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Conference Speaker: Amid Rising Financial Pressures, Nonprofits Must Rethink Staffing Policies

Chris Gaetano
Published Date:
Jan 13, 2022

Gary Bagley, CEO of New York Cares and the keynote speaker at the Foundation for Accounting Education's 44th Annual Nonprofit Conference, said that organizations in the caring community are under unprecedented pressures due to the pandemic, which necessitates focusing on the people who make their missions possible. 

Bagley noted that, during the course of the pandemic so far, 40 percent of nonprofit organizations have drawn on their rainy day funds, and 20 percent have either taken loans or increased their lines of credit. This is coming at a time when fee for services declined by 30 percent last year. Meanwhile, on the expense side of the balance sheet, he noted that said organizations are facing increased technology costs to account for the rise of remote work and the extra cybersecurity needed to accommodate it, as well as rising vendor costs after a long period of forgiveness at the start of the pandemic, and higher staffing costs. With this in mind, he said, it should not be surprising that recent data indicates that one in three nonprofit organizations is set to close over the next two years. This is especially the case, he said, for smaller nonprofits. 

"Just the way our small businesses were most affected by the pandemic in terms of your local restaurant, your local shop, [smaller organizations] felt the most pressure," he said. "You have less than a million-dollar budget, you may rely on some fee for service, your clientele is unbelievably in more need than ever, your resources are strained, and you've kind of been holding it together. So that one in three is really, really looking at what's happening and just their ability to survive with greater demand, smaller staff and revenue being sort of up in the air for them."  

Bagley spent a longer amount of time elaborating on how staffing challenges relate to this reduction in resources. He noted that the nonprofit sector has not been immune to what people have been calling the Great Resignation, pointing out that staffing levels are still about 5 percent below what they were prior to the pandemic. Indeed, staffing has been particularly affected in the sense that most of those quitting their jobs have been women, and about two-thirds of those working in the nonprofit sector are female. Meanwhile, he said, only 13 percent of nonprofit organizations have a retention strategy at all. This, he said, comes from a pre-pandemic attitude that does not work anymore.

"We have run on a model of, ''You just graduated college, you work for us two years, your parents are probably paying your rent because you couldn't cover it on what we pay you, and then you'll go to grad school or whatever,'" he said. "That staffing model is not working; we're seeing the effects of that rapid turnover on all our expenses."

He pointed out that organizations that rely primarily on volunteers, such as hunger relief groups, are also seeing a decrease in available people, a 10 percent reduction since the start of the pandemic. This hasn't been as visible to organizations because, so far, volunteers have been holding the line, but this has come from having fewer people doing more things, which he felt was not sustainable in the long run. Burnout will be a problem for them just as much for staff. 

The typical way nonprofits deal with employee burnout is with time off, but he said this isn't working the way it used to, due to the shift to remote work. A third of paid time off has remained unused, and organizations that provide unlimited time off have not seen workers availing themselves of it as much. People, he said, are not as satisfied being able to stay home if they already work from home, especially if they're going to be sitting in the same room where they work, on the same computer, hearing their devices ping with each new email demanding to be read. 

Finally, he said, the problem is not restricted to just lower-level workers and volunteers: Senior executives have also been quitting at record levels too. These, he said, are the ones with the most institutional knowledge and are more of an effort to replace, whether through outside hires or training someone internally. 

These issues all invite organizations to rethink their staffing models; unfortunately, he said, few actually are. 

For example, to relieve pressure on current employees, organizations might want to consider outsourcing work (a trend that was already happening pre-pandemic that has accelerated since then) or hiring more seasonal staff when pressures grow. He also stressed flexible scheduling, saying that managers need to get out of the nine-to-five mindset and adding that there is huge demand for it right now among workers. There is also a certain level of support that employees need in these turbulent times, such as mental health services, which many organizations are not meeting. One way to provide such support is to find a way to maintain a cohesive culture at a time when leaders may have never even met some of their workers in person, and another is to encourage employees to form networks of their own that can provide more connection points to the organization. 

Bagley added that creating a culture of inclusion and equity can help create a sense of buy-in and ownership of one's work that can promote retention. Unfortunately, he said, the nonprofit sector actually became less diverse over the course of the pandemic, which he theorized could be related to the disparate impacts across groups.

"Many hypothesized this was because of [the] pressure of managing the pandemic for people of color; 49 percent of nonprofit employees of color felt that race had a very or a slightly negative impact on their career advancement," he said, adding that he was surprised it wasn't higher. 

Similarly, despite the sector employing primarily women, many women left the workforce, again, due to disparate impacts. Several studies have shown that women dropped out of the workforce in greater numbers than men, with lack of support for caregiving activities, whether for children or elderly relatives.

He said the lack of diversity on the board level has not helped. He attributed this current state to the model where, if donors give a certain amount, they're offered  board seats, meaning that most of the people on boards are those with large amounts of financial resources. 

"We're all tired," he said. "I think one of our biggest problems, as a sector, is not staying energized around equity. We need to do equity audits; we still need to do anti-racism and unconscious bias training. That is why people of color are not being promoted internally, why talent isn't recognized and supported. We also have to look at pay equity across our sector."

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