Last week, I was part of a group of 25 senior nonprofit leaders (mostly CEOs) who were looking for fresh ideas and confidential counsel from their peers. Over the course of two days, I found myself listening to leaders who were passionate about their mission, but facing challenges of every kind — from founder’s syndrome to dysfunctional boards to programmatic scope creep. These discussions reminded me just how hard nonprofit leadership can be. I’m not saying leading a for-profit business is easy, but nonprofit leaders have an especially challenging time of it. Why do you think that is? Here are a couple of factors that I have observed to be true:
Because nonprofits tend to focus on the hard problems
The issues that nonprofits tackle tend to be tricky. They’re usually clouded with uncertainty, and there is often a great deal of disagreement about the best way to take them on.
In business, you look for easy things—very good businesses that don’t have many problems and that almost run themselves… In the philanthropic world, you’re looking at the toughest problems that exist. The reason why they’re important problems is that they’ve resisted the intellect and money being thrown at them over the years and they haven’t been solved. ~Warren Buffett, Omaha World Herald, April 27, 2003.
I work in international development, where things are getting more convoluted by the day. More than ever, problems cut across issues and geographies. Population shifts, water depletion, food insecurity, and energy issues all require constantly adapting approaches.
Because of the complexity of the problems many nonprofits face, measuring progress is also complex. Peter Drucker once said that nonprofits “do something very different from either business or government. The nonprofit institution neither supplies goods or services nor controls. Its product is neither a pair of shoes nor an effective regulation. Its product is a changed human being. Nonprofit institutions are human-change agents.”
Because leading a nonprofit takes a more complex skillset than leading a business
If you’re like me, you try to build your leadership knowledge and skills through the best thinkers you can find. I read John Kotter and keep my eye on the Harvard Business Review. I’ve learned over the years, though, that lessons from the corporate world don’t always apply one-to-one in the nonprofit space.
The new issue of Stanford Social Innovation Review landed in my mailbox this week, and includes a fascinating article from Garry Jenkins on “The Wall Street Takeover of Nonprofit Boards.” Jenkins points out the trend toward more professionals from the finance sector sitting on nonprofit boards, which has led to business practices becoming a core part of nonprofit leadership. It’s not that these practices are wrong (I don’t argue against data-driven decision making or managing via five-year plans per se), but we have to be mindful not to ignore their costs and trade-offs. Uncritically adopting business practices can erode some of the greatest strengths nonprofits have — like their values, long-term mission focus, shared governance, and participatory problem solving.
A few years ago, Strategy & Leadership published an article titled “A corporate executive’s short guide to leading nonprofits,” which offered some insights into the difference between the role of corporate CEO and nonprofit CEO. Compared to their corporate peers, nonprofit CEOs have greater challenges related to…
- A smaller scope of authority (respect doesn’t come with the title—it has to be earned),
- A wider range of stakeholders (consensus has to be built and maintained),
- The need for innovative metrics (to track “squishy” goals like social or behavioral change),
- Higher demands for communication (internal and external), and
- Building an effective organization (due to limited resources and training).
Don’t let the complexity of nonprofit leadership get you down. Like your mother always said, “the things worth doing are usually the hardest.” She did say that, right? In any case, set your sights high and take on the world; just don’t underestimate the challenges you’ll need to navigate along the way.
What do you think? What are some other ways that nonprofit leadership is especially challenging?