Insights from Daring to Lead 2011 (Pt. 1)

Last Tuesday, CompassPoint Nonprofit Services and the Meyer Foundation released their third Daring to Lead report, a national study of nonprofit executive leadership. The last report was released in 2006, making the 2011 report the first of its scope since the recession. More than 3000 nonprofit executives participated in the survey, answering questions about everything from the amount of time spend on fundraising and boards to their current levels of burnout. The report is organized into three key findings and four calls to action:

Key Finding no. 1: Though slowed by the recession, projected rates of executive turnover remain high and many boards are under-prepared to select and support new leaders. In the 2006 report, 9% of executives were in the process of leaving their jobs, with another 75% anticipated leaving within five years. Numbers from the 2011 report show a slowdown from this pace, with 7% having given notice and 67% anticipating leaving within 5 years. Another 10% within that 67% have not given notice but are considering leaving. The report suggests that this slowdown is attributable to (1) the recession's effects on both personal and nonprofit financial health and (2) lack of an appropropriate successor, which was cited by 9% of executives as a contributor to their delay.

Key Finding no. 2: The recession has amplified the chronic financial instability of many organizations, causing heightened anxiety and increased frustration with unsustainable financial models. 84% of leaders surveyed reported negative organizational impact from the recession and 26% of organizations having downsized at the time of the survey in the fourth quarter of 2010. The survey also found "widespread acknowledgement among leaders that fundamental shifts are underway in how the social safety net... is adequately financed going forward." The prevailing wisdom is that organizations should maintain cash reserves of at least 3-6 months, however 46% of executives reported having less than three. 33% percent of those with less than a month of reserves were hit particularly hard, reporting high levels of recession-related anxiety. This kind of anxiety was also associated with executive burnout: a full 19% of leaders with high levels of recession anxiety reported burnout, compared with 9% of executives overall. Get more information about operating reserves and how to start one>>

Key Finding no. 3: Despite the profound challenges of the role, nonprofit executives remain energized and resolved. Here's the good news! 45% of executives reported being very happy in their jobs, and, despite the pressures of the recession, overall burnout was low, with 67% of leaders reporting little or no burnout at all.

Given these findings, I want to ask: "what could executive directors be accomplishing if they had better support from within their organizations--board support, fundraising support, and more adequate professional development? The report makes four calls to action to accomplish just that:

1. Plan for successful transitions: only 17% of organizations have a documented succession plan, and just 33% of executives are confident that their boards will hire the right successor. Proactive planning for succession is a key to effective transition. Additionally, 45% of executives did not have a performance evaluation last year, suggesting that boards are unfamiliar with their executives' actual role and performance, adding challenges to termination, hiring, and onboarding.
2. Advance understanding of nonprofit financial stability: A clearer understanding on the part of executives and boards of their nonprofit's financial position and business model is an important part of maintaining financial stability. This requires executives to improve financial management skills, and boards to shift focus from financial oversight to longterm sustainability. The report also suggests an increase in board engagement in fundraising, as a minority of boards are active in fundraising, and only 66% of boards have even achieved 100%, which is a "fairly standard expectation of board support."
3. Expand and diversify the professional development options available to executive directors: development was very important to executives surveyed, with (1) executive coaching, (2) peer networks, and (3) leadership programs being seen as very effective. 10% of the leaders surveyed were working with an executive coach, and peer networks were seen as useful for decreasing feelings of isolation--70% of executives reported some loneliness in their roles. Support for directors during their first few years are seen as especially important, as executive happiness was reported at its lowest point for years 1-3.
4. Find new ways to improve the performance and composition of boards: currently, overall satisfaction with board performance was low, with just 20% of leaders describing themselves as very satisfied, and only 39% confident that their own efforts could improve board performance. Many executives struggle to define the return on investment (ROI) of board-related activity and to understand their ability to influence that ROI. The report specifically recommends improving systems to plance and train board members, and increased attention to this topic from funders.

There is a lot in this report to think about. I'll add my two cents on how to answer these calls to action on Monday in part two. In the meantime, what are your thoughts? Do these findings ring true to you? How will you answer these calls to action within your organization?

Elyse Klova, Program Associate, Foundation Center-Atlanta