The practice of capital aggregation – when a foundation or coalition of donors pool their resources to target a group of nonprofit organizations over several years – holds much promise as a more comprehensive and longer term funding strategy. We believe this innovation will go a long way in creating whole new paradigms for nonprofit support. Edna McConnell Clark Foundation has blazed the trail practicing capital aggregation, which also provides a good model for addressing leadership needs.
Research in the last six years highlights stubborn and worrisome trends throughout the nonprofit sector when it comes to the capabilities and readiness of current and future leaders:
- By 2016 the nonprofit sector will need 80,000 new senior managers per year, yet most organizations lack sufficient size, expertise or resources to develop managers internally.
- 91% of senior nonprofit leaders feel they are not being adequately developed to become the next executive director.
- 73% of nonprofit leaders feel they lack sufficient resources and opportunities to develop their leadership skills.
- Many funders support leadership development in theory but don’t allocate funding for professional growth or see this as a strategic imperative.
- And, although the exact numbers are hard to nail down, well over 85% of all money raised by nonprofits is reserved for program and operational expenses. In most organizations any money set aside for talent development is insufficient to meet its needs.
While many funders, leaders and communities are aware of this leadership gap few have taken strategic steps to develop the next generation of talent. This worries us. Without effective leadership, now and in the future, how can capital aggregation succeed? In the absence of a serious strategy and investment in developing nonprofit leaders the return on the current investments—aggregated or not—will be minimized or not realized at all. As we all know, you need the right mission, strategy, funding and relationships. But without capable leadership that is all beside the point. Achieving the desired impact to affect social change does not occur without effective leadership.
We believe the nonprofit sector needs ‘leadership aggregation’ as well as capital aggregation. We see four requirements necessary to achieve this:
- Commitment & resources. Influential funders (e.g. foundations, cities, individuals) identify a critical leadership gap and commit to developing the leadership capacity within a specific sector, region or community.
- Strategy. With this target identified, a plan is created to develop a pool of leaders across multiple organizations.
- Local focus. Groups of regional leaders are selected to reinforce existing networks, build new connections and enhance each leader’s potential for success.
- Effective development methods that multiply impact. Offer a program that allows leaders to learn new skills and behaviors from both experts and each other.
To meet these requirements funders and organizations must invest in resources that address the unique needs of nonprofit leaders. Our research shows that powerful tools for teaching practitioners how to lead and manage include the opportunity to reflect face-to-face with a cohort of peers, receive expert coaching guidance and participate in dynamic learning experiences that address their specific challenges. Yet many leadership programs persist in offering topic-specific training in lecture formats which is repeatedly cited as one of the least effective methods.
We call upon foundations and other donors to consider investing in leadership development; to follow the examples of Haas, Omidyar and McConnell Clark foundations. Whether it is per organization or en masse with other funders or organizations, creating talented leaders is the multiplier effect for your investment. Missions are achieved through effective leadership, good management and an exceptional staff. The research is clear; leadership development is an urgent need.
Nicki Roth and Gavin Fenn-Smith are co-founders of Saroga, The Nonprofit Leadership Forum. They are seasoned consultants in the corporate and nonprofit spaces. For more information contact: forum@saroga.org or read Nicki’s leadership blog at www.getrealleadership.com.
