity as part of the vision of the future is needed to overcome this challenge.

    Nonprofit boards are more effective with a clear understanding of the mission and vision along with a clear job description. How often does a nonprofit look at who is serving on the board? What is expected of the board members and what mix of capabilities are needed on the board? Answering these and other questions will determine if a nonprofit will meet the challenge of board effectiveness.


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