Aug 7, 2024
Posted Under: Human Resources President's letter
This month we released our Salary and Benefits Report & Dashboard. While we have been producing these reports for nonprofit decision-making since 2003, this year our report is bigger and better than ever thanks to a partnership with the state nonprofit associations in Montana, Idaho, Washington, and Oregon.
Certainly, this type of data has been useful in the past but right now the nonprofit workforce is at the nexus of events that likely will result in a lasting shift for current and future employees. We have reported over the years on the challenges nonprofit employees and employers face, which sadly have not changed much because few organizations ever feel like they are fully staffed or financially flexible enough to deploy the team they have in all the ways they think would be best. The long-standing issues are now exacerbated, and new ones have surfaced since the height of the pandemic which has resulted in a highly competitive environment to recruit and retain staff.
Whether you dive into the data or not, we encourage you to consider how these issues impact the choices you make to recruit and retain staff, how you write and execute policies and expectations for nonprofits in government grants and contracts, how you choose to volunteer to support existing staff efforts, how you donate to help support the ability of nonprofits to compete in the marketplace for the best and the brightest to perform essential work in our communities, and how you decide as an employee to navigate a complex environment marked by hurdles and opportunities.
None of us are alone in this space. Together, as employers, policymakers, volunteers, donors, and employees, we all have a role in creating a vibrant economic landscape for nonprofits to do their best work on behalf of us all.
Let’s dive into just a few of the largest hurdles (and a few opportunities) we face in Alaska’s workforce and what our study’s findings confirm we are experiencing:
- An average 8% out-migration of Alaska’s workforce between the ages of 18-54 in 2023, as reported by the University of Alaska Center for Economic Development, further exacerbating the state’s workforce shortage. Note in your search through this report how jobs are paid from one state to another. Does this match your expectations and assumptions?
- The heavy burden on nonprofits adapting to workforce shortages both in their organizations and in their funding and collaborative partners. According to this study, the workforce shortage is almost double that of our regional peers.
- Lowest philanthropic support (corporations, foundations, individuals) for all nonprofits in the country in the past 40 years. This is not only a challenge for programming, mission growth, and stability, but it has a direct impact on the ability of nonprofits to compete for employees in the marketplace across all sectors.
- Lack of prompt payment by the State of Alaska for grants, contracts, and reimbursements means nonprofits are again unable to compete in a challenging marketplace to recruit or maintain employees and in many cases are creating an inordinate amount of stress on those currently working in the sector.
- Pandemic right-sizing to meet the demand for services. Most nonprofits either experienced an increased demand for their services or closed their doors in the name of public health during the height of the pandemic. Either way, most nonprofits are just coming out of the pandemic fog to understand their next move. For many, it looks like hiring more staff, prioritizing specific lines of business, or adjusting to a budget without federal or state relief aid.
- The dynamic of workplace designation resulting from learning (and preferring) to work from remote locations during the pandemic. This means we have a workforce that demands much greater flexibility in their personal lives and a strong desire to pick workplaces that can meet that demand, even if it means leaving the nonprofit sector. On the positive side, this also means a greater ability to employ Alaskans across the state regardless of office location, offering more flexibility and a more family-friendly environment to existing and future employees, along with a sharper focus on outcomes rather than time spent. On the opposite side, it presents a challenge with team dynamics, cohesion, and in some cases accountability. And, while the sector used to recruit and retain loyal nonprofit workers, employees are willing to forgo the sector and find other ways to give back to the community.
- A shift in the generational workforce with many long-time, senior leaders leaving their current positions creating both opportunities to rethink and restructure positions and losing long-term institutional knowledge in the churn. The result is a need for a more thoughtful process in leadership transition and a willingness to adjust and adapt the way the mission moves forward with new ways that staff want to do their work while continuing to honor and recognize each generation in the workforce.
- New overtime rules and federal OMB reforms that take effect on July 1 and October 1, 2024. Each will have both positive and challenging impacts on the nonprofit sector to comply with the new rules without new funding to match. On the positive side for some nonprofits, the 10% de minimus indirect rate for operations will rise to 15%, which will help but not solve the gap in funding by the government levied on the nonprofit sector to provide essential services.
- The lack of childcare, housing, and investment in public education and their immediate and long-term impact on employee choices. While most nonprofits cannot solve these pressing concerns directly, the influence they have on employment is present in each offer letter and every decision to stay in a community.
- Board transition and engagement that has also shifted since the onset of the pandemic. Most nonprofits can see similar trends in their board members as in their employees when it comes to the need to spend extra time and energy building and sustaining a productive and connected board team. The pandemic invited a new conversation for volunteers about where and how to spend their free time, and the result is both a reshuffling of board members in and out of organizations and a deep effort to engage those who choose to stay. This has an impact both on the overall health of the organization and also on the board-executive relationship that is central to the success of every mission.
- An all-time high in the possibility of federal infrastructure and broadband funding in Alaska, which requires public-private-nonprofit-tribal collaborations and a workforce to carry out the projects. These projects could change the way we operate in transportation, communication, health and safety, economic development, education, and more, but the pressure to collaborate, plan, request, carry out, and report on each project is immense and intense. To ramp up and then be ready to sustain what we build will be one of Alaska’s greatest collective challenges that will be felt for decades to come.
- More fluidity in the workforce between sectors since the pandemic. More and more, individuals are not just choosing between which nonprofit to work for but between working in the nonprofit sector or another sector. While our data focuses solely on those working in the nonprofit sector, we encourage you to look at comparable jobs in the for-profit and government sectors to better understand the factors that potential and current workers weigh in their decisions. Understanding how a job classification compares to other sectors could mean leading a conversation not with just salary but with tangible and intangible benefits of mission-focused work. It could also have the long-term and more global benefit of raising the expectation and ability to increase compensation in the sector overall compared to other parts of our economy.
These factors and more mean that the employment landscape is incredibly competitive. It can certainly feel overwhelming and hard to navigate. We see nonprofit leaders worried. We hear the concerns. And we recognize that most of these challenges will not be solved by one nonprofit or one change in policy, or a funding decision. We also know that we can all play a role in addressing what is in front of us.
- As nonprofit employers, we urge you to use the data not to make just one salary decision at a time but to define your compensation philosophy and your position in the marketplace. In this competitive environment, don’t forget to use the data to make necessary adjustments in salary and benefits and also highlight all the other less tangible benefits of working for a cause that matters. Additionally, having tools in place like board succession plans, staff succession plans, up-to-date employee policies, strategic plans, and a healthy workplace culture are essential building blocks in today’s workplace. We are ready to help you with all these steps.
- Donors and funders, we urge you to also see these challenges as opportunities to truly see how your investment is helping or further challenging nonprofits to do the work in front of them.
- Policymakers and state agencies, we urge you to quickly adapt to the new OMB rules of 15% de minimus for operating costs at a minimum and to PAY ON TIME EVERY TIME for work supported by your grants and contracts.
- All of us can join a larger set of voices that are advocating for better or more childcare, housing, public education funding, or any of the other larger economic issues facing our workforce and mission.
We are standing with you with data we can turn to action, with tools you can use today, with support to listen and learn on your journey, and with our advocacy voice that seeks the changes we need so we can all succeed in serving our communities. Together we will navigate our way forward.
Reach out! Join us!
Laurie
