Big challenges for nonprofits, foundations

Foundations and nonprofits need to get their house in order.

A thriving charitable marketplace is critical to address the urgent social problems America faces, but that marketplace itself faces huge challenges.

Those challenges, spelled out in three new reports, include the need for more effective nonprofit boards, more investment in nonprofit leadership, and more diversity in philanthropy.

While it faces an imminent crisis because of massive turnover expected in staff leadership, for example, the nonprofit sector gets poor grades for the job it is doing to provide leadership training and professional development opportunities to aspiring nonprofit executive directors, according to a report by the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University in Grand Rapids, Mich.

Emerging leaders want and need mentors but worry about making nonprofit work a life-long career because of low pay, burnout, the burden of student loans, and lack of professional development, and generational differences in organizational expectations, the report says.

A second report, by Rockefeller Philanthropy Advisers, says that with public pressure growing “for foundations to be more responsive to underserved and diverse communities,” foundation leaders should “reconsider the many ways to incorporate diverse perspectives into solving our greatest challenge.”

While foundations have made “much progress” in staff and board diversity, and modest progress in the share of grant dollars targeting minority populations, the report says, the number of grants and grant dollars targeting minority populations did not increase in direct proportion to increases in staff and board diversity.

A third report, by the Urban Institute, finds that most heads of mid-size nonprofits give poor marks to their trustees for fundraising and monitoring board performance.

The study calls for more support for board development and for initiatives designed to bring more diversity to the leadership ranks of the nonprofit sector.

To fix the urgent social problems we face, foundations and nonprofits need to fix their own internal problems.

With foundation investment, for example, nonprofits must develop sustainable business and fundraising strategies; build and engage effective boards; find and keep smart leaders and groom the next generation of leaders; unleash the power for productive collaboration; and work to fix flawed policies underlying the symptom sand causes of social problems.

Without greater investment to equip foundations and nonprofits to be more effective, the charitable marketplace will fall short of its underlying mission of making our communities better places to live and work.