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Short Supply, Expanding Demand

The Nonprofit Sector's Leadership Deficit
Thomas J. Tierney | Outcomes, May/Jun 2007

Editor's note: Tom Tierney is the Chairman and Co-founder of the Bridgespan Group, an independent, nonprofit organization that provides management consulting and talent-matching services to foundations and other nonprofits. When Tierney and CMA's president and CEO Frank Lofaro met recently, their conversation turned to the critical need for leaders and to the Bridgespan Group study on the growing leadership deficit in nonprofits.
Tierney graciously agreed to provide CMR readers with some of his findings and insights on this topic. This article is based on the study, "The Nonprofit Sector's Leadership Deficit." For the full paper and related resources, visit: http://www.bridgespan.org/kno_articles_leadershipdeficit.html.

Nonprofits increasingly do the work required to fulfill our desire for a civil, compassionate, and well-functioning society, and to deliver these results they must often be able to spin straw into gold. Despite steady increases in charitable donations, nonprofit executives face unyielding pressure to make every dollar go a long way.

But money is not the only resource in short supply. Like most organizations, nonprofits' ability to consistently deliver results depends more on the quality of their people than on any other single variable. Yet today, nonprofit organizations struggle to attract and retain the talented senior executives they need to fulfill their missions. Searches for chief operating officers, chief financial officers, and even executive directors often turn up surprisingly few qualified candidates. Over the coming decade, this leadership challenge will only become more acute.

The Bridgespan Group carried out an extensive study of the leadership requirements of nonprofits with revenues greater than $250,000 (excluding hospitals and institutions of higher education). We found that:

• Over the next decade, these organizations will need to attract and develop some 640,000 new senior managers—the equivalent of 2.4 times the number currently employed.
  
• If the sector were to experience significant consolidation and lower-than-forecast turnover rates, this number might fall as low as 330,000. On the other hand, given historic trends, the total need could well increase to more than one million.
  
• By 2016, these organizations will need almost 80,000 new senior managers per year.
  

The projected leadership deficit results from both constrained supply and increasing demand. Key factors include:

• The growing number of nonprofit organizations