Nonprofits face crisis as leaders prepare for retirement
Nonprofit workers pour their passions into causes such as providing food and shelter to the needy, counseling troubled veterans and staging live theater and music.
But nonprofit organizations often fall short taking care of themselves — in grooming their next generation of executive leaders and helping their employees save enough for retirement.
Those are among the findings in new research by the Bayer Center for Nonprofit Management at Robert Morris University that says the nonprofit sector faces a crisis as the current crop of baby boomers who lead them prepares to exit the workforce.
The report characterized as “distressing” its finding that almost half of nonprofit professionals had $50,000 or less in savings.
“These are idealistic people helping people and not paying attention to themselves,” said Peggy Outon, executive director of the Bayer Center, which plans to release findings of the research funded by the Richard King Mellon Foundation on Friday.
Nonprofits employ 1 in 5 workers in the Pittsburgh region, according to the study.
The research included a survey of nearly 300 nonprofit workers, including executives and other professionals. Among the questions asked were whether organizations had planned for personnel transitions and whether they personally had saved enough to retire.
“The biggest message is to sound the alarm about the lack of effective human resources in a majority of nonprofit organizations,” Ms. Outon said.
Of 143 executives who participated in the Bayer survey, only 34
percent said their organization had a succession plan in place.
Even though nearly 70 percent of those executives said their boards had personnel committees, for most nonprofits, “internal processes and systems to support retirement are spotty,” the report stated.
Much of the issue is the result of the sector’s growth since the 1970s, when many nonprofits were created to address social justice issues, the report noted.
“Those organizations were seldom built with attention to the individual needs of those who worked in them,” the report said. “The focus was on the community they served.”
“The sector is in some ways a creature of the baby boomers, and now they are aging,” Ms. Outon said.
The study calls for boards of directors and senior community leaders to step up and provide coaching for nonprofits. “This has got to be a whole community effort,” Ms. Outon said. “It’s not something to be solved with a short-term answer or one agencydoing some classes.”
To that end, the study also included conversations with 11 top executives of local foundations and funders including officials at some of the city’s largest philanthropies — the Richard King Mellon Foundation, Heinz Endowments and Pittsburgh Foundation.
“Foundations have a reason to care that good people are being groomed [at local nonprofits],” Ms. Outon said.
According to a 2014 report from Grantmakers of Western Pennsylvania, the city ranked first in the U.S. according to foundation investment per capita.
On the issue of retirement savings, it wasn’t surprising that many nonprofit workers have saved less than their for-profit counterparts. They earn lower wages on average.
But they also aren’t getting help in building up a nest egg.
Gregory Farrell, senior vice president with The Farrell Group at financial advisers Hefren-Tillotson, said many nonprofits don’t have the staff and resources to provide automatic enrollment in savings plans.
“They don’t have the infrastructure to set that up necessarily and they are so focused on their mission that they rarely have the resources to stop and help their workers,” said Mr. Farrell, who served as a consultant for the Bayer Center on the report.
During discussions with nonprofit workers for his research, Mr. Farrell found older workers who had previous experience at forprofit businesses were more savvy about financial planning.
“For those with a background in corporate America, I think maybe that’s where they learned to speak retirement savings,” said Mr. Farrell. “Some younger workers who have been employed by nonprofits their entire career are at the greatest risk for not establishing longterm [savings] habits that couldhelp them.”
He is one of four speakers set to address a Bayer Center Leadership Briefing on the report’s findings and offer solutions Friday morning at Alloy 26 in Nova Place, North Side.
The others are Todd Owens, principal at Nonprofit Talent; Phyllis Hartman, human resources consultant; and Shirl Regan, chief executive of the Women’s Center and Shelter of Greater Pittsburgh.