Next Generation Governance - Pillar Nonprofit Network
Next GenerationGovernanceEmerging Leaders’ Perspectives onGovernance in the Nonprofit SectorONN/Connectthe SectorOCTOBER 2018
AUTHORS:ASIYA BARAKZAIPublic Policy FellowLondon Youth Advisory Council in collaboration with the Pillar Nonprofit Network.ALYSSA LAICo-Chair of ONN’s Connect the Sector.LINDA MOLLENHAUERChair, Ignite NPS.ADVISORS:MELISSA KAMPHUISExecutive Director, London Youth Advisory CouncilDHARSHI LACEYDirector, Diversity and Governance, Pillar Nonprofit NetworkPROJECT COORDINATION:Pillar Nonprofit NetworkREIMAGINING GOVERNANCE INITIATIVEThis research is part of Reimagining Governance, which is a collaborative initiative designed to advance newapproaches to the governance of nonprofit organizations. In response to a changing environment, it aims to helpnonprofit leaders to reimagine a more effective way to fulfill organizational governance, including its structures,processes and practices.COLLABORATORS:IGNITE NPS is a foundation which supports research, resources and initiatives which help nonprofit leaders toanticipate change and thrive in a complex environment.LONDON YOUTH ADVISORY COUNCIL is an organization by youth, for youth that strives to ensure young peoplehave decision-making power in public processes. We believe young people’s priorities, perspectives andexperiences are key in community decision making processes.ONN’S CONNECT THE SECTOR is a network of emerging nonprofit professionals that seeks to promoteintergenerational leadership in the sector by creating spaces for idea-sharing, community building, and publicpolicy engagement.PILLAR NONPROFIT NETWORK strengthens individuals, organizations and enterprises invested in positivecommunity impact.ACKNOWLEDGMENTS:We are grateful for the time, perspectives and ideas that research contributors shared with us for this paper.THE PAPER WAS FUNDED BY IGNITE NPS.2OCTOBER 2018
SETTING THE STAGEIn recent decades, nonprofit governance has beenenhanced by new practices that shift boards away fromoperations, engage board members more effectively, andbetter explain its roles and responsibilities. Despite theseenhancements, the basic form of nonprofit governanceremains fundamentally unchanged even though theenvironments in which nonprofits operate have beentransformed. Factors as varied as new technologies,sophisticated financing models, hybrid organizationalstructures, and shifting demographics have altered theway organizations engage with each other, conducttheir work, and accomplish their missions.“Structures of nonprofits andphilanthropy that we’ve builtduring the last 500 yearsof capitalism’s ascent arebound to change – we are sofamiliar with these enterprises that we often take theirstructure for granted.”Philanthropy and theSocial Economy (9)A Philanthropist article Forces of Change describes the nonprofit environment as one “of greatcomplexity, accelerated change and unprecedented competition for resources 1”. ONN’sLeading our Future calls the environment “unstable, complex, changing and turbulent.2” KCI’sPhilanthropic Trends concludes it is a time of “profound disruption In many of our lives, attitudesand behaviors are changing and as a result, so too are long held rules and definitions”. 3In addition to creating operating challenges, the environment creates governance challengesthat require leaders to have sophisticated competencies for accessing resources, managingcomplex accountabilities, and navigating strategically. Finding and retaining the right kind ofgovernance leadership is critical to the vibrancy and sustainability of nonprofit organizations.ONN’s Shaping the Futureargues that the challengesreported by leaders “may bean important indicator of theneed to rethink the modelof leadership in place andwhether current strategies andexpectations are sustainable”.Shaping the Future: Leadership inOntario’s Nonprofit Labour Force (39)This challenge is complicated by the significantleadership transition that will occur over the nextfive to ten years as the baby boom generation exitsgovernance leadership and the smaller Gen X can’treplace it.The convergence of these three trends – a staticconstruct of governance, a profoundly shifting sector,and challenges attracting governance leadership –raises some interesting questions: W ill emerging leaders4 be attracted to the currentstructures and practices of governance andengaged by its processes? Will there be a leadership gap in governance andif so, what are the implications? How might the values and expectations of emergingleaders shape future governance?Mollenhauer,L. (May, 29, 2017). Forces for Change: Reshaping How Nonprofit Organizations are Governed, Managed and Resourced. The Philanthropist. pg. 1Clutterbuck, P., Arundel, C. (2017, July). Leading Our Future: Leadership Competencies in Ontario’s Nonprofit Sector. Ontario Nonprofit Network. pg. 13Spears, M.A., Nakoneshny, N. (Summer 2015). The Change & Adaptation Issue. Philanthropic Trends Quarterly. KCI Ketchum Canada pg. 24 We don’t have a formal definition of ‘emerging leaders’ but for the purposes of this paper we describe them as the youngest cohort of Gen X (e.g. born 1979 – 1982) and millennials(born between 1980 – 1995) who are currently holding leadership positions.1233OCTOBER 2018
This paper explores the trends, some next generationleaders’ views about governance, and considers how thenext generation of governance could change to meettheir needs and expectations. Along with presentingideas and solutions, the paper explores three themeswhich emerged in the research : Attracting governance leadership volunteers Fulfilling the competency requirements Responding to new rules of engagement“Charities must think ahead tobe sure they are ready for whatthe future holds. Every successful organization must be ableto create the conditions thatwill enable future success.”KCI’s PhilanthropicTrends Quarterly,The Future of Fundraising ( 2)A JOURNEY OF DISCOVERYThis paper is based on research that involved an extensiveliterature review as well as focus groups and telephoneinterviews with just under 100 thought leaders. Thesethought leaders – our research participants – includeemerging leaders in the nonprofit sector as well as moreestablished leaders who have a deep understanding ofgovernance and the challenges of leadership. Althoughwe drew participants from a readily accessible network,we sought a wide diversity of perspectives. The focusgroups and interviews were not formally structured; theywere conversations guided by open-ended questionsand probing.THE RESEARCH WAS GUIDED BY FIVE CHALLENGING PARAMETERS: T his was not research on how to attract and retain young leaders to participate oncurrent boards. Rather it was research on what governance could or should look likewhen emerging leaders are the majority among governance leaders. onprofit organizations vary by size, resources, purpose, geography, and lifecycle. TheseNvast differences impact the nature of their leadership challenges and opportunities.Leadership is complex; there are no simple answers for the challenges facing the sector. 5W e were mindful of generational stereotyping, recognizing that you can’t ‘lump an entiregeneration into a single group’5 with the same perspectives, attitudes and experience.We also worked to distinguish between generational characteristics that are age-specificand those that might continue throughout adulthood. For example, just because ayounger leader is seeking short-term volunteer experiences to build a resume doesn’tmean that resume building will be a prime motivation later in life.Environics Institute. (2017). Canadian Millennials: Social Values Study. The Environics Institute. pg. 14OCTOBER 2018
uch has been researched and written about emerging staff leaders in nonprofitMorganizations but very little about emerging governance leaders. We believe manyobservations and findings about paid leadership can be applied to volunteer governanceleadership. I t is tough to predict the future of nonprofit governance based on what we know todayabout emerging leaders. As a result, this paper raises more questions than it answers.However, we believe it is critically important to anticipate where the issues, barriers,and opportunities lie. great deal is at stake given the critical role of governance in driving the effectivenessAand sustainability of nonprofit organizations.Given these parameters, we approached our research and wrote this paper on next generationgovernance with an eye to challenging the “enchantment and tenacity of the status quo”.6NEXT GENERATION GOVERNANCE: CHALLENGES AND OPPORTUNITIESOur literature review, focus groups, and conversations with thought leaders revealed challengesand opportunities for next-generation governance over the next decade. We highlight theseon the following pages and identify things the sector should consider now to succeed later.I) ATTRACTING GOVERNANCE LEADERSHIP VOLUNTEERSEMERGENT QUESTIONS“While social entrepreneurshipis not a new practice, itsbuzz in the business worldovershadows the fact thatcharities and nonprofitsare the original socialentrepreneurs . Reinforcingthe fact that (it) is a practicewithin the nonprofit sectorcan help increase awareness.”Setting the Stage for IntergenerationalLeadership, The Philanthropist (1)6 W hat are the implications if emerging leaders aredrawn to alternative organizational models thatachieve social good rather than to traditionalcharitable organizations? Will the transition in governance leadership createa vacuum or generate an opportunity? H ow will emerging leaders’ perceptions influencethe degree to which they take on governanceleadership roles? What should be done to ensurethat emerging leaders have positive governanceexperiences now?Spears, M.A., Nakoneshny, N. (2016, Summer). The Innovation Issue. Philanthropic Trends Quarterly. KCI Ketchum Canada. pg. 45OCTOBER 2018
EMERGING LEADERS HAVE ATTRACTIVE ALTERNATIVESTO “DO GOOD”Emerging leaders who want to do good and createsocial impact have several options. They can choose atraditional nonprofit organization or a hybrid organizationsuch as a social enterprise or social entrepreneurialventure. These hybrids blur the line between businessand social good by creating profit to finance socialgood in a way that is “innovative and self-sustaining”.7Alternatively emerging leaders can choose to work forcorporations with strong social responsibility programsor cause-driven initiatives. Even the growth in vibrant,technologically savvy networks and movements createscompetition for traditional nonprofit organizations thatare trying to recruit high-quality leadership volunteers.“Millennials will soon becomesome of the most powerfuleconomic and social decisionmakers. They will not justwork more, but lead more.As Dianne Lister notedrecently, the ‘charitable sectoris undergoing the largesttransition of leadership everfaced in Canada.”Learning How to Do SuccessionPlanning from Younger Leaders (1)The 2009 Convergence report about trends shaping thesocial sector describes this recruitment challenge asfollows:Although the nonprofit sector has historically had a monopoly ondoing good, nonprofits now must consider public agencies, for profit corporations, networks, an even informal collections ofindividuals among their potential competitors and partners. What does it mean for the sector when nonprofits are no longersociety’s preferred way to accomplish social goals? Some alreadyargue that the best way to address important social causes is witha for-profit, market-based solution.8The 2013 Giving, Volunteering and Participating survey found that “more volunteering is beingdone by less people and those people are more often than not, of the boomer generationand older”. In the article, The Future of Volunteering (July 2016), Volunteer Canada’s DeborahPike wonders whether “fewer people (are) volunteering or are more people choosing to getinvolved outside of defined positions within organizations?”9The perceptions that emerging leaders form when they work as interns, contract workers, staff,and volunteers in the non-profit sector may influence their future desire to take on governanceleadership roles. Many studies have shown that Gen X and millennials value the sector’s work.However, some of the emerging leaders who participated in our research voiced frustrationwith their volunteer experiences, particularly their experiences serving on boards and beingexpected to represent their entire generation. They wonder whether emerging leaders whohave negative experiences early in their careers will turn to alternative ways to create socialimpact.789Clutterbuck, P., Arundel, C. (2017, July). Leading Our Future: Leadership Competencies in Ontario’s Nonprofit Sector. Ontario Nonprofit Network.pg. 15Gowdy, H., Hildebrand, A., La Piana, D., & Campos, M. (2009, November). Convergence: How Five Trends Will Reshape the Social Sector. The James Irvine Foundation pg 23Levy-Ajzenkopf, A. (2016, July 27). The future of volunteering? It’s a campus thing. Charity Village6OCTOBER 2018
THE TALENT POOL NEEDS TO BE NURTUREDTwo converging realities will impact the size of the talent pool for governance leadership.First, there will be a significant exodus of nonprofit governance leaders as the baby boomgeneration vacates leadership roles over the next decade. This is concerning given that theGen X cohort is approximately half the size of the boomer generation11, the oldest millennialsare in their thirties, and the youngest millennials in their early twenties. The shortfall in thegovernance leadership pool is amplified in rural communities when young people moveaway for school and work and don’t return.12The second reality is that many nonprofit organizations, particularly the resource challenged,struggle with long-term governance succession planning and investing in professionaldevelopment for emerging leaders. This means the talent pipeline is not being nurtured, apoint noted by many of the emerging leaders we interviewed who feel there aren’t enoughprofessional development and mentoring opportunities for them to build their confidence andgrow as leaders. Even when nonprofit organizations are intentional about recruiting emergingleaders for governance positions, informants felt that members of the older generations – thepeople doing the recruitment – sometimes struggle to gauge the leadership potential ofemerging leaders whose career paths are nonlinear, multi-faceted, and different from theirown. One informant said “they don’t know how to read my resume”. The Millennial Reportexplains the difference as follows:“The baby boom grew up in a time where (people) tendedto remain at the same job or company and support the sameinstitutions for years. Millennials live in a more “global economy They travel more, change jobs more, obtain more education,develop relationships far differently than any previousgeneration”.13It is worth noting two other perspectives that appear in the literature. The 2007 report, Next Shift,cautions that the “nonprofit sector itself is in crisis and the emphasis only on leadership transitionreinforces rather than challenges the prevailing issues facing nonprofit organizations”.14 Theauthors make the case that for young leaders, the next decades will mean a different type ofsector with different kinds of leadership.Another perspective is that we may need fewer governance leaders in the future if the trend ofnonprofit mergers, consolidations, and adoption of shared platforms continues. ONN’s Leadingthe Future reinforced this view:The more turbulent environment with increased competition forlimited resources favours the ‘bigger’, better resourced playersor the smaller, innovative and nimble organizations. Some thinkthat this will lead to a rationalization and consolidation withinthe nonprofit sector and a phase of restructuring, mergers andamalgamations.15There are currently 80 million baby boomers and 42 million Gen X in the U.S. The same approximate difference is true in Canada. From an interview withDavid Hutchinson, President, Cause Leadership Inc.Clutterbuck, P., Arundel, C. (2017, July). Leading Our Future: Leadership Competencies in Ontario’s Nonprofit Sector. Ontario Nonprofit Network pg. 1413Achieve. (2016, November). Cause, Influence and The Workplace - The Millennial Impact Report Retrospective: Five Years of Trends. Achieve. pg. 114Kunreuther, F., Corvington, P.A. (2007). Next Shift: Beyond the Nonprofit Leadership Crisis. Annie E. Casey Foundation.pg. 115Clutterbuck, P., Arundel, C. (2017, July). Leading Our Future: Leadership Competencies in Ontario’s Nonprofit Sector. Ontario Nonprofit Network. pg. 2411 127OCTOBER 2018
PERCEPTIONS ABOUT GOVERNANCE CAN BE A DETERRENTEmerging leaders’ perceptions about governance mayinfluence their future willingness to actively engage asleadership volunteers. Many of our research participantsview governance as “daunting” and “demanding” anddescribe the work as “fulfilling onerous accountabilityrequirements” in a climate of “chronic underfunding”and without the “ability to innovate”.“The best way to teach properboard roles and transmit boardculture is for great boardmembers to modelthe behavior.”A research participantSome research participants talked about the “heavylifting” required in organizations that have no or few staffand wondered if it is possible for governance volunteersto make a meaningful impact if their work is consumedby fiduciary and operational issues. Participants alsoquestioned whether emerging leaders will be willing toassume governance roles if the perceptions and realitiesof governance work don’t change.II) FULFILLING COMPETENCY REQUIREMENTSEMERGENT QUESTIONS I s it reasonable to assume that all of the competencies required for effective governancecan be met by board members? What are the implications if the answer is no? Are thereother ways nonprofits can acquire these competencies? iven there is no shortage of committed and talented people, what can we do to ensureGthat emerging leaders are developing the competencies they will need to become stronggovernance leaders? hat are the implications for effectiveWgovernance if the sector struggles to recruit andretain the competent managers needed tosupport complex board work? ow can inclusion be imbedded intoHorganizational cultures so that nonprofitorganizations can not only recruit from a morediverse pool of governance leaders but alsoensure that such recruits feel included?“Younger leaders wonderedif the fact that they actuallylooked different by race and/or gender made it hard forolder leaders to see themas serious candidates .eachgeneration may have differingexperiences with race andgender and hold differingviews of how these constructsoperate within organizations.”Next Shift: Beyond the Leadership Crisis(9)8OCTOBER 2018
GOVERNANCE IS COMPLEX AND REQUIRES SOPHISTICATED, SKILLED LEADERSTo operate effectively in increasingly complex andcompetitive environments, nonprofit organizationsneed governance volunteers who have sophisticatedand multifaceted skills, knowledge, and experience.Research participants are concerned about thecapacity of future leaders to meet these requirements.From conversations with the people who participated in our research and publications like ONN’sLeading Our Future, we identified several competencies essential for governance leadership:the capacity to manage complex data sets, maneuver through diverse eco-systems, accessand steward sophisticated financing models, and create strategy in a constantly changingenvironment. Governance leaders must be comfortable innovating while also managingdemand and risk. In addition, governors must be open, empathetic, agile, engaging, andreflective people who can thrive in complexity.One participant said that “governance leaders need super hero skills to do it all”. Anothercommented that “the increase in venture philanthropy and s
governance leadership is critical to the vibrancy and sustainability of nonprofit organizations. This challenge is complicated by the significant leadership transition that will occur over the next five to ten years as the baby boom generation exits governance leadership and the smaller Gen X can t replace it.
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