The Foraker Group

Posted Under: President's letter

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When you imagine a healthy nonprofit workforce, what attributes are on your list? To me, there is no such thing as perfect, so I hope my top six attributes lean to the healthiest end of the continuum as possible. They apply to any nonprofit regardless of type, budget size, staff composition, location, or mission and include:

1. Fully staffed. Not in the way that barely gets us by, but in a way that truly honors how the work best gets done. By the way, in my 30+ years in the sector, I have rarely seen this – especially when it comes to the administrative functions of our work, which are often the lowest paid and most understaffed even though they make the work – well, work.
2. Livable wage, retirement option, and health care for the whole team. The trifecta of total compensation. Again, rarely have I seen this in Alaska where our staff teams are small, the options for coverage are few and mostly out of financial reach, and the ability to financially compete in the marketplace – especially now – gets harder and harder.
3. A values-driven – even joyful internal culture. Now this I see. I am not necessarily speaking of every moment or every interaction, but rather the overall culture of the organization where the DNA is loud and proud and fully woven into decisions, people, and actions. Honestly, I think I see more people leaving their workplaces because of this attribute than the other two but, of course, joy on its own doesn’t pay for childcare, rent, a mortgage, food security, student loans, and all the other financial pressures our workforce faces (not unlike others).
4. Mission aligned. If we had a superpower in our sector different from other sectors, this is it – the strong desire and belief that the work matters, that it is bigger than a single person but that a single person can make the world better. On our hardest days, when burnout is high and challenges are higher, this is where so many of us dig deep and commit to another day. It’s this superpower we can draw from – all the time remembering that it needs to be nurtured so our mission thrives, with or without us.
5. Diverse team – but more than that – a place of belonging. This attribute means many things. First, the “team” is defined as whoever is working consistently on mission – staff, board, volunteers, community partners, etc. Second, diversity in and of itself is defined in ways that matter most to mission success (race, age, gender, geography, lived experience, perspective, socio-economic standing, etc.). And your definition is a baseline measure from which you grow because of your diversity – not in spite of it. This brings me back to my third attribute of living the organization’s values in ways that contribute to a welcoming place where a true sense of belonging exists for each person according to their own definition and experience – a place that encourages the exchange of ideas, that fosters healthy debate for the betterment of mission decisions, that honors the lived experiences that are different from the majority – a physical or virtual place we want to be and get to be our whole self.
6. High tolerance for ambiguity and change. It’s trite but true, the only thing we can count on is change. And yet, understanding what is changing and knowing how the team tolerates and processes change is essential in fostering a healthy workforce. We have talked many times in these articles (both before and during the pandemic) about living in a VUCA world where volatility, uncertainty, complexity, and ambiguity are the driving characteristics of this life we are living. We have also spoken at length about viewing the chasm between what is and where we want to be as liminal space – or the space in-between. This space is not a void. It is a place of both grounding in what matters the most and envisioning why we are packing those intentions and traveling to new goals and aspirations for our mission and our community. For some on your team, there is nothing more exciting than this space of unknowing and for others it is truly terrifying and regularly produces anxiety. Extra efforts to build trust and deep communication are everything in our workforce right now. With so much unknown and so much at stake, for most groups this is where the big work currently lives.

Do our lists match or come close? I am sure I could keep going. And I hope you are thinking about what makes (or would make) your workplace a top choice for job seekers, because the marketplace is showing us that now is the time to be at our best – even as we are faced with mounting data that shows our struggles and a multitude of other constraining factors.

Let’s be honest, the most recent data tells a difficult story. No, we don’t yet have the full dataset on employment, but we do have a snapshot of what is happening in our workforce thanks to our partnership with the National Council of Nonprofits who conducted a nationwide survey in which more than 50 nonprofits in Alaska shared their workforce experiences (more participation than 40 other states). While we await the full NCN report, you can find the Alaska numbers here.

Key preliminary findings include:

• 88.7% of Alaska nonprofits report job vacancies.
• Nearly three out of four (73.6%) Alaska nonprofits responded that they have more vacancies compared to those before the COVID-19 pandemic, and nearly four out of ten (39.6%) have longer waiting lists for services.
• 5% of respondents with vacancies identified program and service delivery as a category with vacancies.
• 9% of responding organizations said salary competition affects their ability to recruit and retain employees, followed by stress/burnout (66%).

Again, keep in mind that these numbers represent a limited number of Alaska organizations, but they certainly mirror what we are finding in our work with organizations around the state. Is this true for you?

So, what is causing this bleak data not just in Alaska but across the country? As you might guess, it is complicated and intertwined. To untangle it a bit, I turn to our 2020 report, Alaska’s Nonprofit Sector: Generating Economic Impact, which is based on total nonprofit employment, where we found that our rate of job loss was at 4% while for the State of Alaska as a whole it was 8%. We knew that bubble would burst given that the demand for a growing workforce in health and human services during the pandemic held us steady but was not viable in any long-term way. Instead, we were hit with the Great Resignation and Reshuffle brought on by burn-out, stress, an aging population of nonprofit leaders, a deep need for more family-friendly flexibility and independence, already low pay, the end of federal pandemic relief, a childcare access crisis, and broken business models that left us uncompetitive in the marketplace for both quality and quantity of staff to fulfill our missions.

I also turn to our Foraker Nonprofit Sustainability Model, which tells the story of how nonprofit business models either rely heavily on earned income through fee-for-service contracts, direct pay or third party pay, and then dabble in philanthropic sources such as individual donors, corporate giving and/or foundation grant making, or they are based in a philanthropic model that dabbles in earned income.

It is no wonder then that we are struggling to retain a solid workforce when we see earned income reimbursement rates by government and the private sector lag along with the lack of prompt payment and antiquated technology in state and federal government grants and contracts, which only seem to be getting worse. For more information on our view of the challenges and possible fixes to these issues as it relates to the nonprofit workforce, check out the article from January.

Turning to the philanthropic side of the equation, for staff recruitment and retention funding has always been an uphill climb. We still see the persistence of The Overhead Myth play out in philanthropy and in government contracting. (You can read more about the myth here and here.) This scarcity-based model of thinking is pervasive. There are many parts to the overhead myth, but the quick version is the notion that essential, effective, and quality work can be achieved with as little overhead as possible. Overhead being all things – staff, lights, heat, technology, administrative functions, communication, fundraising efforts, etc. – that actually allow for the very essential, effective, and quality work that is demanded and expected both internally and externally. This myth is reinforced consistently by philanthropic and government funder decisions to not fund operations. Nothing new here. You live it. Long past annoying and defeating, it means the ability to compete in this highly competitive workforce is near impossible.

On the bright side, there is a wonderful initiative called Fund the People that identifies how the symptoms of the funding deficit creates “a bottleneck in nonprofit leadership… where too many diverse, talented leaders never join the field, remain stuck in neutral or simply burn-out.” They go on to note that “this situation is an existential threat to nonprofit performance, impact and sustainability.” Thankfully, they are solution-oriented and invite us all to “replace the old myths of overhead and martyrdom with a positive new mindset that lifts up the dignity and powerful contributions of nonprofit workers…. And make talent-investment a widespread practice in grantmaking, fundraising, and nonprofit management.”

Next month we will jump deeper into the philanthropy data that was recently released by Giving USA, and where we should be focusing our efforts. But for now, please know and process this truth with your team. Total charitable giving by corporations, foundations, individuals, and bequests to support the work of nonprofits dropped 10.5 percent in 2022 compared to 2021 when adjusted for inflation. Giving by individuals fell by an even steeper, mind-boggling rate of 13.4 percent after adjusting for inflation.

Giving USA notes some important context, especially as we think about our workforce challenges: total charitable giving has fallen only three other times in the last 40 years in current dollars, in 1987 and in 2008 and 2009 (the Great Recession). The authors attribute the steep drop in 2022 to stock market volatility and economic uncertainty. Additionally, the National Council of Nonprofits notes in their recap of the report that “while the report’s findings are not news to frontline nonprofits that too often find themselves struggling with the multiple, often intertwined, challenges of not only decreasing revenue, but also significant workforce shortages and increasing demands for their services, especially now that the federal pandemic relief programs have ended. Indeed, turnover and staffing shortages among fundraising teams themselves may be among the drivers of the decline in giving, according to a national survey of 685 fundraisers commissioned by the Chronicle of Philanthropy in 2022.”

Add to this a known shortage in financial expertise in the nonprofit workforce, and we have a vicious cycle of too few people trying to balance too much work with fewer accountability systems and people in place to satisfy grant makers and government reporting demands. This only further exacerbates the limited ability to successfully seek funding and be competitive in the workforce for the best and the most able to deliver mission. Sigh.

It is so easy to only see the downside of all of this. And we could just keep naming this a workforce shortage – after all, a recent national report this week showed that there are two jobs for every one applicant. Yet, without sugar coating the dire consequences of what happens to the well-being of those we serve when we don’t have enough workers, we can also see this as our opportunity to double down on the possibility of attracting people who are looking for meaningful work, not just a job.

The struggle is real, and I know that the best way forward is to tell the whole truth so we know where we stand, keep our eye on what success looks like, i.e. a healthy workforce, and lock arms for the support we need to take the next steps that are right for each of our missions.

We don’t just have to let this bad news wash over us. We don’t just have to give in to the financial forces pushing against us. Each of us can take a meaningful step that feels in your control.  

• Maybe it is to tell the whole truth to your teams about your current business model so they have a clear understanding of what drives your economic engine and how you can or cannot compete effectively in the marketplace right now. Then make sure you are structured for growth in the right spot within your team and your structure.
• Maybe it is about looking at the intrinsic side of the employment equation, i.e. the six attributes I listed above, and seeing where you can reground, reconnect, or reengage.
• Maybe it is about joining the effort to stop the overhead myth conversations, perspectives, and actions in its tracks and pointing it out when you are faced with the juxtaposition of the funders demands with the reality of their funding proposition.
• Maybe it is about using your mission voice in the public policy arena to advocate for prompt payment, better treatment of the sector as a key partner to government, and better systems overall.
• Maybe it is about writing and adopting a succession plan not just for the CEO but for all key staff that prepares your organization for inevitable changes while elevating the importance of leadership and mission continuity.
• Maybe it is about thoughtful transition that engages the team in a way so that no one is rushing to search but rather is taking clear stock of where you are as an organization, what is most important, and how you prepare everyone for success. You can learn more about leadership transition here.
• Or maybe it is turning to a friend in Foraker and knowing that you are not alone and that this is not a challenge you are supposed to solve by yourself. It is bigger than all of us, and it will take all of us to solve it. We are here with you.

Take one or take them all. Each will take time to turn our challenges into opportunities. Let’s take a step together.

-Laurie