Professional Development – No Luxury Expenditure for Nonprofits

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July 7, 2013;

With increasing attention being paid to nonprofit fiscal management, “luxury” administrative expenses such as marketing and staff development often are pushed to the backburner. This can be dangerous. Today, nonprofits must stay competitive not only with other nonprofits, but with an increasing number of for-profits and hybrid corporations entering the social sector. In some cases, these for-profit companies may have similar missions and business models; however, their day-to-day operations can vary widely. Independently owned for-profits do not follow the same board governance model. Additionally, for-profits do not have the same level of public accountability or public scrutiny as nonprofits, nor do they deal with nonprofits’ external pressure to keep overhead low.

Hopefully, the recent open letter from the heads of Charity Navigator, Guidestar, and BBB Wise Giving Alliance will debunk some of the myths around overhead and help donors recognize the importance of a robust organizational infrastructure. Certainly, funds spent on professional development are a key part of that.

A recent study by Heather Carpenter, PhD, out of Grand Valley State University illustrates the needs faced by Michigan nonprofits. The study documented that 57 percent of nonprofits needed training for boards of directors, 53 percent sought training regarding program evaluation and data-based decision making, and 66 percent wanted training regarding technology, marketing, communications, and social media. Nonprofits also indicated that they were concerned about their sophistication on following legal issues: fundraising, grant obligations, and donor support; compliance and regulatory matters; and employment matters. Nonprofits largely relied on board members (41 percent) or pro-bono services (38 percent) for legal advice.

Training can be costly. The Association for Training and Development’s 2012 State of the Industry reported that of the organizations surveyed, which include Fortune’s Global 500 Companies, among others, U.S. organizations spent approximately $1,182 per learner. This was split between funds spent internally and externally, including tuition reimbursement and external services. This per-learner expense may be significantly more than what most nonprofits can afford; however, that shouldn’t halt the pursuit of professional development trainings.

Despite initial costs, training can positively impact the bottom line. Organizations that regularly access training can improve governance, improve program outcomes, improve fundraising, and increase community engagement. Legal assistance and training regarding compliance can increase overall performance and decrease the potential for lawsuits or mismanagement.

If donors want to ensure their donations are going to good use, funds earmarked for nonprofit professional development can be a wise investment.—Jennifer Amanda Jones