Nonprofits unprepared for exodus of baby boomers, Robert Morris University report warns
Western Pennsylvania’s nonprofit sector will lose the majority of its top leaders and most experienced employees over the next decade — and most organizations aren’t prepared for the fallout, a new report found.
Nearly 7 in 10 nonprofit executives and more than half of all nonprofit workers in a 10-county region plan to leave the sector within 10 years as baby boomers retire in droves, found a report titled “What Now: How will the impending retirement of nonprofit leaders change the sector?” by researchers with the Bayer Center for Nonprofit Management at Robert Morris University.
“There’s a growing awareness that this is an issue that cannot be ignored any longer,” said Peggy Outon, executive director of the Bayer Center and lead author of the report. “We really do need to be as resourceful and intelligent as we can.”
The report further warned that weak, ineffective and sometimes nonexistent human resources practices pervasive within the nonprofit community make it ill-equipped to sustain programs and payrolls amid the looming exodus of workers.
“We see a sector that seldom calls the hiring process talent acquisition, a sector that too infrequently grows its own into leadership — a sector that is relentlessly outwardly focused, now challenged to up its game internally to meet a demanding future,” Outon wrote in the report .
The baby-boomer retirement dilemma — also a concern for industries such as manufacturing and health care — poses as particularly threatening blow to the nonprofit sector because nonprofit growth “exploded during the baby boomers’ work lifetimes,” Outon said.
From the 1970s to now, nonprofits nationwide ballooned from about 250,000 to more than 1.5 million, federal data show. Nonprofits employ roughly 800,000 people in Pennsylvania and 11.4 million nationwide, accounting for more than 10 percent of all jobs in the United States outside the public sector, Bureau of Labor Statistics data show.
That includes more than 300,000 nonprofit employees in a 10-county region of southwestern Pennsylvania, Outon said.
The oldest of 75 million baby boomers — born between 1946 and 1964 — turn 72 this year. About 10,000 baby boomers will turn 65 today.
As leaders retire, nonprofits should tap their wisdom and make concerted efforts to invest in training potential successors and cultivating a talent pipeline, the report said.
“We have some very talented younger people working. But in many cases, they’re not being groomed or really thought of to do the top jobs,” Outon said. “The top person is so busy getting it done.”
Outon suspects many of the best successor options will belong to Generation X, or those born between 1965 and 1984, which describes roughly half of all nonprofit workers in the region.
“We talk about boomers and we talk about millennials and we overlook this whole age group, but they’re they going to be a commodity and people are going to poach them because they’ve got good skills and they’ve got experience,” Outon said.
Further, the report lamented that retirement benefits offered by nonprofits have steadily declined, making it tougher to recruit employees and harder for employees to retire comfortably.
“In this sector composed of thousands of small nonprofits, people matter profoundly,” Outon wrote in the report.
The report included survey responses from 299 nonprofit professionals and executives from 195 organizations in a 10-county region. They ranged in annual budget size from $21.5 million to $186 million and in payroll from no paid employees to 27,000 workers.
“Regional nonprofit organizations are plagued by inadequate human resource practices, ineffective personnel committees and insufficient development of younger leaders,” the report concluded. “From an individual perspective, the data indicates emerging retirees will not be able to adequately support themselves after leaving the workforce.”
Natasha Lindstrom is a Tribune-Review staff writer. Reach her at 412-380-8514, [email protected] or via Twitter @NewsNatasha.