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Investing in Leaders

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It’s that time of year! Many nonprofits are going through their budget process right now.  Often, in addition to an income/expense budget and cash flow, nonprofits with fixed assets also develop budgets for facility repair and maintenance.  Too often though, nonprofits forget a very important asset that requires the same type of care and planning for future needs – human resources.

What percent of your budget is dedicated to professional development?  Do all staff have professional development plans?   How does the Board evaluate compensation and development for the Executive Director, and how often is that reviewed?

Unfortunately, these questions are often not in the budget planning discussions.  I don’t think that it is because Boards and nonprofit leadership don’t care about professional development. Rather, most likely because this is considered discretionary.  At times when funding is tight and choices are made, giving up on training staff seems to make sense.  Perhaps this is true in the short-term, but in the long-term it has significant consequences.   Investing in training for staff is critical to long-term sustainability of a nonprofit organization. Otherwise, where will the next leaders of nonprofits come from?

A recent study completed by Third Sector New England studied nonprofit leadership issues in that region. One of the greatest concerns was leadership development and succession planning.  The study went as far as stating that the nonprofit sector is undercapitalized, with a high percent of long-term talented people and a lower than average pay scale. Retirements will create a deficit in thought-leadership and an increase in operating expense.

I am hearing the same thing here in Delaware.  Many financially strong nonprofits have benefited from the longevity of their leaders – some of whom have grown their organizations 10-fold over the 20+ years in which they have led the nonprofit.   Who will be taking their place when they retire?  What skills will be necessary for a new leader to take the reigns?  And how are the organizational culture, board practices, and operations tied to the personality of the leader?

If the board and leadership are not asking these questions now, they should.  The Nonprofit Finance Fund’s 2015 State of the Sector report indicated that less than half (39%) of Delaware nonprofits surveyed provide professional development training for staff.   And even fewer (28%) have tackled leadership succession.  Most nonprofits rely on people, their skills, and their thinking to create sustainable value to the community.  Without investing in those areas, how will nonprofits compete for talent and resources in the future?

Infrastructure, such as buildings and technologies, over time need care and investment for them to meet the current needs of nonprofit services.   The many talented people who work tirelessly in your organizations need the same.  If you are concerned about funding, then it’s time to speak with your top donors and funders who value your people and the great work they do for the organization.

There are many sources of training out there.  DANA training begins at $40 for members, and we offer online as well as in-class experiences.   Whatever the professional development need is, don’t delay in investing. Good, talented people who have created the value your organization offers to the community are not easy to replace. Why not build the next generation of leaders within your nonprofit organization so that it can thrive in the long-term.