Déjà vu? The economy is weak, workloads are up, and revenues are down; the nonprofit sector is once again under pressure to do more with less.
The sector has been here before and will be here again. Doing more with less appears to come with the IRS tax exemption letter. But unlike the federal government, the nonprofit sector cannot disguise its deficits by ignoring future liabilities or changing the start of the fiscal year. And unlike the private sector, it cannot shelter itself by eliminating unprofitable product lines, declaring bankruptcy, or falsifying profits. The nonprofit sector will do what it has always done: it will ask its workforce to work harder and longer, and its workforce will do just that.
The nonprofit sector will survive the current crisis because it has the most dedicated workforce in the nation. It is a workforce that comes to work in the morning motivated primarily by the chance to do something worthwhile, savoring the chance to make decisions on its own, take risks, and try new things, and puts mission above all else.
The question is not whether the nonprofit workforce will tough it out through another year of cutbacks, pay and hiring freezes, and short staffing–its passion for the mission will give it the energy to keep going. Rather, the question is whether this workforce will be there for the next crisis. Gone are the days when the nonprofit sector could count on a steady stream of new recruits willing to accept the stress, burnout, and the persistent lack of resources that come with a nonprofit job. The vast majority of nonprofit workers come to work in the morning because they love their jobs, but many go home at the end of the day exhausted by the workload and unsure that they have the tools, let alone the stamina, to come back the next morning.
This “state of the nonprofit workforce” report provides a statistical confirmation of what many readers already know about their colleagues in the sector: that the workforce is strong, but their organizations are often weak. According to a telephone survey 1,140 randomly selected nonprofit employees conducted by the Brookings Institution’s Center for Public Service, nonprofit employees experience high levels of stress and burn out, and report that their organizations do not provide enough training and staff to succeed. When asked which one reform might improve their organizations, these employees mentioned just about every fad known to the field, but none mentioned the need for more advocacy, higher foundation pay-out, or a stronger defense across the sector as a whole. At least for these employees, every nonprofit is a tub on its own bottom. (The complete questionnaire and all survey findings can be downloaded at www.brookings.edu/nonprofiteffectiveness.)
Having studied more than my share of beleaguered, dissatisfied workforces over the years, I have come to believe that a healthy workforce has six characteristics: It comes to work for the chance to accomplish something worthwhile; it provides the kinds of work that talented Americans want; it is continually improving; it has the resources to succeed; it recognizes high performance and manages poor performance; and it has the respect and confidence of the people it serves.
Compared to parallel studies of the federal government and private sector conducted by the Center for Public Service, the nonprofit sector has the healthiest workforce in America. But the readings are not all positive. Nonprofit workers often fight against the organizational odds to get the job done.
1. Nonprofit employees come to work for the chance to accomplish something worthwhile:
* Nonprofit employees were much more likely than federal or private-sector employees to say that the people they work with are open to new ideas, willing to help other employees learn new skills, and concerned about achieving their organization’s mission.
* Nonprofit employees were much more likely to say that they took their job in the sector for the chance to help the public, to make a difference, to do something worthwhile, and pride in the organization than the job security, the salary and benefits, or the paycheck.
2. The nonprofit sector provides the kind of work that talented Americans want:
* Nonprofit employees were less likely than federal or private-sector employees to say their work is boring and their jobs are a dead-end with no future, and were much more likely to say that they are given a chance to do the things they do best.
* Nonprofit employees were more likely than federal or private-sector employees to be able to very easily describe how their jobs contribute to their organization’s mission, and more likely to say they personally contribute to helping accomplish that mission.
3. The nonprofit workforce is continually improving:
* Nonprofit employees were more likely than their federal and private-sector peers to see their executive leadership, and middle- and lower-level employees as very competent.
* They are also more likely to say that all levels of their organizations, including the board, have gotten better over the past five years. The nonprofit sector is not standing still–it is getting better every day.
4. Nonprofit employees report serious shortages of the resources needed to succeed:
* Roughly a third of nonprofit employees said their organizations only sometimes or rarely provide the training they need to do their jobs well.
* Another two fifths reported that their organizations only sometimes or rarely provide enough employees to do their jobs well.
* Nonprofit employees reported high levels of stress and potential burnout. Seven out of ten strongly or somewhat agreed that they always have too much work to do and that it is easy to burn out in their jobs.
* Despite these obstacles, nonprofit employees were more likely than federal or private-sector employees to say they felt proud to tell their friends and neighbors where they work, to trust their own organization to do the right thing just about always, and characterize their organizations as innovative, helpful, fair, and trustworthy.
5. Nonprofit organizations do recognize high performance, but have difficulty disciplining poor performance:
* Nonprofit employees were much more likely than other workers to say they were very satisfied with the chance to develop new skills, public respect for their work, and the opportunity to accomplish something worthwhile, but were just as unsatisfied as their federal and private-sector peers with the opportunity to advance.
* Nonprofit employees estimated that a smaller percentage of their co-workers were not performing their jobs well than federal or private-sector employees, and were much more likely to say they come to work every day for the common good.
* At the same time, barely half of nonprofit employees said their organizations do a very or somewhat good job disciplining poorly performing employees at their level of the organization.
6. The nonprofit sector may be losing the respect of the public it serves:
* According to a series of pre- and post-September 11 polls, the number of Americans who said they had a lot of confidence in charitable organizations held steady until winter 2002, when it began to fall. By August, the number of Americans who said they had no confidence in charitable organizations had doubled to 16 percent, while the number saying they had a lot of confidence had fallen from 25 percent to 19 percent; the number who said they had some confidence remained steady through the period. Despite the Independent Sector’s optimistic report that roughly two-thirds of Americans believe that charities are honest and ethical in their use of funds, the fact that so many Americans express some or no confidence in the sector is cause for alarm and a possible harbinger of increasing distrust.
* Americans estimate that 39 percent nonprofit employees are not performing their jobs well, compared to 42 percent of business employees and 48 percent of federal employees.
* At the same time, roughly a quarter of Americans have a favorable opinion toward nonprofit organizations, compared to 17 percent toward private businesses and just 13 percent toward the federal government.
Viewed as whole, nonprofit employees are highly motivated, hard working, and deeply committed, but often serve in organizations that do not provide the resources to succeed. Perhaps that is why turnover among executive directors is so high, why board vacancies are increasing, and why so many talented recruits leave early in their careers.
The following pages will examine the sector’s two great strengths and weaknesses. On the one hand, the sector provides the chance to accomplish something worthwhile and the kind of work that attracts talented Americans to serve. On the other hand, it tolerates high levels of stress and burn out–in large measure because it often does not provide the tools to succeed. It may also have difficulty in disciplining poor performers that is also dispiriting for high quality staff.
Nonprofit employees come to work for exactly the right reasons: they are motivated primarily by the chance to accomplish something worthwhile. That is what brought nonprofit employees to the sector in the first place, and what brings them into work every day. If a healthy workforce is measured in part by its commitment to the common good, the nonprofit workforce is healthy, indeed. Asked to choose between competing explanations for taking their current job, nonprofit employees were much more likely than their federal government and private-sector peers to focus on helping the public, making a difference, doing something, and pride in the organization itself. (See Table 1.)
Nonprofit workers were also much more likely to focus on the nature of the job and the common good when asked a simple open-ended question about why they come into work every day. Given the chance to give as many answers as they wished, nonprofit employees focused much more on the work itself:
* Forty-one percent of the nonprofit employees said they come to work for the personal interest in the job, because they like their work, or for the spiritual rewards. Reading the answers one after another is nothing short of inspirational: “I love what I do.” “I love working with the clients.” “I understand and embrace the mission of the organization.” “Because I love my job, I love the kids, it’s fun.” “It’s a wonderful match for my skills, background, and interest.” “Love to build things; pride in my work.” “I’m passionate about what I do.
* Many of these respondents also said they felt called to the work: “It’s my life calling.” “I feel called by God to make a difference in people’s lives.” “To make a difference in lives for now and for eternity.” “Because of calling.” “I feel called to the work that I do.” Some were clearly driven by a calling from God, while others were simply called to the work.
* Ten percent focused exclusively on the common good. “I go to work every day because I can make a difference.” “In order to make the world better.” “To help the community.” “To be of service.” “Because I can make a difference and that’s where God wants me to be.” “I know whatever I accomplish is worthwhile and necessary.” “My work has social meaning.”
* Sixteen percent answered they come to work for the paycheck. Most of these answers were crisp and to the point: “I need a paycheck.” “To pay the bills.” “Because I need the money.” “Way to make a living.” “Five years to retirement.” “Because otherwise there’s no one to pay the mortgage and bills.”
* Eleven percent focused on their personal work ethic. “Because that’s my job,” said one respondent. “Because I am a very dependable person,” said another. “I’m responsible,” said still another. “What can I say?”
* Seven percent focused on a combination of the paycheck and the nature of the work, while five percent focused on the nature of the work and the common good.
These answers are radically different from the ones given by federal government and private-sector employees: 31 percent of federal employees and 47 percent of private sector employees said they come to work every day solely for the pay check, while just five percent of federal employees and none of the private-sector respondents focused on the common good, either solely or in combination with other answers.
The focus on mission is the nonprofit’s greatest strength and weakness. On the one hand, mission gives nonprofit employees the energy to keep going under trying circumstances, at low pay, and in under-funded, under-equipped organizations. It also provides a distinct recruiting advantage in the war for talent. To the extent young Americans want challenging, important work, not to mention the chance to grow and learn, they can do no better than go nonprofit.
On the other hand, the commitment to mission can invite exploitation and under-resourcing. Even their most ardent supporters know that nonprofit organizations will skip pay checks, cut supply and training budgets, defer needed maintenance and hiring, and even sell assets to keep the mission alive. They also know that the sector will almost never raise a well-organized word in protest, lest they somehow lose sight or their mission or get in trouble with the watchdogs.
Nonprofit employees clearly understand that they could make more money elsewhere. Asked to think about similar jobs outside the sector, almost half of nonprofit employees said their pay would be better, while only a fifth said it would be worse. But nonprofit employees appear willing to accept lower pay in return for the chance to accomplish something worthwhile. Asked again to think about similar jobs outside the sector, the only a tenth said they would find more opportunity to make a difference, and even fewer said they would find greater respect from family and friends.
One reason nonprofit employees were so focused on mission is that they can describe their own role in achieving results. Sixty-nine percent of respondents said they could very easily describe how their jobs contribute to their organization’s mission, compared to 63 percent of federal government employees and 57 percent of private-sector employees.
A healthy nonprofit workforce provides the kind of work that America’s most talented employees want. Survey after survey shows that young Americans value challenging, interesting work, the chance to help people and learn new skills, and put pay at the bottom of their concerns. To paraphrase the famous line from Jerry Maguire, young Americans are not saying, “show us the money,” but “show us the meaning of the work.” Nonprofit work has been showing very well lately:
* Seventy-five percent of nonprofit employees strongly disagreed that their work is boring, compared to 57 percent and 58 percent of federal government and private-sector employees respectively.
* Sixty-eight percent of nonprofit employees strongly agreed that they are given the chance to do the things that they do best, compared to 46 percent and 52 percent of federal government and private-sector employees.
* Fifty-eight percent of nonprofit employees strongly disagreed that their job was a dead-end with no future, compared to 47 percent and 54 percent of federal government and private-sector employees.
* Seventy-three percent said their organizations encourage employees to take risks or try new ways of doing their work a great deal or a fair amount of the time, compared to 58 percent and 62 percent of federal government and private-sector employees.
* Seventy-four percent of nonprofit employees reported that morale was very or somewhat high among the people they work with, compared to 72 percent of private-sector employees, and 60 percent of federal government employees.
Moreover, nonprofit employees were far more likely than their peers to report a positive work environment. They view their colleagues as helpful, open to new ideas, collaborative, and concerned about the overall mission of their agencies. For young Americans who want to acquire experience and skills, the nonprofit sector is clearly the place to go. (See Table 2.)
It is one thing to have the kind of jobs that talented people want, and quite another to build a hiring process that works. The nonprofit sector has both. Asked to describe the hiring process for new people in their organizations, nonprofit employees saw their hiring process as simple, fast, and very fair. In contrast, federal employees saw their hiring process as confusing, slow, and surprisingly unfair. (See Table 3.)
There are warning signs in the survey, however. Younger respondents were less likely than older respondents to say their organizations were doing a good job at retaining employees, for example, and were the most likely to say it would be easy for them to get another job in a different organization. Other research by the Center for Public Service shows that graduates of top public policy schools, such as Harvard’s Kennedy School and Duke’s Terry Sanford Institute, are more likely to leave the nonprofit sector within their first five years than either government or the private sector.
A healthy nonprofit workforce does more than recruit talented people and give them the chance to accomplish something worthwhile. It also gives its employees the tools, training, and technology to succeed, and creates the organizational settings in which high performance can flourish. Unfortunately, there is ample evidence in this survey that many nonprofit employees do not have the resources for their work:
* Twenty percent report that their organizations rarely or sometimes provide access to the information needed to do the job well.
* Twenty-eight percent report that their organizations rarely or sometimes provide access to adequate technological equipment.
* Thirty-one percent report that their organizations rarely or sometimes provide access to training.
* Forty-three percent report that their organizations rarely or sometimes provide access to enough employees to do their job well.
The good news, if it can be labeled as such, is that the nonprofit workforce has roughly the same amount of access, or lack thereof, to these resources as federal and private-sector employees. Moreover, nonprofit employees reported that their organizations were in remarkably good shape:
* Nonprofit employees were far more likely than their peers to describe their organizations as helpful, fair, and trusted, and just as likely to call their organizations innovative. (See Table 4.)
* They were also the most likely to say their organization is basically sound and needs only some reform and that there are the right number of layers of supervisors between themselves and top management.
* They were the most likely to believe that past efforts to reform or reinvent their organizations had been effective. Of the 60 percent of nonprofit employees who said that their organization had been reformed in the past five years, 61 percent said the reform had made their job a lot or somewhat easier to perform.
The bad news is that the lack of enough employees to do the job appears to be intimately related to stress and burnout. Overall, 41 percent of nonprofit employees strongly agreed that it is easy to burn out in their job, while 36 percent strongly agreed that they always have too much work to do. But among employees who said their organizations only sometimes or rarely had enough employees to do their jobs well, the levels stress and burnout were much higher. (See Table 5.)
Whatever their concerns about resources, nonprofit employees clearly saw an organizational whole that is much greater than the parts. They were much more likely than their federal and private-sector peers to say that their organizations were very good at running programs and delivering services, helping people, being fair in their decisions, and spending money wisely.
It is no surprise that nonprofit employees might also see their sector as doing the best job in a head-to-head face-off with the federal government, state and local governments, and private businesses. The great surprise is that federal and private-sector employees mostly agree: the nonprofit sector is always the place to go for helping people. (See Table 6.)
A healthy nonprofit workforce rewards its employees for a job well done, and puts poor performers on a path to improvement. It measures performance carefully, sets clear goals, recognizes success, and addresses failure. It also provides room to grow, whether through promotions or the opportunity to gain new skills, even if that growth means employees move onto other jobs.
The sector is clearly doing something right when compared to the federal government and private sector. Prompted to make a “best guess,” nonprofit employees estimated that 19 percent of the people they worked with were not performing well, compared to 24 percent and 25 percent among federal and private-sector employees respectively. Asked to explain the poor performance they had just estimated, nonprofit employees put more of the blame on a lack of training than either federal or private-sector employees. (See Table 7.)
Nonprofit employees were also much more satisfied with the “psychic income” generated through their work:
* Forty-eight percent of nonprofit employees were very satisfied with the opportunity to develop new skills, compared to 43 percent of private-sector employees and 36 percent of federal employees.
* Forty-nine percent were very satisfied with public respect for their work, compared to 39 percent and 36 percent of private-sector and federal employees respectively.
* Most importantly given their basic reason for coming to work each day, 66 percent of nonprofit employees were very satisfied with the chance to accomplish something worthwhile, compared to 41 percent and 47 percent of private-sector and federal employees respectively.
* Nonprofit employees were less satisfied on two fronts, however. First, their organizations provide relatively few opportunities for advancement. Only 27 percent of nonprofit employees said they were very satisfied with the chance to advance, while almost as many, 24 percent, said they were unsatisfied. Although nonprofit organizations must stay flat to maintain their competitive edge, they must compensate elsewhere for the scarcity of this traditional reward for performance.
In addition, nonprofit employees doubted their organization’s ability to do something about poor performance. Fifty-two percent of nonprofit employees said their organization did very or somewhat well at disciplining poor performers, compared to just 30 percent of federal employees and 52 percent of private-sector employees. The rest of the nonprofit employees, or 44 percent, said their organizations did not do well in this critical area.
Trust in the nonprofit sector has clearly fallen over the past year, in part because of the flood of negative press surrounding the disbursement of the Red Cross Liberty Fund, and in part because the sector did not do a good job telling the success stories of the many other charities involved in the rescue effort. If the nonprofit sector is to rebuild the public’s trust, it must strengthen its own organizations and workforce. Just as trust in government rises and falls with its performance on everything from the war on terrorism to delivering the mail, trust in the nonprofit sector is almost certainly linked to its performance in everything from the war on illiteracy to delivering the meals.
The question is, where to begin? At least for the nonprofit employees interviewed for this assessment, the answer is definitely not in reducing the sheer number of nonprofits. Asked to think about the mission of their organization, only seven percent said there were too many nonprofits that perform the same mission, while 56 percent said there was the right number, and 32 percent said there were too few.
Nonprofit employees did see gains from recent reforms such as strategic planning, however. Asked to look back over the past few years, nonprofit employees who had either worked in the sector for at least ten years or were now in management posts said strategic planning had been the top reform for improving performance, followed by increased openness to using standard business tools or techniques, the encouragement to collaborate with other nonprofits, an increased emphasis on outcomes measurement, and the creation of management standards. The only reform that did not receive a majority endorsement was reducing duplication and overlap through merges and alliances.
Asked to look forward and think about just what reforms were needed to strengthen their organizations, the 76 percent of respondents who said their own organizations needed some or major repair offered a rather different list of suggestions:
* Sixty-four percent of these nonprofit employees said their organizations needed to reduce bureaucracy, improve communication, and increase access to staff, training, technology, and funding. “There is too much cream on top. We need to get rid of the weight up above.” “People higher up need to come down to the lower level to experience the day-to-day work there.” “Streamline the basic work flow, get more innovation in front-line decision-making, and reduce multiple layers needed for approval.”
* Twenty-six percent said their organizations needed to reward a job well done. “We need a different level based on performance.” “We need to take more time in training, teach responsibility, and show the effects of job not getting done.” “We need more focus on employee satisfaction. We need a pat on the back when something good happens.”
* Sixteen percent focused on the need for a more talented, diverse, well-managed workforce and more engaged boards. “We need to attract more qualified people who will stay.” “We need a new board, new upper level management, and more employees at the middle level.” “Oh God, a stronger board, stronger executive director, a strong rabbi.” “Do more than just talk about diversity. Actually do something about it.” “We need to find ways of reaching out to young people.” “Clearer job descriptions and boundaries.”
* Seven percent said their organizations need a clearer mission. “We need to stop dreaming so big.” “More care needs to be taken to set priorities within our mission.” “Walking the walk, talking the talk, living up to the mission.” “Put more focus on the patients and less on the paperwork, more acknowledgment of good and bad performance, especially good.” “Stay on track.”
It is hard to find a single pattern in the answers except the lack of one. This may be a sign of the remarkable variety, creativity, and diversity of the sector, a natural product of the different stages of development covered by the survey, or a sign that the sector simply does not know what to do about reforming itself.
Nonprofit employees tend to see the roots of their organizational salvation in home-grown answers to the continued funding pressure and lack of resources. None of the respondents looked to the sector and its leaders for answers to their organizational problems. None mentioned the need for a stronger response to media reports about mismanagement, a more aggressive stance on foundation pay-out and government budgets during economic downturns, or greater access to advocacy training on behalf of their missions.
The organization’s mission comes first, even if that creates a social Darwinism in which some nonprofits prosper at the expense of others.
The state of the nonprofit workforce is excellent–the state of nonprofits and funders in supporting that workforce is more questionable.
The nonprofit sector is blessed with employees that come to work for the right reasons because they have jobs that give them a chance to make a difference. But the degree to which they can leverage this energy on behalf of their organization’s mission is highly dependent on funder and organizational practices that either actively support or ignore their potential. Boards and executive directors need to look carefully at how they manage their human capital. Are their practices designed for workers who are intrinsically rather than extrinsically motivated? Do their workers have the right tools and access to training? Do employees have time to plan and reflect? At the same time, funders need to ask how they can assure that the sector maintains its competitive advantage in coming years, starting with a hard look at how their own policies about infrastructure and operating expenses affect the sector’s workforce.
The nonprofit sector can only win the war for talent in coming years by giving its workers what they want most–not just the chance to accomplish something worthwhile, but the resources to do so. That means building organizations that provide resources on time and training on demand. That also means building a sector that can advocate effectively–promoting a stronger image with the public at large and more realistic investments in core infrastructure and staff related costs with funders.
The nonprofit workforce cannot wait much longer for action. It will endure the current crisis, but may not be around for the next one.
Paul C. Light is vice president, director of the Center for Public Service, and Douglas Dillon Senior Fellow at the Brookings Institution. His most recent Brookings books include Pathways to Nonprofit Excellence (2002), Government’s Greatest Achievements From Civil Rights to Homeland Security (2002) and Making Nonprofits Work (2000).