Finding and Retaining the Right Leadership: A Critical Challenge for Nonprofits

While I'm still new in my role as a consultant, a clear theme has emerged from my conversations with clients and potential clients: finding the right talent and ensuring people are in the right positions within nonprofit organizations is more challenging than ever. Having the wrong leadership in place can lead to underperformance at best, and breakdown of the organization at worst.

Why is this such a problem? Well, it starts at the top. Boards often hire and retain Executive Directors or CEOs that don’t have the skills necessary for the job. It takes more than passion for the mission to be an effective Executive Director. Boards need to ensure when hiring a CEO/Ed that their hire has the full range of skills necessary to run the business. Let me repeat that, a nonprofit IS a business – 501c3 is only about tax status. 

What does this mean? A nonprofit CEO should possess a diverse range of skills similar to those required for a CEO in the private sector to successfully lead an organization.

According to a 2024 article by Forbes “Traditional hard skills, such as financial and business acumen, are obviously foundational for the role of CEO. But softer leadership skills, such as communicating effectively, building high-performing teams, managing stakeholders and inspiring employees, are becoming more widely acknowledged as criteria for success.”

What I am hearing and seeing is what Forbes refers to the foundational skills – financial and business acumen. Even if a nonprofit has a skilled Finance Manager, the CEO needs to understand balance sheets and income statements, think strategically about the long-term picture, and make adaptations based on business fluctuations.

Let’s also talk about managing stakeholders. I would argue that nonprofit CEOs not only have to be able to inspire employees but also inspire donors. Does this mean a nonprofit CEO always comes from the Development side of the house? Not necessarily, but if your nonprofit CEO lacks the skillset to assist in closing a big gift, there might be a mismatch.

In summary, nonprofit boards must prioritize ensuring their CEO possesses the necessary skills to effectively lead the organization both presently and in the future. If the CEO lacks these skills, the board should assess whether professional development or a new direction is in order.

If your nonprofit needs an organizational assessment to address underperformance, or assistance with talent management please contact me at LMCnonprofitsolutions@gmail.com.