Is the nonprofit sector ready for the leadership transition that will happen as the Boomers retire? That’s the question we explored in our recent CharityVillage Connects podcast episode, Succession Crisis: Is the Nonprofit Sector Ready?
In our discussions with sector experts, we spoke to Dave Hutchinson, President and Leadership Talent partner at Cause Leadership, an executive search firm, about this issue. Dave helpfully provided some context on why this succession crisis is happening and what action (or lack of action) led to us being in the place we are today, as well as offered some ideas on how organizations are dealing with the issue on the ground. He also weighed in on whether “sector switchers” might be one part of the answer to this concerning problem. We’re pleased to present a short excerpt of Dave’s comments here.
We kicked off the interview by asking Dave about what he calls the largest transition of nonprofit executives in decades.
Dave Hutchinson: Well, it’s a challenge for many organizations, as you can well appreciate. And the charity sector is a small portion of the greater marketplace today in Canada. But corporations are feeling this, private companies are feeling this. But in particular, I think charities are feeling it the most. We have less money and less talent to deal with the issue the way that the corporate and private sector space might. And so it’s a significant issue that we need to address.
I think, you know, in reality, you mentioned it starting during the pandemic, as far as seeing some of the retirements that have been happening. But if we look back even further, I think we could probably go back about 20 years and say, it’s not just a retirement issue that we’re facing today. It was a succession planning issue that we really, maybe didn’t ignore, but perhaps didn’t fully embrace at the level that we really needed to. And so I’ve often said that, because of that, we didn’t attract Gen X in the numbers that we needed for our leadership roles. And so today, anecdotally, they represent, say, 50% of the solution to leadership transition.
Our greater hope is really looking into that age group in their mid-30s to early 40s, who really are, when we look at that demographic, larger than the boomer generation was by sheer number, are now the largest living generation, and are going to represent a significant amount of the employment sector in the next few years. So there’s a combination of things happening here, but I think when I consider the charitable sector particularly, it really started with succession planning 20, 25 years ago. And our lack of readiness today is probably a testament to the fact that that didn’t really occur in the way we needed it to.
We asked Dave to expand on why the nonprofit sector has been so lax at succession planning.
Dave Hutchinson: I think, in general, our sector is under-resourced in order to be able to prepare well for succession. We don’t often have the liberty or luxury, I guess is a better word, that financially we can’t always afford to have a number two or a number three in waiting while the CEO is still in their role.
So that’s part of it, which is definitely a resource issue. I think it’s a talent attraction issue as well. I mean, the two biggest issues facing charities today are talent and money. And if you don’t have enough talent and you don’t have enough money, then your sector is going to be challenged by those two significant factors. So it comes down to talent attraction as well. But what is attractive about our space that would cause people to come and work here? Obviously mission is a huge piece of that. And so we don’t usually falter on the mission side. We usually have lots of people who are interested in what our charities are about. But can they afford to come and work at a charity and take a reduced compensation package than they might be used to? Have they actually got the education and the experience that they need to assume leadership roles? Have we done mentorship well? Have we done professional development well in our organizations? I would say in general, probably not at the level that we need to. So those are some of the factors that are making it more challenging to find the talent that we need.
What are some solutions to deal with this inevitable shift in leadership? Dave explains.
Dave Hutchinson: Where we’re at today, we have boards of directors who are transitioning at the same pace as our executive leadership, and they’re transitioning at the same pace as some of our major donors as well. And so we can’t look at what was, but we have to start looking at what can be. But today, to find volunteers, both board volunteers as well as other kinds of volunteers is challenging. We’ve already talked about the challenge of finding the revenue and donations that we need in order for our organizations to thrive. But some of the things that I would look at and some of what we’re seeing in the marketplace today is a change in how people are employed within the sector.
So we are seeing interim executives, we are seeing fractional fundraisers. Some organizations and some sizable organizations have already merged, amalgamating with either some of their federated partners or other organizations that were completely distinct from them. That helps solve some of the talent and some of the funding issues that we’re facing. Frankly, I think, we’re still at a place where the government is going to have to step up from a funding perspective or loosen the regulations around how we see funding for our charitable organizations. Or maybe loosen the purse, I guess I should say, as opposed to regulations necessarily. So there’s a lot of factors, I think, that have to come into play for us to see the solutions that we are looking for.
And so flexibility and how we hire talent, who we hire, the terms that we hire them under, those are going to be vital conversations for organizations coming up, especially in this transition period, because we don’t have enough talent in our market to replace the leaders that are leaving. So we’re going to have to be creative and innovative about how we employ people.
Finally, we asked Dave about the practice of hiring “sector switchers”, professionals from the corporate sector who are looking for new opportunities and more meaningful work.
Dave Hutchinson: People in the sector see that issue differently. Some are quite supportive of it. Some are very hesitant about bringing somebody in, especially a late-career person who’s not really spent much time in the charitable space. It would be my attempt to remain agnostic as far as that particular issue is concerned because I do really believe that talent from other sectors should be welcome in the charitable space and in fact would provide a significant amount of talent that we do need.
I would say that, because of the transitions that we’re facing, because of the talent pool that is the reality that we have today, if we don’t embrace people from other sectors, whether it be the corporate or private sector or government, you name it, we’re going to experience the deficit of their experience not being available to us. So for me personally, I would support a properly nuanced entry point for people who come from the private or corporate space. And they bring an immense amount of skills, relationship-building skills, sales skills, which translates into fundraising, project management skills, and executive leadership skills that they have experienced elsewhere as well. So some people would disagree with me, but I’m favourable towards it.
And I joke about this sometimes because people used to ask me, shout out to Paul Alofs, former CEO at Princess Margaret. But people would say, other than Paul Alofs, who do you know that’s made a successful transition into the charitable space? And the second question was always, or the second part of that, was because we don’t know, right? Like there just weren’t enough examples. Now, I’m sure there are many examples of people who have successfully come in, but we often, unfortunately, only hear about the ones that didn’t seem to work out for whatever reason. And I think that’s short-sighted. If our sector is not prepared to look at people from other sectors, then we’re, we are actually shooting ourselves in the foot from a talent perspective.
I think the corporate sector, while it operates more from a revenue and sales perspective, we still see that in the charity space. We do need people who can promote our causes, who can promote the programs that we deliver, the services, if you will, that we have to deliver to society. And these are really big issues, right? We’ve got really smart, really intelligent people in the charitable space, which thankfully we do. And they’re solving really big global issues, domestic issues that are way more than any corporate ROI would ever be able to accept as far as a return on investment. So ours is a social return on investment. But we still need the smarts and intelligence that come from the corporate and private sectors as well, I think, in order to achieve the things that we need. We certainly need to figure out how to work together.
And we’re seeing more and more of that. I mentioned earlier the social impact and sustainability world. That’s a shoot that has grown out of both the charity space and the corporate space and them finding ways to work together. So I think it’s happening.
I think we just need to embrace it and be more open about the willingness to recognize that we have a people issue. We need this problem solved. The only ones who are going to do that are the people. And there are a lot of shared skill sets out there that we can take advantage of in our space. So I affirm it. I hope we do more of it. I do think it’s part of the solution.
Want to hear more from Dave Hutchinson? Listen to his full interview in the video below.
Listen to Dave Hutchinson and other sector experts discuss the looming leadership transition in the nonprofit sector in our new podcast episode. Click here to listen.