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Finding Nonprofit Leadership: The Case for Social Impact Executive Search Firms

Finding Nonprofit Leadership: The Case for Social Impact Executive Search Firms

January 2024

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Nonprofits are a force for good in the world with over 10 million organizations supporting various causes and a collective value of roughly $276 billion

Despite the colossal impact of these organizations, finding and retaining effective nonprofit leaders is a challenge. C-suite nonprofit leaders need specific and specialized skills and attributes, along with a heart for the job and a passion for the organization’s mission.

In addition to strong leadership and soft skills, many nonprofit leaders today must also possess operational and financial expertise, like planning and budgeting, to optimize situations with low funding.

Without strong leadership, nonprofits cannot grow, thrive, or perform their mission effectively. Good intentions are not enough; nonprofits need leaders who can turn vision into reality.

How Nonprofits Can Benefit from Executive Search Firms in Leadership Recruitment

The importance of strong senior leadership cannot be overstated; however, it is often underestimated. 

When it comes to bringing in nonprofit senior leaders, many organizations choose to go internally—that is, through personal networks, boards, and staff—or they engage an executive search firm. 

By examining the impact of using an executive search firm to hire social impact executives and leaders, we can better understand the benefits of this approach.

1. Exceptional Candidates

One of the main reasons that nonprofit clients hesitate to engage executive search firms is cost. Ninety-seven percent of nonprofit organizations have a budget of less than $5 million for their annual operations, and engaging an executive search firm can be pricey. 

But here’s the thing: replacing a bad executive hire can cost 213% of their annual salary. It’s expensive to deal with the fallout of a poor hire in the C-suite. We have had multiple C-Suite searches in the Social Impact sector that are “re-dos” or replacements of poor internal hires, and it costs the organization significantly more than if they had retained an executive search firm in the first place. 

Executive search is an investment, but it pays off with the caliber of candidates who have both the skills and the passion for the organization’s mission.

2. More Stakeholder Consideration

As a nonprofit, you have a global network of stakeholders who care about your work. You make a difference in the lives of countless communities, families, children, and individuals. Nonprofits enjoy a unique advantage that for-profit companies sometimes lack—the trust and support of the people they serve. 

But this poses a challenge in satisfying a diverse and large group of people with your next executive hire, on top of the “usual pressures” from the board, various committees, and staff.

Executive search firms are experts at managing interests—even when they conflict—and can help you listen and respond to all your stakeholders’ feedback when you select your next executive leader. This way, you can preserve and enhance the goodwill that you’ve earned among your stakeholders.

3. Smoother Salary Negotiations

Recruiting your next nonprofit executive is not only about the cost of recruitment; it’s also critical to benchmark your executive compensation to ensure that your organization is capable of hiring and retaining top talent.

You want to pay the executive fairly, to ensure they know that their skills are valued, without draining your organization’s resources.

Setting the right level of compensation can be the difference between attracting and retaining qualified leadership, and executive search firms like Stanton Chase are positioned to assist organizations in negotiating and benchmarking compensation. 

As your partner in the process, we know how much executives should earn, how to negotiate with them, and how to avoid overspending—while respecting your mission and attracting the best executive talent.

4. Diversity

Nonprofits have a noble mission to do good in the world. But many of them are falling short in one crucial area: Diversity, Equity, Inclusion, and Belonging. 

At nonprofits, only a fifth (21%) of executive directors and a fifth (21%) of board chairs are people of color. Nearly a sixth (16%) of nonprofits with programs that mainly serve people of color have all-white boards. And only 62% of executive directors and 46% of board chairs are women. 

Not only has research proven repeatedly that more diverse companies are more innovative and perform better financially, but frankly, diverse leadership is simply the right thing to do. 

Stanton Chase and many other executive search firms have a dedicated Diversity, Equity, Inclusion, and Belonging specialization that aims to partner with organizations to find merit-based, diverse leadership.

5. Improved Talent Retention in the C-Suite and Beyond

Good leaders retain good employees. That sounds simple, but many businesses overlook it. Many nonprofits have trouble keeping their leaders and their employees. People join nonprofits to make a difference, but leave when they feel disillusioned and disengaged. 

The voluntary annual turnover rate of employees at nonprofits is almost a fifth (19%), much higher than the all-industry average of 12%. Nonprofits have more difficulty retaining their valuable employees than, for example, the oil and gas sector. 

Executive search firms can help you find leaders who create a culture that retains good employees. They assess the personality of the new executive hire, the work environment they will strive to create, and the characteristics they possess to create it. Executive search firms also identify performance risks that could hinder the creation of such a culture.  

If you hire your own executive the do-it-yourself way, you may not have the same evidence-based and rigorous assessment process that an executive search firm has. That means you may not know how the executive will perform once hired, or if they will cause more of your employees to leave.

6. Increased Digital Transformation

Less than one in six (12%) nonprofits are “digitally mature.” Nonprofits that are digitally mature are 400% more likely to achieve their mission than those that are not.

What do all these numbers mean? Firstly, 88% of nonprofit executives aren’t sufficiently prioritizing digital transformation. Secondly, nonprofits are appointing leaders whose lack of focus on digital transformation reduces the organization’s likelihood of fulfilling its mission fourfold. That’s a problem.

Digital transformation-savvy executives are another area where executive search firms like Stanton Chase can help. We have a digital transformation specialization that enables us to find world-class leaders for nonprofits that can help bring them into the digital age—and thus, help them to help more beneficiaries.

How to Find Top Nonprofit Executive Leadership

Executive search firms understand executive compensation and can test for the skills and attributes a Social Impact leader needs to succeed using science-based methods. 

They will find leaders for you who won’t jump ship at the first best offer and will consider all your stakeholders and their goodwill in the process. 

Executive search firms can also improve your leadership’s Diversity, Equity, Inclusion, and Belonging through merit-based methods, and help you retain your employees by finding executives people actually want to work for.

If your organization is looking for its next nonprofit leader, we suggest following these five steps when deciding which executive search firm to use:

  • Research potential executive search partners
    When researching potential executive search firms, you should look for firms with experience in the nonprofit sector and a proven track record of successful placements.
  • Evaluate specialization
    You don’t want a jack-of-all-trades, master-of-none situation when it comes to hiring an executive search firm to find your next nonprofit leader. You should only consider firms that specialize in executive searches for nonprofits or have dedicated divisions or specializations for nonprofit placements.
  • Verify references
    It’s important to get an impartial view of the executive search firm’s performance before choosing one. You should ask any executive search firms you’re interested in using for references from organizations similar to yours that have used the search firm’s services in the past.
  • Meet with potential firms
    The best way to know if you’re really compatible with an executive search firm is to meet with its consultants in person. Schedule interviews with shortlisted search firms to discuss your organization’s needs and gauge their understanding.
  • Request a proposal
    If you like a search firm enough after meeting them, you should consider asking for a proposal. Request a detailed proposal outlining the firm’s strategy, methodology, and timeline for the search process. The proposal should include a breakdown of costs, services provided, and the expected outcomes. 

Our team stands out from other nonprofit executive search firms and leadership consultancies. We are well-equipped to provide a global pool of talent while also understanding the challenges of individual communities.

We are well-equipped to provide a global pool of talent while also understanding the challenges of individual communities.

Our recruitment process is designed to identify nonprofit leaders who are aligned with your cause, invested in your strategy, share your values, and have the skills and experience needed to take your organization to new heights.

If your nonprofit is struggling to find the leaders it deserves, please don’t hesitate to reach out to us. Our consultants are just an email away, and we’re here to help you succeed.

About the Author

Jeff Perkins is a Managing Director at Stanton Chase Washington, D.C. He is also Stanton Chase’s Global Leader of the Social Impact sector. 

Throughout his career, Jeff has held leadership positions in North America and Europe for major media, digital, and technology organizations—including SpaceX, NPR, News Corporation, Nielsen, and Time Warner—where he guided diverse teams in human resources, executive search and compensation, culture development, and organizational transformation.

Executive Search
Social Impact

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