Next Stage - Social Impact Services

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Executive Compensation for Nonprofit Leaders: A Critical Moment

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The world of social good is a bit upside down right now. The federal spending freeze announced early last week set in motion a flurry of communications from current and past Next Stage clients, all seeking clarity on what it meant and how to navigate it. While the Office of Management and Budget ultimately rescinded the proposed payments pause, the writing is firmly on the wall—be prepared.

These conversations reminded us yet again how challenging the role of executive leadership in the nonprofit sector is today. The COVID-19 pandemic had a beleaguering effect on administrators who needed to care for their staff members and volunteers while keeping their mission focus alive. And now, just as the world seemed to be getting back to normal, new federal policy directions are throwing them another massive curveball.

We feel for these leaders and want to recognize their importance at this critical juncture in history.

Retention Strategies in Times of Stress

Once upon a time, Next Stage offered executive search as a core service line, conducting as many executive searches as strategic planning efforts. This has since moved to more of a “secret menu item” for client engagements where we’re more deeply involved (like our recent sourcing of Kristine Urrutia as Catawba Nation Foundation’s inaugural Executive Director).

But through our extensive experience in executive search, we identified a significant gap in local data around executive compensation for nonprofit leaders. In response, we created an in-depth community report in 2020 to help address this issue.

The Charlotte-Mecklenburg Nonprofit Executive Compensation Study provided detailed insight into compensation by sector, revenue size, and number of employees, offering key data on base compensation, benefits, and pay-for-performance. While information like this existed at the statewide and national levels, no one had done a deep dive into the data on a local level.

In the years since the report’s release, we’ve received regular inquiries from board chairs and nonprofit leaders about its findings. This ongoing need for local and organization-specific data led us to launch an Executive Compensation Study service line. Through this offering, we provide custom recommendations and analysis for organizations looking to design an executive director retention strategy.

We’re reminded of this work now as nonprofit leaders face an uncertain future. We feel strongly that they deserve our advocacy at a time when they would have us focus instead on the people their organizations serve.

Read on to learn more about retention strategies your organization can implement to help support your leadership during turbulent times.

Nonprofit Leadership in Times of Crisis

Nonprofit executives are navigating a landscape of increasing complexity, where economic uncertainty, shifting public policy, and evolving donor expectations place extraordinary demands on their leadership. These professionals must balance mission-driven work with operational sustainability, all while ensuring their organizations remain resilient in the face of external pressures. 

As these challenges mount, so does the need for organizations to examine how they can best support and retain their leaders.

Avoid Self-Advocacy in the Budgeting Process

Nonprofit CEOs often face the difficult position of advocating for their own compensation while balancing other organizational needs. This challenge is exacerbated when the budgeting process begins with the CEO, who submits an initial draft to the Executive Committee of the Board of Directors. 

The need for transparency and fairness in executive compensation is more urgent than ever. Selflessness is in the nonprofit DNA, with leaders putting the needs of others ahead of their own. This frequently manifests in CEOs prioritizing salary increases for staff over their own compensation, leading to long-term retention challenges. We’ve seen time and again how nonprofit administrators sacrifice personal financial security in favor of sustaining their teams—an expectation that’s neither sustainable nor fair.

A recent article by the Maine Association of Nonprofits emphasizes developing a transparent compensation philosophy. Such a philosophy not only demonstrates the critical role of staff retention in advancing the organization’s mission but also holds decision-makers accountable to guidelines grounded in organizational values, rather than market data alone. This approach equips staff with information that supports self-advocacy and broader organizational accountability.

Sync Executive Assessment to a Strategic Plan

How is your organization’s chief administrator performing? Our take on this hasn’t changed: nonprofit boards lacking strong executive assessment methodology struggle to set compensation fairly, tending to “keep up with the Joneses” rather than compensate for outstanding performance.  

Aligning the executive assessment process with the organization’s strategic plan is essential for ensuring leadership efforts directly contribute to overarching goals. A quality strategic plan will outline objectives across programming, operations, and resource development, complete with measurable targets. By basing executive assessment metrics directly on the strategic plan, there’s a clear understanding of how the CEO achieves desired outcomes and creates measurable impact in their role. This must be adjusted during times of crisis, revisiting these goals against the backdrop of change. 

Nonprofit boards should also consider incorporating pay-for-performance bonuses. According to a survey by BDO USA, 42% of nonprofit organizations now include annual incentives or bonuses as part of their compensation packages for executive directors—a statistic that matches Next Stage’s local findings of 39% back in 2020. This marks a continued shift toward performance-based compensation, reflecting a desire to align executive pay more closely with organizational goals and outcomes.

Scrutiny from the Outside

Media interest in nonprofit salaries tends to be cyclical, often producing sensationalist headlines that frame executive compensation as excessive. A recent Charlotte Observer article (“See who is making millions at 15 top nonprofits”) exemplifies this trend, highlighting salaries without broader context about the complexity of nonprofit leadership. While transparency is critical, these stories often reinforce the false narrative that nonprofits should underpay their leaders—despite the immense responsibility they carry in ensuring organizational success, financial sustainability, and impact.

It has always baffled me that leaders working to make the world a better place are penalized for earning fair compensation while corporate executives are encouraged to earn millions—even when their work sometimes runs counter to social good. This dynamic not only affects how the public perceives nonprofit executives but also discourages top talent from pursuing or remaining in leadership roles.

Instead of perpetuating these misleading narratives, we should advocate for fair compensation structures that recognize the expertise, dedication, and leadership required to sustain mission-driven organizations.

A Call for Change

Nonprofit leaders are at the center of social impact, yet they continue to navigate an uphill battle when it comes to fair compensation. As we look ahead, we must address this imbalance head-on, ensuring that executive compensation for nonprofit leaders reflects the value these individuals bring to their organizations and communities.

This is particularly true now as we face an uncertain future and what will likely be years of policy shifts that impact the nonprofit business model. 

For board members and stakeholders invested in organizational sustainability, the conversation about retention must include compensation. Now more than ever, it’s time to advocate for the leaders who dedicate their careers to building a better world.

Interested in a custom executive compensation study for your organization? Schedule a free consultation today to discuss your nonprofit’s unique needs.

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4 Essential Best Practices for Strategic Planning in 2025

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It’s a new year, and that means new opportunities for your organization to build a strategic roadmap.

Strategic planning is Next Stage’s cornerstone service line. It’s a process we’ve guided more than 100 organizations through—from nonprofits and community-based organizations to health care groups and government agencies. We understand the words “strategic planning” can elicit very different reactions: for some, the process is exciting and full of possibility, while for others, it’s a daunting or even cringe-worthy task.

In recent years, strategic planning in the social good sector has faced significant disruption. The lingering effects of the COVID-19 pandemic, combined with an uncertain political environment and the looming threat of economic recession, caused many organizations to shift to a “wait-and-see” mindset, opting to rely on short-term annual plans rather than committing to multiyear strategic roadmaps. According to one recent study, up to 49% of nonprofits lack a strategic plan.

However, as we enter 2025, the external landscape has begun to stabilize. We’re operating under a new federal administration, the economy has achieved relative stability, and advancements in technology are firmly taking hold. While challenges remain for institutions working to advance social good, we’re no longer navigating in the fog of ambiguity. The near-term future has become clearer—and with that clarity comes opportunity.

So, what now? The time has come to get proactive because developing a multiyear strategy has wide-ranging benefits. One study found that 86% of nonprofit respondents believed their strategic plan positively impacted revenue generation through grants, donors, events, and other avenues.

So whether you’re contemplating your first strategic plan or looking to refresh your approach, we’ve prepared a list of four best practices for strategic planning to help your organization create a roadmap that drives real impact.

1. Listen to Your Constituents

A microphone in front of an audience.

Market research is big business—a $150 billion global industry according to ESOMAR’s Global Market Research report. And with more sources of data than ever before thanks to advancements in technology and AI, there are seemingly endless opportunities to secure key constituent insights. 

That’s welcome news because regularly listening to your constituents is essential. Don’t make the all-too-common mistake of believing you already know what your key stakeholders are thinking, feeling, and experiencing. Conditions change over time, and so too do the needs and opportunities faced by the people critical to your institution’s success.

That’s why we always encourage our clients to use learnings gained by listening to their constituents to inform their operational direction. It’s more than worth the time investment because truly effective strategic planning must begin with robust primary research. This includes interviews, focus groups, surveys, and observational studies that gather diverse perspectives and insights.

And listening to your constituents shouldn’t just be a one-time thing. By regularly engaging in such activities, your organization will gain a pulse on changing needs, opportunities, and challenges. This ongoing process not only informs your strategy but also keeps it grounded in reality, making it more adaptive and actionable.

2. Include Stakeholders in Planning

A diverse group of people stand and sit around a planning table.

As we’ve shared before, Americans have a deepening mistrust of most institutions. According to Pew Charitable Trust’s 2024 report, confidence levels across sectors remain at or near historic lows, with only modest recovery since the pandemic’s onset.

​​Many organizational leaders mistakenly believe their organization is immune to this trend. But the reality is, even the most trusted institutions are feeling the impact of this broader erosion of public faith.

The good news is your organization’s strategic planning efforts present a key opportunity to reverse this trend. By making the process genuinely inclusive, you can build stronger strategies while fostering authentic stakeholder buy-in. When you bring together diverse voices—staff, board members, beneficiaries, and community partners—on your strategic planning task force, the resulting roadmap better reflects the full spectrum of perspectives and voices that matter to your organization’s success.

This sense of inclusion also fosters a sense of ownership among stakeholders, which is essential for successful implementation down the road.

The 2024 whitepaper “Nothing About Us Without Us,” which examines disability representation in media and branding, powerfully illustrates this concept. While focused on the disability community, the report’s central message resonates broadly: sustainable solutions emerge only when the communities we serve are active participants in designing their future.

Because true stakeholder inclusion isn’t just about gathering input—it’s about sharing power in the planning process itself.

3. Build Belonging Through Engagement

A group of people high-fiving.

Strategic planning is more than just charting a course—it’s an opportunity to deepen stakeholder investment in your institution’s future. When done well, it creates a compelling roadmap that inspires diverse groups to unite around shared goals and outcomes.

This has become particularly crucial amid what experts call a “crisis of belonging.” As highlighted in a 2024 Chronicle of Philanthropy article: “It’s not just marginalized populations and marginalized communities that feel a sense of not belonging; it’s also those who traditionally have been higher up in the societal hierarchy who feel they don’t belong.”

Your strategic planning process can help address this crisis by fostering genuine connection and shared purpose. But the work doesn’t end when the plan is complete. To build lasting bonds between your organization and its constituents, it’s essential to close the communication loop with everyone who contributed to the process.

Clearly communicate to stakeholders exactly how their input shaped the final plan. Make their impact visible. By acknowledging their role in shaping your organization’s future, you do more than just build transparency—you cultivate the trust and enthusiasm needed to turn strategic vision into reality.

4. Create a Launch Campaign

The image contains the text Change Me. Change Us. Change the World.

A strategic plan is only as powerful as its implementation. And all too often, this is where organizations stumble. In fact, according to an organizational diagnostic survey by BridgeSpan Group, staff members at more than 120 nonprofits rated their employers’ capacity to implement their strategies 10% below their average rating for all other organizational capability areas. Respondents gave their organizations especially low marks on their abilities to break down their strategies into actionable steps, communicate their vision effectively, allocate resources appropriately, and adapt to change.

To ensure successful implementation, launch your strategic plan with the energy and intentionality of a campaign. The Institute for Sport and Social Justice offers an inspiring example of this approach. Despite having a clear mission of advancing social justice through sport, they needed to unite their diverse programs under a cohesive narrative. Through Next Stage-facilitated strategic planning sessions, they developed the powerful campaign theme “Change Me. Change Us. Change the World.” This framework elegantly connected their four pillars of impact (Training & Education, Community & Youth, Global Engagement, and Knowledge Creation) into a compelling narrative that resonated with stakeholders at every level.

This campaign-style approach transforms strategic plans from static documents into dynamic forces for organizational change. When you develop a unifying theme that speaks to your stakeholders’ aspirations, your strategy becomes more than a roadmap—it becomes a rallying cry that energizes staff, inspires donors, and activates allies in pursuit of shared goals.

The time for strategic planning is now. As the external landscape stabilizes and new opportunities emerge, organizations need robust, multiyear strategies more than ever. And if the past few years have taught us anything, it’s that strategic planning should no longer be treated as a one-off exercise that happens every few years. Instead, it must become a core capability embedded into your organization’s adaptive DNA.

Is your organization looking to develop or amend its strategic plan in 2025?

Reach out today—we’d love to partner with you!

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5 Social Good Trends to Look for in 2025

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It’s December which means the return of a Next Stage tradition—our annual look-ahead to the social good trends for the coming year!

Looking back at our predictions in 2022 and 2023, we feel good about how our previous forecasts unfolded—from recognizing the growing importance of community voice to the rise of digital communities of practice and the increasing role of corporate social responsibility in addressing workforce gaps.

To determine the top social good trends for 2025, we drew from rigorous third-party research and the frontline learnings we’ve gained from our collaborative partnerships with mission-driven organizations.

We’re profoundly grateful to all the nonprofits, corporations, and government entities who have entrusted us to partner with them this year to advance their social good efforts, allowing us to develop a nuanced understanding of the sector’s most pressing challenges and opportunities.

So, what do we think 2025 will hold? Let’s explore…

1. Federal Spending Cuts Will Disrupt Post-Pandemic Recovery

A federal building.

As federal budget cuts loom, the ripple effects will be felt at every level of the social good ecosystem. Federal funding represents a significant portion of state budgets, and reductions are likely to result in decreased revenue for local municipalities. These budgetary shortfalls will have an outsized impact on health and human service nonprofits, which are often the last line of defense for underserved communities.

The stakes are high. Many trusted community-based organizations lack the robust fundraising infrastructure needed to compete for increasingly scarce resources. This financial squeeze comes as pandemic recovery efforts remain incomplete, with critical social indicators—education, housing stability, and mental health—still struggling to return to pre-pandemic levels.

For these organizations—and the social good ecosystem as a whole—the challenge of meeting rising needs with fewer resources could be one of the defining struggles of 2025. What’s more, the ripple effects could also lead to long-term consequences for community resilience and the ability to address systemic inequities.

References:

2. Collaboration as an Imperative

A group of people around a table. They are all smiling and two are shaking hands.

Nonprofits and social service providers will face mounting pressure to work together more effectively in an era of diminished funding. Competition for resources often leads to fragmented efforts, with organizations prioritizing their own sustainability over the broader good. But siloed approaches risk creating gaps in services and duplicating efforts, which can ultimately harm the very populations they aim to serve.

But out of such challenges may come some silver linings.

At Next Stage, we’ve coined the term “the social drivers of everything” to emphasize the interconnected nature of the social safety net and its critical role in fostering economic mobility. Just as health outcomes depend on addressing social determinants like housing, education, and food security, the entire social sector benefits when organizations work collaboratively to align goals, pool resources, and innovate together.

In 2025, cross-organizational collaboration won’t just be an ideal—it will be a necessity. Expect to see service providers forming coalitions, pursuing shared funding opportunities, and leveraging partnerships to weather financial uncertainty while ensuring better outcomes for the communities they serve. Organizations that embrace transparency, open communication, and joint problem-solving will emerge stronger, demonstrating the power of sustained collaboration in addressing complex social challenges.

References:

3. An Innovation Turning Point for Philanthropy

A light bulb to symbolize innovation.

The pressure on philanthropy to fill shortfalls in social good budgets is set to intensify. But let’s be clear—philanthropy can’t single-handedly solve the problem. Government sources account for one of the largest portions of nonprofit revenue (31.8%) while foundations, corporations, and individual donors collectively contribute less than 15%. Asking philanthropy to bridge such a significant gap is like expecting a garden hose to extinguish a wildfire.

In this challenging environment, philanthropists face a pivotal choice: continue to provide stopgap funding for immediate needs or focus on driving innovation to address systemic challenges. A prolonged period of diminished resources will require a shift in how philanthropy operates. Simply maintaining the status quo won’t suffice—philanthropic efforts will need to take bold risks, prioritize systems change, and support initiatives that reimagine how social good is delivered.

Expect 2025 to usher in an era of philanthropic innovation, where funders experiment with new models such as collective impact grants, venture philanthropy, and capacity-building investments. These approaches, while not a cure-all, could catalyze the systemic transformation required to sustain the sector in the face of financial uncertainty.

References:

4. Increased Focus on Social Cohesion

A nonprofit volunteer handing some food supplies to a woman in need.

In the aftermath of an election year marked by unprecedented division, the already-fragile relationship between service providers and the communities they serve is under even greater strain. This dynamic is particularly pronounced among those experiencing poverty—people who are inundated with politicized rhetoric while witnessing the dismantling of equity-focused systemic frameworks.

Rebuilding social cohesion will be a critical focus in 2025. Organizations must prioritize meaningful engagement, moving beyond transactional engagement approaches to build authentic connections grounded in trust, empathy, and mutual respect. This will require creative solutions, such as leveraging “prosocial media” initiatives (think YouTube’s Community Notes or Bluesky’s anti-toxicity tools), which are designed to foster inclusivity and constructive dialogue. These emerging features offer a hopeful counterbalance to traditional social media which often amplifies division and misinformation.

By embracing innovative communication tools and doubling down on community-centered strategies, social good organizations can begin to repair frayed societal bonds and foster a renewed sense of shared purpose. Trust will become a cornerstone of sustainable impact, influencing everything from program design to donor relations.

References:

5. AI Makes Its Mark on Social Good

A graphic that shows the flow of new technologies working together.

How can any self-respecting prognosticator not include AI in a list of future trends? The tools we commonly refer to as “AI” are better described as advanced learning systems. These systems excel at processing vast amounts of data, identifying patterns, and automating tasks—essential capabilities for a social good sector that typically struggles with limited resources for data management, evaluation, and marketing.

AI has the potential to accelerate social impact while significantly reducing costs, a critical need in an era of diminishing resources. From predictive analytics to personalized outreach, these tools can help organizations optimize operations, improve outcomes, and do more with less. However, effective adoption of AI in the social good space is hindered by a lack of access to technology experts and infrastructure.

In 2025, we expect to see greater philanthropic investment in process improvement initiatives aimed at equipping service providers with AI-driven tools and insights. These efforts will likely extend beyond individual organizations, seeking to enhance the efficiency and effectiveness of entire ecosystems working toward common goals.

References:

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Generosity as a Bridge: How Nonprofits Can Use Year-End Campaigns to Unify Supporters

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As the post-election dust settles, we wake in a world still deeply divided. Division and polarization continue to permeate our society, creating significant barriers to positive social and economic change.

It may feel as though this level of division is a uniquely American experience, but rising political and social divisions are a global challenge, threatening the foundations of community, trust, and cooperation worldwide. As noted in Giving Tuesday’s 2023 “Giving Bridge” trend report, many countries are grappling with fractured public landscapes, where conflicting viewpoints and values threaten to widen gulfs between people.

Source: The Giving Bridge: A Lookback at 2023 Trends in Global Generosity

But for U.S. nonprofits, these divisions present a unique challenge—and a unique opportunity. As Giving Tuesday and the year-end giving season approach, organizational leaders may wonder how to best appeal for support amid this highly polarized environment. How can they build strong, lasting connections with their communities when people’s trust in institutions, government—and each other—feels so frayed?

Recognizing Generosity as a Bridge

The nonprofit sector has an opportunity—and a responsibility—to play a role in bringing people together. Why?

Because nonprofits are uniquely positioned to bridge divides.

According to the Independent Sector’s 2024 report, Americans trust nonprofits more than corporations, the government, and the media when it comes to reducing national divisions. This trust empowers nonprofits to lean into their role as unifiers, offering people a path to connection rather than conflict. 

Source: Independent Sector, Trust in Nonprofits and Philanthropy

What’s more, Giving Tuesday’s report suggests that people are more willing to help others whose values or lifestyles may differ from their own when that connection is rooted in respect, care, and generosity.

These findings suggest that macro ideological differences tend to fall away when people are presented with opportunities to help others, especially through acts of giving and volunteerism.

And this powerful “giving bridge” concept—that generosity can act as a connector between people—is one that nonprofits are well-suited to embrace.

Creating a Giving Bridge in Your Year-End Campaign

Ahead of the upcoming season of giving, nonprofits can help mend divides by drafting messaging that advocates for common ground, community, and human connection.

Here are three strategies for creating more resonant, human-centered communications that invite donors to become part of something greater:

  • Shift the Narrative. Your nonprofit is not the “hero” of the story—your supporters are. Use your messaging to show donors they have the power to drive change through your work. Instead of focusing on your organization’s efforts, highlight how donors make a tangible difference, inviting them to be part of something bigger. At Next Stage, we design movement-building brand strategies, informed by the StoryBrand framework, that help nonprofits empower their supporters as the true heroes of their missions. Here’s how it works in practice:

Before: “We provided shelter to 500 families.“

After: “You helped 500 families find safety.“

By positioning donors as heroes, you transform fundraising into a shared journey, deepening their commitment and making them integral players in your mission—not just passive supporters. These human-centered appeals inspire lasting impact and reinforce the power of generosity.

  • Tell Empowering Stories. Move beyond storytelling that positions people’s hardships as the emotional drivers of your appeal. Instead, highlight the positive outcomes generosity creates—with an emphasis on empowerment rather than collective sympathy. Showcase stories that capture the strengths and achievements of the people your nonprofit supports, letting donors see the full picture of what their generosity enables through your programming. By focusing on outcomes and dignity, nonprofits can inspire support grounded in respect and shared humanity.
  • Build Belonging Between Your Supporters. Create opportunities for donors to feel a sense of belonging with your organization. In essence, aim to create a support community that embodies the giving bridge concept itself. Nonprofits often build one-to-one relationships with donors, but they rarely encourage donors to connect with each other. But by acting as a catalyst for cross-donor connections, nonprofits can nurture a vibrant and engaged philanthropic community united in shared purpose. Creating spaces for supporters to engage with one another—through local events, online platforms, or peer groups—can help them feel like they’re part of an impactful, values-driven network.

Healing Division Through Generosity

I know many of you may be feeling conflicted about the world and your nonprofit’s place in it. And it’s important to take the time to reflect and heal before recommitting to advancing social good and support for our communities.

But at a time when 94% of Americans are worried about growing divisions and a lack of national unity, we want nonprofit leaders to take heart knowing that their work is largely seen as part of the solution.

Source: Independent Sector, Trust in Nonprofits and Philanthropy

Our communities need the hope and human connection nonprofits can provide—not just through the programs they deliver but through their ability to build cultures of caring and generosity that transcend differences.

So nonprofit leaders, when you’re ready, I hope you’ll feel empowered to forge a path of new possibilities and opportunities.

Because your work matters—perhaps now more than ever.

Let this upcoming season of giving be a call to action. Step forward not only as providers of impactful programs but as catalysts for empathy, understanding, and unity.

Because we each hold the power to bridge divides—one act of generosity at a time.

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Social Good’s Collaboration Challenge: Why Is It So Damn Difficult?

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In the world of social impact, a persistent question echoes: Why are nonprofits, municipalities, health systems, and private-sector companies so reluctant to collaborate?

While many point to competition for resources and inherent power disparities, research suggests that the root cause may be cultural—particularly here in the United States.

Exploring the Cultural Barrier: American Individualism

Sociologist Geert Hofstede’s 6-D model of national culture suggests Americans are uniquely defined by their fierce individualism. In Hofstede’s rating system, the United States ranks as the most individualistic society in the world, strongly favoring independence over interdependence.

Our penchant as Americans to resist working harmoniously together is literally everywhere you look — social media, political advertisements, homeowner’s associations, heck, even the aisles of your local grocery store (looking at you pushy shoppers at my Plaza-Midwood Harris Teeter).

And that’s perhaps in part because competition is deeply woven into the American experience, creating a significant barrier to building unified efforts. But, like it or not, collaboration is necessary, both in everyday life and as part of peer engagement  inside the for-profit and nonprofit sectors.

So how do today’s top organizations address the collaboration challenge?

Identifying Obstacles to Nonprofit Collaboration

In corporate America, the struggle to foster collaborative teams is well-recognized. The team-building service market tops $3 billion annually and is expected to grow to $9 billion by 2031.

Nonprofits and community-based organizations are expected to work together to solve society’s biggest challenges, but here’s something to consider: If corporate teams from a single organization, with similar educational backgrounds and related professional experiences, struggle to collaborate naturally, what hope do social good leaders have of effective cross-organizational collaboration? Without access to the team-building tools and resources afforded to the private sector, how can nonprofit leaders align their organizations’ diverse staff, needs, and interests?

That said, a general lack of resources is nothing new for those in social good.

At Next Stage, we often quote Dan Pallota, American entrepreneur and author, who in his famous TED Talk argued that our society places unrealistic expectations on nonprofits. He explores how our culture’s wrongheaded thoughts on compensation in social good force nonprofits into survival mode, stifling their potential for real impact:

“In the for-profit sector, the more value you produce, the more money you can make. But we don’t like nonprofits to use money to incentivize people to produce more in social service. We have a visceral reaction to the idea that anyone would make very much money helping other people. Interesting that we don’t have a visceral reaction to the notion that people would make a lot of money not helping other people. You know, you want to make 50 million dollars selling violent video games to kids, go for it. We’ll put you on the cover of Wired magazine. But you want to make half a million dollars trying to cure kids of malaria, and you’re considered a parasite yourself.”

And in a time where 22% of nonprofit employees are living paycheck to paycheck, it’s easy to understand why nonprofit leaders are feeling the pressure to prove their organization’s efficiency and worth to grantmakers and funders. This ever-present state of “survival mode” inevitably leaves little room for experimenting with cross-organizational collaboration — despite its potential benefits for addressing complex social issues.

But the collaboration barriers social good institutions face aren’t just cultural or financial. Nonprofits often are dealing with widely diverse perspectives, complicated power dynamics, twisted incentives for output metrics imposed by donors, and competition for limited funding opportunities.

Against these odds, it’s any wonder collaborative efforts in social good ever get off the ground in the first place.

So where do we go from here?

Shifting the Narrative

Nonprofit leaders are often motivated by a deep sense of mission and feel personally responsible for their organization’s success. While this perspective is noble and much needed in this sector, it’s important to recognize this outlook can create a “silo mentality,” making leaders hesitant to open up their operations or share resources with other nonprofits. Collaboration, in this context, can feel like a risk — a relinquishment of autonomy that might dilute their own organization’s impact or slow its progress.

But that sense of ownership and mission that drives nonprofit leaders could be leveraged to encourage cross-organizational collaboration. By shifting the narrative away from competition and toward shared outcomes, we can highlight that nonprofits are all part of a larger ecosystem working for the common good.

This requires not just a shift in mindset but also practical support for the underpinnings of collaboration — relationship-building that leads to feelings of connection and trust.

It’s the main idea behind Cultivate Impact®, our digital collaboration management tool that centers the building of social cohesion between platform participants as a central goal. We believe that, deep down, people working to create positive outcomes for others have more in common than they think they do. By highlighting those areas of intersection and sparking engagement around them, we work to forge more effective networks of people working together toward common goals.

Achieving Cross-Organizational Collaboration

If corporate America is spending billions of dollars on team building to sell consumer products, shouldn’t institutions advancing social good be encouraged to invest in similar supports?

By addressing the cultural and practical barriers to collaboration, we can unlock the full potential of nonprofit organizations and create significant, lasting impact in our communities.

Interested in learning more about Cultivate Impact® and how it creates more effective collaboration? Reach out to schedule time to chat.

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Next Stage CEO Josh Jacobson launched Next Stage as a social enterprise in 2014, bridging his professional experiences as a nonprofit practitioner with his consulting expertise. He has led Next Stage’s work with 200+ clients, including nonprofits, private-sector companies, municipalities, faith institutions, philanthropies, and community-based organizations. Josh’s skills in strategic positioning and tactical design help clients achieve their goals. He guides Next Stage’s work in strategic planning and collaboration management and is a major contributor to the company’s thought leadership efforts.

Fundraising or Business Development: What Are We Really Doing Here?

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A few weeks ago, I presented at the 2024 AFP NC Philanthropy Conference with a talk titled Why Was It Declined? Navigating the New Realities of Corporate Social Responsibility. It not only marked my return to engagement with AFP-related events but also revisited Next Stage’s Profit & Purpose series of community research.

My presentation outlined what Next Stage has learned over the years about what drives private-sector companies to allocate resources to nonprofits. I’ve presented this talk in some form or another for the better part of a decade, peeling the onion with each passing year to get at the heart of the matter.

The session appeared on the learning track Rebels, Renegades & Pioneers — apropos for thought leadership from our social innovation company. And, as usual, this talk raised some eyebrows.

The talk’s primary message is that many companies — not just publicly traded corporations — have increased their internal expectations for creating positive community impact as a result of pressure via socially responsible investing. It’s a trendline that’s only increasing (despite the headlines), and this trend is positioned to be one of the most important paradigm shifts in the philanthropy landscape over the next decade. These expectations will influence how organizations can address inequity, economic and social mobility, and a host of other societal ills for years to come.

This shift suggests a new marketplace for investment where nonprofits can build lasting relationships with companies centered on service delivery instead of byproducts, like cause marketing or employee engagement.

The primary barrier? The common nonprofit perception that “corporate philanthropy” is merely a reward for a job well done. 

Is Philanthropy Selfless or Selfish?

Self-interest has always been at the heart of philanthropy, whether we like to acknowledge it or not. And yet it’s verifiably the truth.

An essential book on the topic — Donor-Centered Fundraising by Penelope Burk, the founder of Cygnus Applied Research — uses data-supported research to back up the assertion that donors give selfishly. They give because it feels good to give, and organizations that help donors feel good about their contributions retain them and grow their giving.

“Warm glow altruism,” as Burk describes it, is a function of the donor positioning themselves as the protagonist on a journey. It’s the good they want to do that drives their story forward.

And while nonprofits tend to readily celebrate a donor’s generosity, they often make the misstep of centering those celebrations around their own story, their own programming, and their own efforts. But when organizations talk primarily about themselves, they risk alienating such donors. A donor may wonder, “How do I fit into this narrative?” And importantly, if they don’t see their starring role in the ultimate impact of their contribution, they’ll be less inclined to donate again in the future. 

Adopting a Business Development Mindset

With this focus on self-interest as a backdrop, nonprofit development professionals would be well-served to shift to seeing themselves as vendors to companies — ones that deliver a service that meets a need. The term “fundraising” emphasizes the dollar raised rather than the value produced in an exchange. Nonprofit fundraisers who view their role as building win-win partnerships that add value for both parties (donor and recipient) are far more likely to be successful.

In this way, the development department in most nonprofits could be rebranded as a form of business development. The nonprofit’s services serve as a platform for value exchange. The key is to understand better what the customer’s (in this case, the donor’s) needs are and then build an alignment.

This is not only true for the relationship between nonprofits and the private sector. It’s a concept that can be applied to financial support from foundations, individual major gifts, and the annual fund. What’s more, it’s likely how most nonprofits already view funding from the government (where grant compliance makes clear the role data plays in demonstrating value exchange).

As a former development professional who now leads business development for my own private-sector company, I can speak from experience — it’s the needs of the customer (again, the donor) that matter. Here’s how you can better position yourself for these discussions:

  • Do your research. Donor research tends to focus on identifying capacity and affinity for a mission based on support for similar causes. Understanding what might be driving specific interest in your nonprofit requires reframing the cultivation process, exploring how values, relationships, and external factors influence decision-making.
  • Talk less (Smile Listen more). Showing interest in your prospect should be about more than just small talk before launching into a pitch. Demonstrate a desire to learn. Ask for a tour of the company’s headquarters. Inquire about the philanthropy foundation’s namesake. Show a desire to build a partnership rather than engage in a purely transactional relationship.
  • Focus on the value. Nonprofits tend to over-deliver on content when presenting to institutions, burying the lede in ways that can frustrate prospective donors. A one-page summary that draws attention to the value exchange can help clarify expectations for all parties. If you think of your solicitation less as a request for support and more as a memo of understanding, you’re starting to get the picture.

Embracing a New Nonprofit-Donor Dynamic

It’s time for nonprofits to embrace a business development mindset when engaging with those who provide them financial support — especially corporate partners. Fundraising should no longer be viewed as asking for contributions as a reward. Instead, fundraising should be positioned as a way to create value-driven partnerships with mutual benefits. By understanding the self-interest of donors and aligning your services with their goals, nonprofits can establish long-term, sustainable philanthropic relationships. 

As the landscape of philanthropy continues to evolve, nonprofits who prioritize understanding their donors’ needs and focus on value exchange will be better positioned for success in the increasingly competitive marketplace for social impact.

If you disagree, I’ll probably be presenting on the topic at a philanthropy conference in the future. Stay after and chat for a while — I’d welcome your feedback.

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Next Stage CEO Josh Jacobson launched Next Stage as a social enterprise in 2014, bridging his professional experiences as a nonprofit practitioner with his consulting expertise. He has led Next Stage’s work with 200+ clients, including nonprofits, private-sector companies, municipalities, faith institutions, philanthropies and community-based organizations. Josh’s skills in strategic positioning and tactical design help clients achieve their goals. He guides Next Stage’s work in strategic planning and collaboration management and is a major contributor to the company’s thought leadership efforts.