September 25, 2017
 
Boomer Retirements May Mean Rethinking Your Nonprofit Model

By Thomas A. McLaughlin

Thomas A. McLaughlin
The expected wave of retirements among Baby Boomer leaders at nonprofits will be aggravated not only by a lack of trained leaders waiting in the wings, but also by a smaller pool of potential leaders resulting from lower birth rates among Gen Xers and Millennials.

A major part of the pressure on nonprofits anticipating a leadership turnover will come from the fact that the birth rates of both the latter part of the Gen X generation (people ages 35-54) and all of the Millennial generation (ages 18-34) are half that of the Boomers. Today’s status quo will eventually feel more like the status squeezed.

This situation will evolve relatively slowly, which should make it easier to accommodate, but harder to recognize. The best thing many nonprofits can do is to adjust their strategy planning now so that it fits the circumstances before they feel the leadership pinch.

Here are some suggestions:

Re-Work Your Staffing Patterns

If you are feeling the pressure at the bottom of your workforce as well as at the top, it’s time to re-think your staffing patterns. It would not be a surprise if your underlying assumptions about staffing are still embedded in the 1980 to 2000 era. And while you’re doing this, be sure to apply the same scrutiny to your assumptions about your senior-most executives.

  • Do you really need a CIO, and corresponding staff, now that you can get comprehensive technology support 24/7?
  • How much do you need to staff up on development and marketing expertise? Maybe some functions can be offloaded to consultants, and accessed as needed.
  • Ditto for human resources and legal support.
Re-Think Your Service Models

If you don’t already know the year your nonprofit was founded, pull out your most recent federal Form 990 and look exactly three inches below the word “income” as in “Return of Organization Exempt From Income Tax. ” You’ll find a box labeled “L” and the words "Year of Formation" followed by the four-digit year of your corporation’s founding. If your organization was founded in the two or so decades since 1970, there is a chance that the organization is still at least partially grounded in that era.

In practical terms, this means you may be providing twentieth century service for a twenty-first century world. For example, behavioral health systems and approaches have evolved considerably since the 1970’s. And, for a variety of reasons, the traditional hospital psychiatric unit has morphed considerably in order to stay abreast of legal and medical changes.

Consider a Merger

One way to accommodate the realities of the twenty-first century is to grow your scale. The combination of declining birth rates and growing steady needs for service, e.g., aging clients with longer lifespans, is putting more pressure on many nonprofits. Lately there has been less instinctive opposition to mergers than had been true in the past. The advantage of larger scale operations run correctly is that the resulting efficiencies—one “back room,” one human resources department, etc.—can strengthen the entire organization.

Mergers take the commitment of your board and senior team. They start with updating your strategic plan, knowing what audience/clientele you want to serve, your competitive advantages in serving that market, what you'll need to succeed that you may lack now...and then identifying potential partners who are thinking similarly and can complement your organization.

Consider Collaborating with Other Nonprofits

Mergers may not be the right answer for your nonprofit, but the benefits of such combinations—shared resources—might be. I can’t remember the last time I saw a true back office collaboration. However, if, say, three organizations get together they could readily negotiate discounts on large purchases, possible office rentals, etc.

The U. S. economy has never had aging Baby Boomers like we see today, nor a 50% drop in birth rates. Navigating the next two decades will force many nonprofit managers to adapt their service models. It can be an unnerving time, or it can be exciting in the most positive sense...but only if they are prepared.

Thomas A. McLaughlin is the founder of the nonprofit-oriented consulting firm McLaughlin & Associates. He is the author of Streetsmart Financial Basics for Nonprofit Managers (4th edition) , published by Wiley. Email to him at istamclaughlin@comcast.net. A version of this article was published originally in The NonProfit Times.

April 2017

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