How Grant Makers Can Help Nonprofits Develop Strong Leaders

Nonprofits have a chronic leadership-development problem that foundations and big donors can help solve by making sure their good intentions are in line with their grantees’ real needs.

Grant makers recognize the importance of having strong leaders at the helm of the nonprofits they support. Nearly two-thirds of the 50 foundation heads who participated in a recent survey by the Bridgespan Group (where we work) ranked leadership development as a top priority. Yet a separate survey of 438 nonprofit leaders revealed a gap between the help organizations say they need to cultivate strong leaders and the support they actually receive.

For example, when nonprofits get support for leadership development (which the majority do not), it is usually for off-site training and conferences. But what they most want is support to improve their internal efforts to nurture new leaders, such as improving performance-review and talent-development systems. In fact, the widespread neglect of in-house leadership development is a major cause of nonprofits’ most pressing leadership issue: a lack of succession planning.

If recognizing a problem is the first step to finding a solution, many grant makers appear to be open to new thinking. In our survey, fewer than one in four foundations reported high confidence that they are making the right leadership investments, but their commitment to leadership funding was strong: Roughly 40 percent said they planned to increase their financial support in this area in the future.

As grant makers review their leadership investments, it’s a good time to ask how to make the most of the dollars spent. Based on our research and work with grant makers, we believe that making higher-impact leadership investments starts with answering two important — but sometimes overlooked — questions: What is the problem, and what is the right investment to address that problem?

Talent Needs Vary

Identifying the leadership problem most in need of fixing sounds simple, but organizations often struggle to put the leadership they need in place, for any number of reasons. It could stem from recruiting the wrong people, missing talent-development opportunities, or failing to create an environment that supports and retains leaders for the long run.

Our research showed that the types of leadership support organizations want most differs by field. For instance, groups working on elementary and secondary education named executive coaching as their top priority, while a survey of work-force-development groups in New York City showed that a significant majority put a premium on getting unrestricted funding for overhead costs, which allows for flexibility in implementing ways to nurture talent.

To understand a grantee’s greatest need, we recommend that grant makers take a bottom-up approach, engaging people who understand the challenges best: nonprofit staff, boards, recruiting professionals, and other experts. Using approaches like interviews, focus groups, and surveys, grant makers can get a deeper sense of what support these leaders and organizations need to cultivate talent.

This isn’t to say that foundations disregard grantees’ needs today. Most gather some types of information. But all too often, it isn’t comprehensive and systematic. It is important to get this step right so as to invest in the most useful leadership-development activities.

A collaboration involving more than a dozen of the largest and most influential Jewish philanthropies offers a case in point.

Faced with accelerating retirements of senior figures across their organizations, the groups sought investments they could make in the next generation of Jewish-charity leadership. Initially, they considered a two-pronged approach: an annual, high-profile networking gathering for 50 of the field’s top emerging leaders, paired with an executive-education program for a smaller group of leaders.

But to confirm their assumptions, the grant makers stepped back and conducted interviews with senior executives, emerging leaders, and recruiters who conduct executive searches for Jewish charities. They collected input on the most critical barriers holding organizations back from getting the leaders they need.

This input, and a review of existing leadership programs for Jewish charities, suggested a different priority. While a deeper investment in individual leaders could be helpful, staff churn would likely persist unless the nonprofits themselves became more attractive places to work and build careers.

As a result, the grant makers established the Jewish Leadership Pipelines Alliance (later renamed Leading Edge) and gave it three tasks: engage Jewish philanthropists to support effective leadership development within Jewish nonprofits; roll out a campaign, called Leading Places to Work, to identify proven approaches and provide support to help Jewish charities become more attractive places to work; and launch a program to help new CEOs and support the new generation of leadership that was rapidly taking charge.

Without the extra effort involved in listening to the needs of the leaders themselves, those grant makers might never have been able to design investments that so directly addressed Jewish charities’ most important leadership needs.

Finding Solutions

Identifying the problem at hand clears the way for picking the right leadership investments. This requires answering several questions:

• What is the best solution or mix of solutions to meet the challenges identified?
• What is the most effective way to deliver solutions to ensure lasting impact? (That is, what depth and duration is required per individual to have lasting influence?)
• What is the most efficient way to deliver solutions to maximize the number of individuals served?
• What operational support is needed to ensure the program delivers high-quality results?

Executives at the Tiger Foundation used this approach to determine how best to support leadership development among its grantees. Tiger, which strives to help people break the cycle of poverty in New York, observed several years ago that a number of its grantees were struggling to attract, develop, and retain employees. As a result, they did not have the pipeline of leaders they needed for the future.

At the time, the foundation invested primarily in sending leaders of nonprofits it supported to an executive-education program for social enterprises at the Columbia Business School. While the program served those individuals well and made them better contributors to their organizations, it didn’t address the systemic challenge of grooming talent and planning for succession.

Tiger researched ways to help its grant recipients establish processes to develop leaders in-house and decided to pay for external consultants to help grantees put effective practices in place. Nonprofit consultancy AchieveMission worked with six Tiger grantees in this way.

“We supported these exemplary organizations to embed tailored systems that helped them identify the most promising future leaders and develop them in the most effective way,” says James Shepard Jr., AchieveMission’s CEO. “In several cases, these nonprofits saved tens or even hundreds of thousands of dollars in recruiting fees alone, even as they built stronger organizations that are better able to promote from within for critical roles.”

While Tiger continued to provide funding for individuals to attend the Columbia program, the added investment in grantee organizations enabled the foundation to support the development of many more leaders now and in the future. That’s a worthy priority for any foundation.

But to do it well, foundations need think and act differently — loosening the grip on overhead expenditures, for example, or taking more time to dig deeply into the varied leadership challenges facing individual grantees. Leadership clearly matters when it comes to achieving impact. It’s an investment worth making.

Kirk Kramer directs Leading for Impact , the Bridgespan Group’s two-year strategic-consulting program for midsize nonprofits. Libbie Landles-Cobb is a partner in Bridgespan’s San Francisco office and a Leading for Impact coach. Betsy Haley Doyle is a partner in Bridgespan’s San Francisco office.