According to Imagine Canada, the non-profit sector includes over 170,000 charitable and non-profit organizations, with 85,000 being registered charities. Imagine Canada highlights that the charitable and non-profit sector contributes an average of 8.1% of total Canadian GDP, more than the retail trade industry and close to the value of the mining, oil and gas extraction industry. Over 13 million people volunteer and two million people work in the non-profit sector.
This sector is under increasing pressure to address multiple needs in a variety of communities across Canada, with limited resources. Yet, resources are only one challenge facing the non-profit sector. Based on a review of the literature it is clear that the non-profit sector is facing numerous challenges in addition to ongoing financial challenges. In January 2016 Joanne Cave wrote an article in The Philanthropist identifying 5 key trends facing the non-profit sector. These trends are still relevant today. They include:
- Investment in leadership development and capacity-building;
- Increased emphasis on ‘decent work’ and best practices in human resources;
- The social finance and social innovation tipping point;
- Shared platforms and administrative outsourcing; and
- New frontiers for technology and data management.
I would add a sixth and seventh trend to this list:
- Increased emphasis on social enterprise development.
- Impact of COVID-19 on not-for-profits
In this blog, I am going to discuss the first challenge: “Investment in leadership development and capacity-building” because I believe this is the greatest challenge facing the non-profit sector over the next decade. The complexity of leading non-profits has become increasingly challenging and will continue to do so in the future. Non-profits are faced with complex issues including operating within an uncertain funding environment; an expectation from funders to partner with other providers who are also competitors for funding; continued increase in community needs; an expectation of ongoing evaluation and increased public accountability; complex human resources issues such as unionization, staff retention, and provincial staff training expectations; increased competition for limited funds; increased pressure to merge agencies; an expectation to create and operate innovative social enterprises; and a growing need to use technology without corresponding funds to support the purchase the required technology. And these are only a few of the challenges of operating a successful non-profit.
Non-profit leaders have tended to grow up within the non-profit sector, having pursued education and training in social services, social work, community services, and other non-profit sectors. Most current leaders have begun their careers at the front-line level and have grown into their management positions, with limited formal management training. To respond to today’s and tomorrow’s growing non-profit leadership challenges, business schools are increasingly adding full-time and part-time courses for the non-profit leader. In the future, we will be seeing more and more MBA and MPA graduates moving into non-profit leadership roles. MSW courses are beginning to offer more business-oriented leadership courses. To deal with the complexities of leading non-profits, future non-profit leaders are going to have a combination of non-profit and business training.
To address the immediate challenges current non-profit leaders, who have traditional training rooted in the non-profit sector, are pursuing additional business training. Business Schools have risen to the challenge and are offering short-term leadership training programs to assist current leaders in adapting the required business skills and knowledge to effectively lead non-profit agencies in a growingly complex world.
I have updated this blog to include a seventh trend, the impact of COVID-19 on the not-for-profit sector. Analysts are now suggesting, because of COVID-19, upwards of 30% of the not-for-profit organizations in Canada, more than 50,000, are at risk of closing their doors. This could be devastating to our communities and the millions of people who depend on these organizations. More than ever now is the time for innovative leadership in the not-for-profit sector.
To address the ever-changing complex nature of leadership in the non-profit sector we will need new, innovative thinking, and this will include applying, and evolving, business theories to meet the challenges of the non-profit sector. The evolution of non-profit leadership training makes me think that non-profit leadership is applying one of my favourite Albert Einstein quote; “We cannot solve our problems with the same thinking we used when we created them”.
*Originally published on June 6th, 2018