Why the “Great Resignation” Isn’t a New Problem in the Nonprofit Sector
You might have heard about the “Great Resignation,” which refers to a recent “tidal wave of resignation.” This reality has affected almost every industry—from corporate finance to retail. The nonprofit sector, in particular, has suffered greatly.
I’m witnessing the challenges my clients are facing firsthand. So many nonprofit leaders have been impacted by the departure of their fundraising staff. I lost count of the nonprofit CEOs who’ve come to me over the last 12 months wanting to hire “right” this time.
To do this, we need to have a much deeper conversation—one that requires looking at the foundational structure of nonprofit organizations. Why? Because this problem only gets fixed at the root.
People will take a pay cut to have a greater sense of meaning at work. That doesn't mean you should be frugal when you budget.
I advise lots of corporate folks who have shifted their careers into the nonprofit sector. Some of them make less money—and that’s perfectly OK with them. In fact, Harvard Business Review discovered that more than nine out of 10 employees are willing to trade a percentage of their lifetime earnings for greater meaning at work. Employees don’t just expect something “richer” than a paycheck for their work; they crave it.
To be fair, we have to look at the numbers. A 1-2% earnings cut isn’t that much of a leap. But, Payscale calculated that employees are willing to take a pay cut of up to 18% (depending on their role) in order to do something they are passionate about.
Here’s where I find the disconnect occurs among nonprofit organizations: Simply because these individuals agreed that taking a pay cut was worth it doesn’t mean that smaller investments should be taken across the board.
However, the Great Resignation in the nonprofit sector cannot be pinned on compensation alone. What do I see as the reason? Frugality.
What happens when you don’t budget for staff development
Whether I agree or disagree (or agree to disagree) about someone taking a pay cut is irrelevant. What’s really important is that this doesn’t mean you should under-invest in developing your staff. Talent and career development in nonprofit fundraising is greatly lacking and desperately needed.
Yet, much to my alarm, professional development was one of the first things I saw removed from nonprofit budgets in 2020.
I’m not saying that people who enter the nonprofit space need extra training compared to their corporate existence. I am saying that, too often, I see staff members in roles that require deep training.
For example, think about the communication or marketing person who is a digital marketing master, but when “development” is added to their title, they’re expected to also know how to find major donors. And then they are expected to immediately know how to ask for money.
One scenario I see all the time is a board member with a corporate role deciding to be the next Executive Director. They need training; it’s as simple as that. Rarely have they scaled a revenue-generating department for a nonprofit. Thinking they should know how to do that intuitively is just setting your organization up for failure.
The Great Resignation in the nonprofit sector is not a “new” thing. Even before this recent wave of resignations, employee unhappiness was tied to a culture of frugality. The pandemic just heightened its pervasiveness.
So, what do we do? Here are three scenarios from real clients of mine that explain the problem in our sector the best.
1. Nonprofits aren’t investing enough money in overhead costs.
It may be an unpopular opinion, but if you’ve found your development team raising the same amount of money every year—and never have enough unrestricted cash to build your reserve—you don’t need more fundraising activities. No new grant, appeal, event, board member, or even a shout-out from Oprah will solve this problem.
What do you need? More gas in the engine.
You need to make sure you’re spending enough money to generate the dollars you need to even think about fulfilling your strategic plan. In one word: overhead.
Try looking at this as a simple math equation. When you’ve created a true, needs-based budget that includes the staff, infrastructure, and overhead resources you need to grow, then you can create a real financing plan to fund it (notice I didn’t say “fundraising plan”... there is a difference).
Many nonprofit leaders skip this step. It feels scary and backward. But, it’s so necessary.
2. Nonprofits hire one employee to do multiple jobs with different required skill sets.
A significant part of my advisory work is revealing to nonprofit CEOs what a true financing plan could look like for their organizations. Financing plans (not fundraising ones) help them see how to align their spend on the “right” fundraising staff that will yield the highest-ROI.
Often, that involves interviews with current and new staff so we can see if the right people are in the right seats on the bus. In this time of the Great Resignation, I’ve never sat in more interviews in my life.
I regularly support nonprofit CEOs in these interviews because, too often, the wrong person was hired for the original fundraising job and they don’t want to make another poor decision. Or, they've simply never hired fundraising staff before and they’re not sure if they’re asking the right questions.
In essence, they want to know, “Can this person raise money?”
It’s a larger question, though. What I want to know is:
Can this person raise the right kind of money?
Can they raise gen-ops money, build your reserve fund, or secure regular unrestricted gifts?
Do they understand how to align their hours with dollars?
When those questions aren’t part of the conversation, much less the hiring process, leaders are stunting themselves before they can even get started. Honestly, do you want to know one of the biggest factors I see that sabotages overall revenue growth?
Combined fundraising and marketing/communication positions. But, these are:
two different roles
two different skill sets
two different pay structures
two different parts of the donor pyramid
What do I mean by that last one? These two roles should be aligning their hours and activities very differently and on different donors. This is where organizations get stuck on the spin-cycle and can’t seem to get ahead.
“But, Sherry, we don’t have enough money to hire two separate staff members.”
I’m going to tell you bluntly that the last 10 organizations that said this to me changed their minds after we created their overall financing plan. They realized they did have the money.
There are solutions to this problem. But, you have to be open to looking at it from a different angle—and then investing in doing things differently to get different results.
3. Nonprofit employees don’t have the skill set to do everything.
I’ve held this opinion for many years: Your Development Director is the hardest organizational role to fill. Why?
Because you’re not just hiring a fundraiser. You’re hiring a co-pilot who can fully finance your overall mission, business, and growth.
Hiring someone who can fully finance your mission means they can:
plan the year around the organization’s cash flow
secure large amounts of general operating revenue
present your financials to investment-level donors
raise a 9-12 month reserve fund alongside your annual fund
secure 50-75% of your total revenue from 30 relationships
But, too often, I see folks leading with questions to ensure they can:
write grants
plan events
create and write campaigns or newsletters
secure corporate sponsorships
The latter list is secondary. Those are fundraising activities—but not skills that will fully finance your organization. And, this approach keeps you raising restricted revenue, ultimately preventing growth.
If you need more general operating funds, a greater reserve, and more unrestricted revenue, first you must ask if you have that skill set on your team.
It’s time to flip the script.
If we can work to solve these three obstacles to growth, just imagine what we can do in this sector… tackling all of the problems nonprofit workers are so passionate about—but in a way that gives staff the skills, knowledge, and confidence to do their job well.
That’s where real growth begins.
PWhenever you’re ready, here are THREE things you can do next:
👣 Follow me on LinkedIn where I share the same lessons I teach my clients about attracting larger gen-ops dollars so they can scale.
🍎 Read my GUIDE! THE TRUTH ABOUT GIVE/GETS :: Top 5 Reasons Your Board’s Give/Get Is Leaving Thousands (Sometimes Millions) on the Table. See how limiting board members to the Give/Get model keeps your staff from reaching their full fundraising potential. Here to get it.
📈 Work with me to fund your organization’s Strategic Plan and scale your budget by 2 - 5X // If you’re a business-minded CEO already raising MILLIONS but still need more general-operating revenue to invest in growth, you can apply to work with me here.
