PERSPECTIVE: The Economic Impact of Not Investing in Social Purpose Sector Leadership
/by Maggie Gunther Osborn As a leader in transition leaving Connecticut, I wanted to reflect on what is happening with leadership in the social purpose sector in our state and sound a few alarm bells. For those of you unfamiliar with my terminology, I am talking about what we normally refer to as the non-profit sector. I have chosen to stop saying non-profit, because it has trained us to believe that this is a sector with limited economic impact or does not require the same investments in infrastructure and human capital as other sectors. Non-profit is a tax status but does not describe the work of the social purpose sector.
In Connecticut, the social purpose sector employs between 14-17% of the workforce and generates $33.4 billion in revenues annually. Connecticut foundation giving supporting the sector totals more than $1 billion, but is primarily invested in the programs and outcomes of the sector giving very little attention to investment in leadership. In fact, nationally less than 1% of all foundation grants support leadership capacity and development. The social purpose sector is a vital, critical part of our state and yet is not often regarded as such in discussions of economic benefit, sustainability, leadership, innovation and job creation.
I sit around the periphery of these discussions and see that much of the energy is focused on the leadership of organizations. We invest in leadership training for our corporate workforces because we understand it is key to the culture, sustainability and productivity of business. I often ask board members who run successful enterprises what they attribute their success to and often they reply “we invest in our people.” And yet very few of them, in their roles as board members, bring that same thought perspective to bear on social purpose decisions.
The result of a lack of investment in the leadership of the social purpose sector is leading to the statistics revealed in Third Sector New England’s Leadership New England Report 2015: Essential Shifts for a Thriving Nonprofit Sector.
- 60% of CT leaders say they will be leaving their organizations within the next five years and 47% of those in the next two years.
- 59% of CT leaders are over 55 compared to 53% in the New England region as a whole.
- More than 54% of organizations have no succession or sustainability plan.
- 61% of CT leader’s salaries are under $100k with 21% under $50k.
- 59% of CT organizations have 3 or fewer month’s cash reserves in comparison to 49% of all New England organizations.
- 29% of CT organizations have no cash reserves compared to just 7.2% of all New England organizations. This indicates that a much larger proportion of CT organizations is at risk of immediately running out of funds than the respective proportion in New England as a whole.
At this point, there are a couple of things to note. First, while we have been talking about leadership transitions for many years, the recession delayed the major transition of leaders out of the sector until now. Second, there is no bench strength to call on from within these organizations when these leaders retire. Very little investment has been made to build the skills and capacity of middle managers to step up into leadership roles. Third, most of the departing leaders are Baby Boomers whose leadership roles were dependent on their willingness to work long hours in a professionalized volunteer sector. We will not fill these rolls with Millennials and Gen Xers for what we paid their predecessors.
Current professionals expect to work in places that are dynamic and culturally competent business environments where they feel comfortable and can advance. They will not stay a professional lifetime anywhere, and will not stay more than a few years where these characteristics do not exist. In addition, the state budget crisis is going to be our norm for the next decade consequently offloading more responsibility to this sector. We need people with the skills to not only provide services, but also create new business models, attract talent and strategically work through these enormous challenges.
All of us, whether professional, volunteer, elected official, philanthropist, board member or donor, should strive to recruit the best and brightest to the social purpose sector by investing in leadership in the same ways we do in the private sectors. Strong leaders will make the next generation of the social purpose sector resilient enough to meet the challenges that face Connecticut.
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Maggie Gunther Osborn is president of the Connecticut Council for Philanthropy. She will be leaving the organization in June to assume the post of chief strategy officer for the Forum of Regional Associations of Grantmakers in Washington, DC.
PERSPECTIVE commentaries by contributing writers appear each Sunday on Connecticut by the Numbers.
