Talent Demands Place Pressure on Nonprofit Organizations

Many will agree that the impact of the pandemic has been far-reaching, resulting in both employers and employees evaluating the relationship between work and life by questioning long-standing workplace traditions and norms and prioritizing purposeful work, meaningful roles, enhanced flexibility, supportive workplace cultures, and personal well-being and safety. In a recent Ernst & Young (EY) study, 54% of workers said they left their employer because their supervisor was not empathetic, and 49% said employers were unsympathetic to their personal lives (Source). A Pew Research study found that 57% of workers quit due to being disrespected at work, 45% left due to a lack of flexibility in choosing work schedules, and nearly half needed to step away due to issues with child care (Source).

What seems to be clear is that the pandemic precipitated a shift in priorities among all workers and the need to pursue better employment opportunities for many. Post-pandemic, we now see workers leaving their jobs at higher rates only to secure better jobs that fit their changing priorities. In a 2022 Gallup poll of 13,000 U.S. employees, when respondents were asked what was most important when deciding whether to accept a new job offer, 61% cited greater work-life balance and better personal well-being (Source).

Nonprofit Sector Faces Labor Shortages

The lasting impact of the pandemic has placed many communities in great peril by not having the labor force needed to provide direct services to individuals. In a recent report by the National Council of Nonprofits, data suggests the nonprofit sector is experiencing an employment shortage, resulting in fewer employees responding effectively to the increased demand for social services. As a result, communities across the country may need more help accessing critical basic needs and wraparound support services. "More than half of nonprofits (51.7%) reported they have more vacancies now, particularly among direct service delivery positions, compared to before the COVID-19 pandemic, and nearly three out of ten (28.1%) have longer waiting lists for services (Source).”

As a result of changes in the labor market, many experts believe that although nonprofit organizations offer an opportunity to engage in meaningful work, its current “business model” of low wages, long hours, and high education requirements may not be as attractive to retain talent nor recruit new entrants into the sector. The next generation of talent seeks employment opportunities that offer higher pay, flexibility, role clarity, professional development, advancement opportunities, and work-life balance. These are critical factors in attracting and retaining talent in the “new normal” of the labor market (Source). Conversely, one study found that nearly 1 in 4 (23%) nonprofit employees are planning to leave their current job to seek new opportunities outside of the sector (Source) in an attempt to secure better pay and career opportunities (Source).

The challenges of nonprofit organizations to retain incumbent workers and recruit the next generation of talent are further exacerbated by current demographic realities. More than 1 in 4 (26.6%) of nonprofit sector employees are older than 55, with fewer than 1 in 10 (9.5%) of the sector employees being new labor market entrants; both statistics are higher and lower than the national average, respectively (Source). The nonprofit sector also employs a higher proportion of women than any other sector, with 2 out of every 3 (66%) employees being women compared to less than half (46.8) in the workforce altogether, thereby posing unique and specific recruitment and retention challenges (Source).

Generational Trends Contribute to Labor Challenges

Tenure at organizations is being challenged by changing generational beliefs that impact nonprofit organization's ability to retain talent longer. According to the U.S. Department of Labor, the median tenure rate for baby boomer workers is approximately 10 years; however, when analyzing millennial employees' trends, these workers' average tenure rate is only three (3) years (Source). Declining employment length is particularly challenging for nonprofit employers, considering that it is estimated that Gen Z and millennial generations will comprise 75% of the U.S. workforce by 2025 (Source).

When asked, more than half (53%) of nonprofit leaders reported that retaining employees under 30 years old is a significant challenge (Source). Even worse, most nonprofit organizations lack an intentional strategy or plan to attract and/or retain talent. In a National Council of Nonprofits 2023 study, most nonprofit organizations (71%) reported not having a formal retention strategy (Source).

Addressing Burnout is a Challenge in the Nonprofit Sector

In many cases, the type of work performed by nonprofit organizations, particularly by human services agencies, contributes to higher-than-average voluntary turnover rates and employment shortages. When nonprofit employers were asked to identify barriers to hiring, unsurprisingly, most said salary competition and budget constraints were the leading causes of increased job vacancies. However, half of more than 1,600 respondents reported stress and burnout (50.2%) as a critical factor in employment shortages in their nonprofit organizations (Source).

The World Health Organization (WHO) defines burnout as “a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed,” resulting in an overwhelmed worker (Source).

In a report published by The Center For Effective Philanthropy, nearly all (95%) of the 237 nonprofit leaders surveyed indicated that employee burnout was at least a slight concern and a critical issue impacting their ability to achieve their mission; 1 in 4 reported that burnout had a moderate or significant impact on organizational performance (Source). According to a 2022 Gallup random sample of over 15,000 full—and part-time U.S. employees age 18 and older, "Quiet quitters" make up at least 50% of the U.S. workforce (Source). Quiet quitters are millions of workers who are not engaged or going above and beyond and are just meeting their job description (Source). Only one in three managers are also engaged at work (Source).

Up next: Part Three - Extended time off initiatives are gaining popularity not only in the private sector but also in the nonprofit sector. Many funders have been investing in extended leave for many years; however, there is less evidence that the sector as a whole, beyond philanthropic investments, has made the necessary shifts to embrace the inherent benefits of paid-time-off policies despite research proving they are effective talent retention strategies and essential to future talent recruitment efforts.