Leadership Study Offers a Roadmap for Nonprofit Transformation and Growth

A new study suggests many nonprofits are unready to confront imminent leadership changes, and many of them aren’t even prepared to make an effort.

The Nonprofit Sector Leadership Report, commissioned by Concord Leadership Group and supported by Bloomerang, Boardable, and DonorSearch, asked over 1,140 nonprofit leaders about their leadership behaviors and results, including work in strategic planning, fundraising, succession planning and particular leadership styles.

“Talking about a CEO’s successor can feel like a personal attack, so people choose not to plan,” said Marc A. Pitman, CEO, The Concord Leadership Group LLC. “Hopefully, these findings will help nonprofit leaders and boards have leadership conversations they have been avoiding.”

Researchers estimate over 67 percent of current nonprofit leaders plan on leaving their position in the next five years.

The nonprofit sector will need approximately 80,000 senior level managers/leaders annually. But less than a quarter of nonprofits in the study (22.3%) have a succession plan in place. And less than half identified future leaders (40.8%).

The report also focuses on four modern perspectives on leadership – servant leadership, transformational leadership, transactional leadership and charismatic leadership, and examines nonprofits’ strategic planning activities, succession planning and ability to fund their work.

Leadership Styles

Servant leadership is a leadership style focused on achieving superior organizational performance by focusing on the needs of their followers, while transformational leadership emphasizes effecting revolutionary change in organizations through a commitment to the organization’s vision.

Charismatic leadership focuses on the process of encouraging certain behaviors in others through force of personality, persuasion, and eloquent communication, while transactional leadership has been defined as “an exchange process based on the fulfilment of contractual obligations and is typically represented as setting objectives and monitoring and controlling outcomes. 

Of the four styles, servant leadership behavior is the most popular among nonprofit leaders (53.7%). Transformational and charismatic leadership are second and third (with 34.8% and 29.4% adopting them to a great or very great extent, respectively). Transactional leadership behavior is the least popular (5.1%).

Servant leadership behaviors have the most beneficial impact on creating a culture of philanthropy in all aspects of a nonprofit. Transformational leadership can also have a positive impact. 

Fundraising Climate

Philanthropy is clearly an important focus for leadership in many organizations, and respondents felt that they have a good understanding of fundraising and make a very positive contribution to the process. A surprising result is leaders hold much more favorable views of their own contribution to philanthropy than they do of their organization as a whole. 

Survey respondents were asked to rate the current external fundraising climate faced by nonprofits, prior to being asked to rate how they anticipated that fundraising climate would look in six months’ time. The results of the analysis indicate a marginally more optimistic perception of the future fundraising environment. Only 46.9% of respondents express an optimistic view of the current environment and only 50.8% of the future.

“According to the research and our experience, too many nonprofits seem to be making the same mistake that the owners of The Goose That Laid the Golden Eggs in Aesop’s Fable made,” notes Pitman. “Rather than feeding the Goose and benefiting from the Golden Eggs, nonprofits seem to be getting all the gold by killing the Goose.”

Is your organization in the 55.8% group?

Strategic planning, or many aspects of it, appears to be absent or underdeveloped in many organizations. Only 55.8% of respondents agreed that staff at all levels were engaged in the planning process, and only 24.6% of respondents were rewarding staff for their contribution. Additionally, fewer than half (47.4%) indicated that performance against the plan was a factor in their appraisal.

According to the study, “many feel that the quality of strategic planning currently engaged in by nonprofits is hampering their ability to progress their missions and ensure the long-term sustainability of their operations.”

It’s encouraging to point out that 90% of respondents indicated that they were engaged in strategic planning, but the fact remains that around 10% of boards appear not to have sign-off on their organizations’ strategic plan.

“It appears nonprofit leaders are rushing to have a strategic plan, but missing the entire power of a planning process” said Pitman. “In our previous nonprofit sector leadership study, having a strategic plan significantly improved an organization’s ability to communicate their mission.”

Fast Facts:

• From analysis of the characteristics of the planning process, the study found that nearly two thirds of our leaders (68.6%) were including fundraising strategy as a significant component of their plan
• Despite a high percentage of respondents reporting having a strategic plan in writing (83%), the process of “strategic planning, or many aspects of it, appears to be absent or underdeveloped in many organizations.”
• Only 21.4% of leaders have a very great degree of confidence in their leadership abilities, and almost 10% have little confidence in their ability to lead.

The free report is available for download at http://concordleadershipgroup.com/report/.