Current nonprofit sector research and recommendations for effective day-to-day practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.
Illustration by Yuxin Qin
Nonprofit leaders play an integral role in the promise of social equity. While nonprofits may aim to achieve an equitable mission for the community, nonprofits also draw in donors, board members, and employees. Without leadership prioritizing equitable practices, class representation suffers in these roles and lessens sector diversity.
Charitable giving, according to a 2020 Gallup poll, shrunk down to 73% in 2020, from 87% in 2005. Yet, charitable giving in the sector has continued to expand rapidly, with expectations of its first $500 billion haul in 2021. Contributions from high net worth individuals are concealing declines in middle and lower class giving. Capitulation to this style of philanthropy further neglects millennials donors, who lag behind the financial impact of previous generations.
Leaders must therefore diversify their donor bases beyond immediate financial gain. The cost paid in effort and resources may not pay off now, but it creates value beyond the dollar. Such costs include website design for traffic, mobile platforms for accessibility, and social media for engagement. The average 2019 online charity donation was $148, yet online giving represented just 8.7% of total nonprofit fundraising. According to a 2018 Blackbaud report, 37% of donations were coming in from online sources. Online giving is therefore smaller and popular, but not targeted by fundraisers.
Leaders should also stabilize giving from the much-maligned irregular donor with recurring monthly donations. According to Classy’s Donor Retention Handbook, monthly donors were five times more valuable to nonprofits as they gave 440% more throughout their lives than one-time donors. Leaders can continue to wine and dine their major donors, but recurring donation software and passive forms of appreciation can keep smaller donors giving and engaged, and produce future value.
Bank of America, in conjunction with Indiana University's Lilly Family School of Philanthropy, found that almost 1 in 4 high net worth individuals serve on nonprofit boards. Unsurprisingly, Boardsource’s 2017 study found that 84% of board members were Caucasian/White, 8% were African American/Black, 5% Hispanic/Latino, and 3% Asian. 27% of all nonprofit boards lack even one person of color. Homogenous nonprofit board compensation results in blind spots, but the change is still slow to come.
Leaders must be the objective prime mover for slow-moving board diversity. Nonprofit leaders are 24% more dissatisfied with board diversity compared to board chairs. Nonprofit leaders must model diversity, equity and inclusion (DEI) practices, like recruiting their next board members from different, diverse networks. Importantly, leaders should also be using DEI resources or DEI professionals as a limitless resource that includes board development.
Leaders should also engage in participatory grantseeking. Grantors who continue to place undue influence on boards with “give or get” policies reinforce board wealth and exclusivity that does not favor middle-class or diverse board members. Leaders must engage with grantors that appreciate the nuance of inclusivity.
In 2017, 44% of nonprofit staff made less than $31,000 per year, compared to 43% (as adjusted for inflation) in 2014, meaning no sector progress in wage equity (Berson & Freundlich, 2018). Wage inequity is effectively failing to retain talented and young professionals that enter the sector. “Psychic wages” are not providing incentives to offset student loan debt, housing prices, and health insurance. Filling lost nonprofit employees can cost at least 20% of their yearly salary. Ignoring the true cost of low wages, the nonprofit sector additionally contributes to a gender pay gap that shows its face when women become CEOs.
Leaders must engage in transparent hiring and wage practices. Relying on previous salaries falls into inequities that were never addressed. Audits can therefore point out wage inequities in the organization, and compare to similar organizations. These audits should be external and the move towards transparency must be an organization-wide approach.
Nonprofit leaders, lastly, are responsible for dismantling the overhead myth, once and for all. The overhead myth is an excuse, and leaders have failed to communicate the harm done to employee wages and wellbeing. It’s worth it to the employees and organization, and leaders must invest their time and energy into deprogramming stakeholders who wield such opinions. Leaders should utilize the organization’s website and social media, as tactics, to combat the stigma.
David Ross is a graduate of the Master of Nonprofit Leadership and Management program at Arizona State University. He is a Chicago-born Oregonian, who moved to Eugene after living abroad in Sudan. He received his undergraduate degree in Social Justice Studies from Northeastern Illinois University, which is how he segued into the nonprofit sector. David is a current program supervisor for the CASA program in Lane County, whose mission it is to supply children in the child welfare system volunteer advocates.