Why is Turnover So High in the Nonprofit Sector? Tips for Nonprofit Leaders and Funders on How to Support Staff to Thrive

“The post pandemic world will continue to have challenges but no financial assistance,” an Executive Director of a local nonprofit shared with us anonymously. “We are headed into a potential recession and inflation is high. We can’t continue to keep up with inflation for salaries and overhead.”

Coming into 2023, the Catalogue surveyed 95 Executive Directors leading nonprofits based here in the Greater Washington region that run on budgets of $4 million and under. Past surveys, which we began administering at the start of the pandemic in 2020, found local Executive Directors facing burnout and significant challenges with securing funding, meeting increased community needs, engaging staff, and hiring.

Just last month, the Chronicle of Philanthropy reiterated how the impacts of recent and ongoing economic uncertainties continue to be compounded for nonprofits. Though inflation is easing, “human-service nonprofits are still seeing heightened demand from people struggling to keep up with the costs of basic necessities.” Meanwhile, despite consumer confidence increasing, “many small charities have had trouble gaining traction with donors,” reflecting what our sector is seeing on the ground – donations coming from fewer and wealthier individuals.

None of these symptoms are new. Along with our nonprofit partners and philanthropic allies, we’ve been advocating for recurring and unrestricted financial support for local nonprofits, in addition to targeted wellness and career support for nonprofit professionals.?The results from the survey we conducted this January shows that more than half of Executive Directors are currently, likely about to be, or have recently been feeling a sense of burnout. The past experience of burnout is a strong indicator of future burnout. But the structural issues present in philanthropy – that are themselves indicative of larger societal inequities – make it particularly difficult for nonprofit professionals, especially leaders, to prioritize their wellbeing in ways that are sustainable.

As another local Executive Director shared with us anonymously, “Increased funding does not immediately translate into increased capacity. When the Executive Director is running at (or over) capacity, it’s a slow process to find the time to hire and onboard additional staff.” Instances where additional funding is tied to additional reporting requirements, for example, can also require further capacity of nonprofit staff and leadership to administer the funding.

66% of Executive Directors surveyed are worried about staff retention and wellbeing. When asked about what is preventing nonprofit leaders from implementing forms of care, the top two barriers are not enough time and not enough staff capacity.

Based on government data, The New York Times reports that “the nonprofit sector as a whole is struggling to compete.” Nationwide, entering or staying in the nonprofit workforce is becoming less attractive. Demand for services strain already thin staffs, but many nonprofits cannot find the funding to increase wages. In 2021, a troubling 26.2% of nonprofits across the United States reported job vacancy rates of between 20 and 29 per cent. The consequences of long-term workforce shortage in this sector can be devastating. “People who leave the field in search of better pay could be unlikely to return,” The New York Times continues. “And students won’t choose the field if they don’t believe they can earn a livable wage.”?

“Our costs are continuing to increase with no increase in revenue.?We are struggling to cover services. Where we have staff, they are not high enough quality staff, and we have many vacant positions. Everyone is stretched thin and has challenges outside of work as well. We do not receive the support we need from our government partners; they just pile on more work and look for faults with all their contracted providers when everyone is struggling. Other agencies have same/similar staffing problems so the people we serve are not receiving the care they need.” – Local Executive Director

It is clear that, as Rusty Stahl of Fund the People states, “The need for funders and nonprofit leaders to understand, practice, and assess talent investing and talent justice across lines of race and power has never been more urgent.” Creating the conditions for nonprofit staff to thrive is critical to ensuring strong, efficient, and sustainable infrastructure – for each organization and for the sector.

As we forge ahead into the rest of this year, here are two tips we want to offer nonprofit Executive Directors looking to invest in their staff, and two considerations we urge funders to keep in mind.

For Nonprofit Executive Directors:

1. Prioritize building wellness, in achievable ways, into your budget and systems.

Wellness does not have to look like weekly yoga classes or paying for expensive?services that you cannot currently afford. It is most important to ensure that your team feels like they are heard. This can mean guaranteeing a cost-of-living adjustment, establishing pay bands and clear promotion structures, offering a stipend for work-from-home expenses, or providing more paid time off during the holidays. Sometimes, there are smaller changes you can make year-round to ease the stress on your team, such as instituting a “no-meetings” day every week, intentionally building time for professional development and learning in staff schedules, and so on.

Check in frequently with your team to ensure that they are driving this conversation. What do they need for your workplace to feel supportive? Frame this question as an ongoing discussion, even after your budget for the year has been approved, and remain transparent about what your organization is able to offer while acknowledging its areas of improvement.

2. Establish clear expectations with your board.

At a certain point, when there is too much to do or too frenetic a pace of work, simply giving your team more space or time off is not going to actually reduce their stress. Leaders need to take some things off their plates to lighten the workload. This can be a challenge if the organization has already set goals that were previously discussed with the board.

Executive Directors must build relationships with their boards such that they can offer honest feedback and a realistic view of the work. These can be challenging conversations to have with your board if a pre-existing relationship isn’t strong – an Executive Director may feel like they are admitting a failure. But a strong leader prioritizes the wellbeing and retention of their team, so make sure that your conversations about annual goals with your board include staff wellness and engagement as critical factors.

When setting strategy, ask yourself if you are growing just to grow (a modern interpretation of a historical imperialist perspective) or if you are doing so to meet a well-documented need. Even if the reason for the growth is strong, will it require your staff to sacrifice personally in ways that they should not have to? The question is not if we can hit the goal, but if we can achieve the goal in a sustainable, equitable, and values-driven way. If the answer is no, then we need to shift the goal.

For Funders:

1.?Focus your support on the practical matters.

“In a review of more than 100 foundation grant applications, it appears to be almost nonexistent for U.S. foundations to communicate concern for staff job quality or to commit to funding good jobs,” Betsy Leondar-Wright, project director of Staffing the Mission, told Inside Philanthropy. “No application forms ask about health insurance or pay ratios, as far as we have seen. Further, in a preliminary survey of foundations and in conversations with grantmakers, we learned of overhead limits as low as 10% and formal and informal pressure to keep wages down.”

It isn’t just that the overhead myth neglects the fact that a nonprofit’s programs can only function because of its greatest assets – its people. When combined with what Rusty Stahl calls the Soft Stuff Myth, where funders believe that the return on investment in talent cannot be evaluated, it is downright harmful to conditionally fund nonprofits based on double standards. Within the for-profit sector, it has been recognized and proven that training, compensating, and valuing staff translates directly to improved outcomes. Why shouldn’t the nonprofit sector be equally trusted to value and incentivize its employees?

In addition to offering multi-year general operating support, we encourage funders – including major donors who are often in a flexible position to offer such support – to center growing people capital in your relationships with nonprofit grantees. Offer to fund internships, salaries, expanded benefits, sabbaticals, and create space in your conversations with nonprofits to talk about?these things. If you are a board member, make sure this is part of your conversations. Ask your Executive Director, and support them in asking their staff, about what they need to tangibly improve the workplace and organizational culture.??

2.?Make nonprofit working conditions a core part of your DEI efforts.

Racial equity is deeply intertwined with workers’ rights and justice. As part of your commitment to improve diversity, equity, and inclusion, ground your DEI conversations in the material conditions that nonprofit staff – the real people who make up our sector – need to thrive, not just survive. This can also include considering time off for voting and civic action, as well as looking at what holidays you recognize and what benefits you provide.