Is it Worth Switching Careers into the Nonprofit Sector?
By Paul Konigstein
If you are feeling burned out in your job, you are not alone. Mid-career burnout is a rite of passage in corporate America. At some point after ten to twenty years in their career, most corporate workers begin to question the relevancy, impact, and beneficiaries of their work and look for a greater psychic return on their sweat equity. They tire of working to make more money for an owner, question the impact of their work on society, and wonder who really cares about their decisions. An executive at Apple might wonder whether their company really needs another billion dollars, be concerned about whether old computers end up in landfills, and wonder whether anyone really cares what colors the next mobile phone comes in.
Workers feeling burned out want to make a visible, positive difference in the world. The organization most likely to be improving the world is a nonprofit. Transitioning to a career in the nonprofit sector could be the solution to your mid-career burnout, but before you make the leap, you should know what to expect from a nonprofit employer.
The nonprofit sector is incredibly diverse, ranging from small organizations run like a mom-and-pop corner store to large organizations with cultures indistinguishable from a Fortune 500 corporation. In addition, nonprofits have a wide variety of missions. The National Taxonomy of Exempt Entities (NTEE) recognizes nine major classifications of nonprofits:
- Arts, Culture, and Humanities
- Education
- Environment and Animals
- Health
- Human Services
- International, Foreign Affairs
- Public, Societal Benefit
- Religion-Related
- Mutual/Membership Benefit
This variety makes drawing generalizations that apply uniformly across the nonprofit spectrum virtually impossible, especially when many organizations adhere to a worldview in which they are one-of-a-kind snowflakes. Browse nonprofit mission statements, and you will find a disproportionate use of phrases like “we are the only organization in the world that” and “a unique approach to.” Nevertheless, it is possible to identify general traits that most nonprofits share. Based on these traits, here’s what, in my experience, you can expect in your future nonprofit sector career.
You Will Work for a Smaller Organization than You are Used To
According to the paper The Financial Health of the United States Nonprofit Sector published by Guidestar in 2018, 66% of all nonprofits have an annual budget of $1 million or less. Only 8% are larger than $10 million, and only 2% have a budget larger than $50 million. However, that 2% includes hospitals and universities with annual revenues in the hundreds of millions and endowments in the billions.
Your Organization Will Struggle Financially
Guidestar studied the financial health of the nonprofit sector and found that the economic expansion of the 2010s left nonprofits behind. Their study showed that:
- 7-8% of nonprofits are technically insolvent with liabilities exceeding assets
- 30% face potential liquidity issues with minimal cash reserves and/or short-term assets less than short-term liabilities
- 30% have lost money over the last three years
- 50% have less than one month of operating reserves
You Will Have to Make Do With Less
The deteriorating financial health of nonprofits combined with the relatively small size of nonprofits means that you will likely have to learn how to succeed in a resource-constrained environment. Expect to work as many hours as you did in the corporate world. You won’t have the budget to expand your team to the size needed to properly manage the workload during a nine-to-five day. Ten-to-twelve-hour days are typical, especially during peak seasons such as leading up to the annual gala for a fundraising executive or during the yearly audit for a financial executive. You will probably also have to do without ancillary resources such as an executive assistant or an IT support desk that you may have been accustomed to in your previous career. Be prepared to learn how to manage your own calendar and clear printer jams.
Paul's Recommended Reads
"I would recommend anything by Doug White, especially for people interested in fundraising."
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You Will Work at a Different Pace
The corporate world is known for quick decision-making designed to produce results by the next quarterly earnings report. In the nonprofit world, external earnings reports are annual (on IRS Form 990) and take a back seat to programmatic impact data, so there is little incentive for snap decisions. This leaves plenty of time for collaborative decision-making, the preferred modus operandi in the sector. Typically, a group of senior managers or a formal committee encompassing both trustees and staff will develop a decision framework and carefully apply it step by step to the decision at hand. Even a simple decision such as updating stale website information may go to a committee. A decision you are used to making yourself in days may be made by a group that includes you over the course of months. In fact, don’t be surprised if your hiring process stretches over several months and involves multiple interview panels.
You Will Have to Change Organizations to Advance Your Career
A 2019 report by the U.S. Small Business Administration (SBA) found that 99% of nonprofits have fewer than 500 employees. The median number of nonprofit employees is four. As a result, you will likely join a department of one, with little potential for upward mobility. More senior positions you could be promoted to often do not exist. In this environment, you advance your career by moving to a larger nonprofit. However, after you move to a larger organization, fewer even larger organizations represent possible landing spots for your next move. On the other hand, the 1% of nonprofits with more than 500 employees represent 45% of employees working in the nonprofit sector. If you are lucky enough to be hired by one of these organizations, you will find multiple internal paths for career advancement.
You Will Earn Less
Due to resource constraints, salary caps often mandated by government contracts, and the disclosure of key employee salaries on IRS Form 990, employees of nonprofits typically earn less than those of a for-profit business. In an entry and mid-level position, the pay disparity is relatively small. According to the 2019 SBA report, the average nonprofit salary is $53,700 per year compared to an average of $55,500 in the for-profit sector, a difference of only 3%. However, the pay gap tends to be much greater for executive-level positions.
You Will Love Your Job
Despite the frustrations of inadequate resources and slow decision-making, you will love your job. You will have an opportunity to directly observe the impact your organization makes and the gratitude of its beneficiaries. In my thirty-year nonprofit financial leadership career, I have seen children grow more confident and talented as their music education progresses, seen sight restored to rural Africans through simple surgery, seen the joy of children learning about science in a hands-on science center, and witnessed the power of opera to move people. No matter the day-to-day frustrations I may encounter, I wouldn’t trade these experiences for anything. But don’t take my word for it. According to charities.org, the majority of nonprofit professionals are satisfied in their roles and aligned with leadership. Furthermore, 84% of nonprofit professionals across departments express satisfaction in their jobs. Or, as Booker T. Washington said, “Those who are happiest are those who do the most for others.”
Impact Opportunity would like to thank Paul Konigstein for writing this article. Paul brings over 30 years of nonprofit financial leadership experience. He currently serves as the CFO of the Alcoholics Anonymous General Service Office and co-chairs the Financial Executives Networking Group (FENG) and the CFO Roundtable (formerly known as the Bridgespan Nonprofit CFO Group.)