Study Finds Nonprofit Leaders More Effective than Corporate Heads

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The Nonprofit Quarterly today released the initial findings of a research study that reveals that nonprofit leaders may well be more effective than for-profit leaders. An article detailing this landmark study and its results is published in the winter issue of this journal. The study was conducted last year by Community Resource Exchange (CRE), in partnership with Performance Programs Inc. (PPI).

Over 2,500 management leaders in the nonprofit and for-profit sectors were studied through feedback surveys submitted by peers, direct reports and managers with a total of 22,859 respondents. The study shows that nonprofit leaders significantly outscore their for-profit counterparts across the board in 14 out of the 17 dimensions of leadership practices. These dimensions include persuasiveness, risk-taking, demonstration of effectiveness and vision. For-profit leaders score higher in only three dimensions.

The Nonprofit Quarterly’s editor in chief, Ruth McCambridge says these findings attesting to the (comparative) excellence and effectiveness of nonprofit managers should have been expected.  “Nonprofits have innate complexities that challenge executives in unique ways. Managing multiple sources of restricted funds, a diverse continuum of important stakeholders, and a variety of reporting requirements in even the most resource thin environments is par for the course even in very small nonprofits and people who rise to the challenge distinguish themselves with those who watch them carefully.”

Jim Collins, renowned author of best selling business studies, “Good to Great” and “Built to Last” has researched management practices in both the business and nonprofit sectors and agrees with this in an explanative commentary that accompanies the article. “We should not be surprised by the findings of this nonprofit leadership study,” Collins observes, “In executive leadership, the individual leader has enough concentrated power to simply make the right decisions. Legislative leadership, on the other hand, relies more on persuasion, political currency, and shared interests to create the conditions for the right decisions to happen.” Collins continued, “For this reason, we should expect to see very high leadership ratings in the social sectors, as true leadership only exists if people follow when they have the freedom to not follow.”

Of the 14 dimensions in which nonprofit leaders outscored their for-profit counterparts, the most dramatic differences appeared in six dimensions that are characterized by sensitivity to people and situations and the use of personal versus hierarchical power. The complete results will offer a detailed analysis of the study including key findings such as:

  • Nonprofit leaders tend to rate themselves lower than do their feedback givers, while for-profit leaders rate themselves higher than those that evaluated them.
  • Peer rating of nonprofit leaders were higher than peer ratings of for-profit leaders in all 17 dimensions.
  • Differences in responses on leadership effectiveness broken down by respondent’s relationship to leader.

“This is an exciting validation of the incredible talent and skill CRE sees in our clients every day,” said Fran Barrett, executive director of CRE.  “We are delighted to be able to share this work with our nonprofit and for-profit colleagues across the country, but bringing this affirming message to our own clients – demonstrating to them that objectively speaking they compete well – to us is the heart of the matter.”

Respondents from both the nonprofit and for-profit sector assessed leaders through the Clark-Wilson Survey of Leadership Practices (SLP), a well-known feedback tool used to rate leaders within the corporate sector.  SLP is a 360-degree, or multi-rater, feedback survey that provides insight on 17 leadership dimensions, each representing leadership skills or practices. The 360-degree feedback technique used in this study is an effective assessment tool because it analyzes skills that are relevant to the leader’s role, that can be seen by others, and that are responsive to development efforts.

“Leadership in for-profit endeavors is widely studied. The same is not necessarily true in non-profits, which is why CRE chose to partner with PPI to develop sector-relevant norms for nonprofit leadership practices,” said Jean R. Lobell, managing director, CRE.  “As a result of this study, we now have an appropriate point of comparison for nonprofit leaders and their leadership practices. As far as we can tell, this is the first of its kind.”
McCambridge agrees that the study is potentially pivotal in that it runs counter to conventional wisdom. “We have heard for decades that nonprofits need to act more like business. It appears, however, that business leaders should take lessons from the leaders of nonprofits in at least equal measure.”

For more information on this study and for the complete results, visit www.nonprofitquarterly.org .


The Nonprofit Quarterly is a unique print magazine that leaders count on to provide them with values-based management information and proven practices. Each issue focuses on a theme of critical importance and provides you with the cutting edge, relevant and useful information you need to manage more effectively and advance your mission.


For over 25 years, Community Resource Exchange (CRE) has worked towards a more just, equitable and livable city for ALL New Yorkers. CRE provides strategic advice and technical services every year to over 350 community-based organizations that fight poverty and HIV/AIDS. CRE provides its clients with the information, skills and leadership training to make New York City stronger – one community group at a time.


Founded in 1987, PPI has a staff of industrial psychologists and experienced survey professionals who are experts in employee questionnaire and report design, survey administration, report preparation and interpretation. PPI has worked with hundreds of organizations to achieve reliable, valid, actionable survey results.