Next Stage - Social Impact Services

Social good strategy to amplify your impact

joshjacobson

Worried for Workforce: Addressing a Nonprofit Talent Shortfall

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It is nearing the end of June, and you know what that means — the end of the fiscal year for many nonprofits. Leaders at organizations across the region are in the final weeks of securing funding to balance their budgets, completing programming ahead of the summer months, and making plans for the new year that starts when the calendar flips to July.

It is also the time of year when the game of musical chairs commences as staff departures are announced. Chief executives and nonprofit leaders in charge of programming, operations and development often wait until the end of the fiscal year to make their moves, hoping to minimize the negative impact of leaving in the middle of the year or in the final push at the end of the year. And that means a domino effect that typically ripples into the early fall.

This annual reshuffling of talent in the nonprofit sector has been increasingly challenging in recent years. Finding great talent for your nonprofit has never been easy, which we’ll get to below, but of late something else is going on. It started even ahead of the onset of COVID-19 but got much worse as the pandemic raged on.

There is a talent shortfall in Charlotte’s nonprofit sector. And it is an active threat that is only growing worse.

We at Next Stage believe it has gotten to a point that it requires calling it out and building a community strategy to address it.

What is Going on Here?

In 2021, Next Stage discontinued its search service line. While the company is proud of the many chief executives it helped to source for area organizations, it was clear that the challenges facing talent recruitment were making it difficult for us to be successful with it.

One big reason was executive compensation. We published our Nonprofit Executive Compensation Study in 2020 to help the boards of area organizations understand that a significant shift in perception about base salaries, benefits and pay-for-performance needed to take place. It was difficult to help organizations trying to fill chief executive roles of a departing longtime leader when the target salary was 20-30% below market rate.

But compensation is just one of many hurdles local organziations face in attracting talent. We have a number of theories for why we think this challenge exists:

  • Too Few Feeder Institutions – As I have said many times when discussing this topic, the NC Triangle region is robust with young professionals in their first decade of work who are willing to take nonprofit salaries to fight the good fight. That is because the Raleigh-Durham-Chapel Hill region’s talent base is fed by incredible higher education institutions. The Charlotte region’s nonprofits struggle to channel talent in a similar way. UNC Charlotte’s MPA program can only be counted on to do so much in a city this fast-growing.
  • Nonprofit Leader Exhaustion – The lack of plentiful young professionals willing to take on Associate and Manager-level roles inside local nonprofits (and the annual churn that the competition for these roles produce) means department heads are consistently required to dip down to do the work of their absent direct reports. Over time this creates an exhaustion for the chief executive that can result in decreased productivity, which in turn challenges the organization even further to solve its talent challenges.
  • Dire Need for More Professional Development – Given these challenges, smart organizations focus on retaining the talent they have and growing it into the future roles that will be needed down the road. Organizational approaches to professional development vary widely and are rarely connected to whole-organization succession strategies. And while other cities have institutions dedicated to delivering that programming – e.g. a Center for Nonprofits attached to a college or university – Charlotte lacks this as a dedicated resource across all areas of the nonprofit business model. We think this needs to change.
  • Increased Competition from the Private Sector – Local nonprofits are not the only institutions struggling to sustain a workforce. We have noticed a marked increase in the number of employees at nonprofits who have left the sector behind for roles at area companies – a skimming of talent that only further challenges small and mid-size organizations downstream.

There are many other contributing factors, but these four combine to make for a very difficult environment for talent acquisition and retention.

So… Uh, Hey Josh, Got Any Tips?

It is a testament to the success of our past marketing efforts that I still get calls from board leaders and chief executives inquiring about search services. While we no longer provide it, we are empathetic to the challenges these folks face and do our best to provide support where we can. That includes featuring job openings in our well-read weekly newsletter for free.

The advice I give most board chairs or chief executives that call includes the following:

  • Hire a Search Firm – Organizations that try to go it alone are far less likely to achieve success than those who hire experts. Search firms have the dedicated team, network and processes needed to contend with the great odds outlined here. Even better, consider engaging an interim executive who can give your organization the time and expertise to make good decisions on behalf of the organziation you serve.
    While there are many strong firms across the state, we tend to send our referrals to Armstrong McGuire, which has differentiated itself in our market with strong placements and interim management services.
  • Get Relational – If you can’t hire professionals to do it for you, it is critical that your nonprofit commit human resources to relational outreach. The days of posting a position opening on jobs boards and seeing high-quality candidates come your way are over (if they ever really existed). We are hearing horror stories of organziations receiving zero qualified applicants – none, zilch, nada – through highly trafficked sites like Axios. The only way to find talent is to conduct direct outreach to both gatekeepers (people who know people) and potential candidates themselves. This is a time-consuming activity that is absolutely essential.
  • Consider Recruiting From the Private Sector – The search referrals I receive most often these days are about talented people in private sector roles who are ready to make a transition to social good. I readily take these calls because I believe they are a key to solving our nonprofit talent shortfall. While compensation is often a barrier, I have increasingly encountered driven individuals who are eyes wide open about the pay divide and are called to make a career change that aligns to their value system. This has only increased since 2020 disrupted the status quo and caused people to reexamine their lives and choices. We have to be capable as a sector to receive this interest, offer training to overcome gaps in experience, and rebuild the talent bridge that served our community so well over the last four decades. Many of Charlotte’s top nonprofit leaders once upon a time left the private sector for a life of nonprofit service.
  • Promote from Within – The worst time to be contemplating your nonprofit’s succession strategy is when a longtime staff leader announces a looming departure. Many nonprofit employees leave the organizations they are in because they hit a ceiling under a chief executive who is still years away from retirement. Organizations too often avoid these critical discussions, believing perhaps that it invites outcomes that are inevitable anyway. While nonprofits must be careful not to anoint successors, grooming internal talent is a smart way to ensure the organization has strong options when they need them rather than watch institutional knowledge continually walk out the door.

Building a Community Strategy

The tough thing to hear is that this is just the beginning. The talent challenges we are experiencing in the nonprofit sector will only get worse as aging Boomers exit the sector altogether and the competition for talent becomes even more pronounced. I’ve found myself using the term ‘existential crisis’ a lot lately, and while I am sometimes accused of hyperbole, I think it is an apt description.

All of these barriers to talent recruitment and retention are set against the backdrop of incredible challenges, of a community struggling to recover from a global pandemic that is having devastating impacts on families and children in disinvested neighborhoods. Economic mobility has become a focus of the private sector as a strategy to mitigate future workforce challenges of their own. But, the organizations they are counting on to implement that programming are deficient of the human resources needed to make it possible.

We need to get this on the table and start working together to solve it.

The only way to address this is via collaboration. At Next Stage, we are eager to do our part. Are you interested in joining an effort to strengthen the nonprofit sector through a community-wide talent strategy? Let’s talk.

Disruption, Collaboration & the Hidden Potential of the Middle Market

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Why is collaboration so difficult?

The longer we work to advance social good through Next Stage, the more we have come to understand that the biggest barrier to achieving success is a seeming inability of people to “play nice with others.”
Such was the topic last week when I appeared as a panelist on an episode of The ESG Show, a digital program hosted by journalist Michael Baxter, founder and Editor-in-Chief of The Techopian. The theme of the episode was ESG as a silo-buster inside the private sector – an examination of how expectations for positive societal impact is requiring companies to rewire how once-disparate business functions work together. I was joined as a panelist by Natalie Runyon, ESG Strategist and Consultant at Thomson Reuters, and Jonathan Ha, Founder and CEO of Seneca ESG.
The discussion was wide-ranging and focused on a number of barriers to implementing cohesive, company-wide ESG strategy including technology, reporting structure, leadership and training. The speed with which this trendline has developed is a complicating factor, as companies are being forced to figure this out on-the-fly.
To date, ESG has largely lived in the Fortune 1000 sphere where publicly-traded companies see alignment to it as a means to drive positive shareholder outcomes. As noted last year on Forbes, “investors globally are embracing ESG Investing on a massive scale” translating to “$1 for every $5 invested” by 2026.
As a risk management topic framed by compliance and regulatory agencies, it can be difficult for companies to see ESG as an opportunity and not a burden. With so much investment on the line, it isn’t a matter of simply checking the box.

The Challenge of Collective Action in the US

My appearance on The ESG Show, a UK-based program, was Next Stage’s first international media engagement since the publication of Profit & Purpose: The ESG Addendum, our recent report highlighting the role of corporate citizenship via the ‘External S.’
In many ways, ESG has already become a dominant topic in European and Asian markets where adoption of strategies aligned to environmental, social and governance materiality has become accepted best practice. This is less true in the US, where the politicization of ESG has muddied the waters and slowed forward progress.
But that’s not the only thing happening here. As we’ve encountered personally through our outreach at Next Stage, even in companies that make ESG a priority, silos abound. Breaking through “established ways of operating” takes much more than company-wide memos and edicts from the C-Suite.
A primary barrier in the US? Our inherent individualism.

Next Stage’s approach to collaboration work is informed by Sociologist Geert Hofstede, whose decades-long research resulted in the identification of six basic issues that society needs to come to terms with in order to organize itself. This 6-D model of national culture suggests that Americans are uniquely defined by their fierce individualism.

In Hofstese’s rating system, the concepts of collectivism and individualism are suggested as opposites, with Americans the most inclined society toward independence in the entire world, and opposed to being interdependent as members of larger wholes.

As a result, efforts to bring people together across differences typically fail to take into account these cultural truths, leaping to collective aims without first addressing underlying barriers to working collaboratively.

How does this apply to a US-based corporation trying to make ESG work? Just try to get the heads of sustainability, DEI, corporate social responsibility and corporate compliance in a room together and see how much they have in common.

A Leg Up for the Middle Market

Next Stage’s private sector work is focused specifically on helping middle market companies thrive in this environment of increased expectations.
It may seem counterintuitive that midsize companies, most often privately held, would need to pay attention to industry pressures primarily felt by publicly-traded corporations. And yet, the middle market plays an important part inside the supply chain for larger companies.
It can be jarring to receive an RFP from a long-time customer that now includes questions related to sustainability, DEI and community impact. These are the business leaders we hear from at Next Stage, where a quick google of these search terms finds companies like ours who are helping to translate these issues into practical implementation plans.
The strategic strength of these midsize companies? Often the lack of already-existing infrastructure. Unlike larger companies that are trying to get pre-existing functions to play nice in a new sandbox, middle market companies are building rather than rebuilding their models.
That means an opportunity to put it together the right way from the start, creating the infrastructure and team cohesion needed to help disparate functions report in and connect strategically to a centralized strategy.
This is a strength of Next Stage which has worked with countless nonprofits to create similar structures, where collective ownership of the 501c3 model creates a challenge of knitting together board members, staff, donors, volunteers, partners and the community served to create shared ownership of goal setting and activities for advancement.

Interested in Learning More?

We are here to help your company navigate a way forward with a specific focus on citizenship efforts – the elusive ‘External S’ in ESG. Here are actions to take:
  1. Download our recent report, Profit & Purpose: The ESG Addendum and check out its predecessor.
  2. Watch our launch workshop for the new report where we illuminate the history of this trendline and share action steps for you to follow.
  3. Get in touch and schedule a free consultation – we are building our next thought leadership report and look forward to learning from your experience.

Filed Under: ESG

To ESG or Not to ESG: That is Actually Not the Question

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Last month, our company released a new report on a continuing theme – the role of social impact in the private sector. Profit & Purpose: The ESG Addendum summarizes our findings following 18+ months of discussions and engagement with leaders in the private sector. It follows a lengthy report we published in 2021 on what we are calling “the intersection of social good.”

Next Stage has been on a journey to understand how the private sector engages in efforts to advance social causes for the past four years. In both reports, we profile our thinking on what is moving companies to be more focused on their citizenship efforts. We think it is more than just a trendline – it is a demarcation point.

Last year, we shifted our language. We previously settled on the term “social good” as phrasing for what we saw as a growing focus by companies to address social challenges. And then, seemingly overnight, the initialism ESG came to life and we adopted the terminology. Our new report focuses on ‘External S’ – the ways we think companies will be held accountable in the future for contributing to positive social outcomes that are outside of their direct control.

So, it made sense to call our new report The ESG Addendum. The initialism only showed up a handful of times in our original report, and now we believe it is the essential, disruptive framework that is at the heart of a paradigm shift. We not only joined the ESG bandwagon, but we also aimed to become one of its chief conductors through the lens of External S.

But first, we have to contend with what David Hassekiel called “a distraction” in his recent piece for Forbes, “ESG Should Bring Us Together Not Tear Us Apart.” In it, he references our report and the loaded phrase the initialism has become.

Are you really still calling it ESG?

The signs of hesitation regarding ESG were starting to show in the months leading up to our report’s release. The concept of ‘woke corporations’ was nothing new – it showed up as a trend of politicization that we’ve chronicled all the way along. But something changed in early Q1 2023. Much the way Critical Race Theory (CRT) had been hijacked to mean something different than was intended, so too has ESG been redefined – like it or not.

A conversation over coffee earlier this year was telling. I met with a social impact leader who described a tumultuous number of days leading up to what a company had branded as ‘ESG Day.’ Executives worried that the term had become too divisive and efforts were made to soften exposure. Banners emblazoned with the initials were quietly replaced and talking points were reframed.

Now, imagine having the initials in your department name or your title! Such is the case for many professionals across the country who have been a part of a series of change management efforts to reposition how environmental, social and governance strategies are formed and metrics are tracked.

Our conversations suggest corporate leaders are unsure what to do, which is where we also found ourselves a few weeks back, debating whether to move forward with naming our report “The ESG Addendum.”

In the end, we decided to stick with it. Why?

“Because it doesn’t matter what we call it. It’s the underlying change in behavior that matters.”

Coming to grips with the new reality

As we explored how social impact fits into the future of ESG, we started with an audience we know well – corporate social responsibility executives. But perhaps not surprisingly, our journey arrived in a different place altogether: the corporate general counsel’s office.

To date, the ESG movement has been predominantly viewed as a risk topic for companies, treated as another form of regulation to navigate. ESG evaluation is elective, but because of the stakes involved, it is typically reported to someone with a law degree.

That arrangement makes for some strange bedfellows. In companies across the country, social impact strategy is being filtered through a lens of risk mitigation and compliance. We see this as an essential challenge for the private sector – until ESG starts being treated as an opportunity as opposed to risk, flat-footed companies will fall further behind.

Because no matter what you call it, the underlying trendlines are not changing:

  • Generational change continues to disrupt. You thought Millennials were disruptive? Allow us to introduce you to Generation Z, which the OliverWyman Forum recently described as “humankind’s best, and greatest, hope in the existential battles against global warming, inequality, and political and social unrest.” If your company is wrestling with whether it can possibly bow out of the whole social impact thing and take a wait-and-see – you run a significant risk of being left behind.
  • The workforce shortage is real. We’ve been privy to some pretty scary discussions inside boardrooms about the looming threat of a significant labor shortage, which we outlined late last year. Recent preemptive layoffs ahead of a predicted recession are only temporary – the long-term trendline is pretty bleak, creating what we called “an existential threat to capitalism.” Key to workforce retention and acquisition strategies? Values alignment in the workplace. We’ve seen companies reframe the intended audience for their impact reports to include their current and future workforce.
  • Socially responsible investing is not a temporary trend. As covered late last year by Forbes, ESG investing is expected to roughly double globally in the next three years, growing to 21.5% of total assets under management. In a few years, $1 out of every $5 invested will be in ESG vehicles. Is it a perfect system? Of course not, but that isn’t stopping people – particularly young people at the beginning of their investment journey – from choosing ESG funds as a part of their company’s 401k offerings.

For every Sears, there is an Amazon

In our report, we look to the past for inspiration:

“We liken the ESG paradigm shift to others that have come before it: the Industrial Revolution, the rise of digital technology, the advent of the internet and the emergence of social media. Each of these advancements challenged leading institutions to make a choice – to either fiercely protect the status quo that had worked for so many years or to make changes to stay contemporary to a new reality. For every Sears that refused to make those changes fast enough, there is an Amazon, a new company that seeks to harness the paradigm shift into a powerful expression.”

The real question isn’t what we should call social impact initiatives, but rather what we should do to embrace them, channel them and make it work for your organization.

In the months to come, that is exactly what we will be covering in this newsletter – Moving the Needle: Impact for Business. Each month, we will highlight innovative case studies, exemplary impact reporting and the latest on social impact metrics, employee engagement strategies and cause marketing. Subscribe today and stay in the know.

And that’s not all – we are so much more than researchers and prognosticators. Your company can hire us! The Next Stage team can support the development of new social strategies, provide project management support and even lead the design of your next impact report.

We stand ready to help your company bring its social responsibility strategies into a contemporary frame. Want to learn more? Reach out and let’s talk.

Filed Under: ESG

Addressing a Growing Community Threat: Diminished Referral Pipelines

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Have you noticed Next Stage looks different than it did a few years ago?

For one thing, we’re larger. We’ve doubled in size since the onset of the pandemic, adding new service lines, digital tools and approaches to our work. We recently moved into a new office because our team simply could no longer thrive in a co-working environment.

When I describe the history of our company, one of the demarcation points was the addition of Helen Hope Kimbrough to our team. Added as a Consultant in 2021, she recently got a new title that is so fitting – Senior Director, Community Voice.

It is apropos because her addition signaled a change in how our company does its work. Most of our engagements with nonprofits include a discovery phase where we gather insights to inform a Current Condition Assessment deliverable to support the process of strategic planning. In the past, that process tended to focus on ‘grasstops’ stakeholders – business executives, philanthropists, system leaders and elected officials – with interviews designed to capture their perspectives toward shaping forward progress.

Missing from the analysis was a critical component – the perspective of the people the organization hopes to engage with its programming. It was an absence that Helen called out and rectified through a modification to our qualitative data-gathering methodology. Now every engagement includes it.

The process of collecting insights from target populations for services now has language to describe it – community voice – and it is at the center of our work.

If you missed Helen’s stellar piece from last week, I encourage you to read it. She defines the concept of community voice and makes such a compelling argument for why trust is at the heart of forming lasting partnerships in the communities local nonprofits aim to serve.

And boy, do we ever need it.

We believe we have arrived at a community-wide proof point for trust, and it requires immediate action.

‘Where are the people for our nonprofit’s services?’

Organizations across Charlotte are experiencing a unique challenge. With ARPA funding and renewed investment from philanthropic sources ready for deployment, area nonprofits are flush with resources.

But for many of the nonprofits Next Stage has spoken with of late, what had once been a steady stream of program participants has slowed substantially. At first, the natural assumption was that the pandemic was having lasting effects. But as time has gone on, there is concern that something else has happened as well – a significant loss of trust.

We believe there are a number of factors contributing to this trendline. Chief among them is poorly-constructed outreach efforts that pre-date the pandemic. The championing of quarterback community-based organizations (CBOs) has led in some cases to an overreliance on them, with services concentrated on the economically-vulnerable populations in a handful of historic neighborhoods around uptown – ‘the Crescent.’

And yet, decades of displacement through development and gentrification have forced many people further out into apartment homes in Steele Creek, Mint Hill, Pineville, Northlake and University City. Still others have moved over the border into nearby counties where resources are even more scarce. Many in our region who are one crisis away from economic catastrophe live in micro-geographies that have historically featured relatively little dedicated outreach. And as opportunity corridors and redevelopment take hold, these are the communities where even more displaced residents will be moving.

We believe building infrastructure to reach these populations is imperative for area nonprofits. We at Next Stage are committed to addressing this challenge head-on through community voice efforts designed to spark engagement, build buy-in and activate programming through a listen-first philosophy designed to bridge community through trust-building.

Going where others are not

Next Stage has always focused on the bleeding edge for social good. It is the role of provocateur that we are uniquely positioned to play.

Back in 2017, we launched an incubator for emerging nonprofit organizations – many of them CBOs led by people of color – at a time when most philanthropists and civic leaders were loath to engage them. ‘Not another new nonprofit’ was a common refrain as we worked with founder-led organizations on the outskirts of social impact.

Skip ahead a few years and the disruption of the pandemic mixed with a renewed fight for racial and social justice has made CBOs not only fundable but a civic imperative. Corporate foundations and community-giving organizations that once created barriers for smaller, early-growth organizations are now making them a centerpiece of their work.

As a result, we dismantled our brick-and-mortar incubator, moved it online, and now give it away for free. Our job is not to compete where there are robust resources, but instead to think ahead and go where others aren’t.

We probably read Blue Ocean Strategy a few too many times, but somehow it works for us.

That is the energy we are taking into our next social impact venture – Community Voice-Enabled Demand Generation.

The process of building referral pipelines

Acquisition is a significant challenge facing nonprofits. It has been a barrier on the resource development side for years, where organizations struggle to tap into new networks or pioneer relationships with those who relocate to our community. And now it is impacting their programs.

That is due in part to a system of supports that trace the origination of relationships back to systems and safety net organizations. A first-time relationship with a resident is most often to come reactively, as someone reaches out for support in a crisis – e.g. access to housing, food, transportation or health services. The act of a resident, often in desperation, starts a chain of referrals to not only help that person in the moment but also to help ensure that the crisis is not experienced again.

But what about people who never reach out for that sort of support? If economic mobility is the Charlotte region’s central challenge as a community, how is that being addressed if the primary entry point to services is through crisis?

We believe there are many people who are under-employed and under-resourced in our communities who may never be reached because they do not step foot in a safety net provider organization. If we are to address our signature challenges, we must be willing to not just be reactive to need but proactive to opportunity, pioneering relationships that build demand for local services.

Next Stage’s Community Voice-Enabled Demand Generation is a four-step process:

  • Step 1: Constituent Modeling – The first step is to identify ideal characteristics of your target audience and map to micro-geographies using available tools like census data, Claritas and the Charlotte-Mecklenburg Quality of Life Explorer.

    The premise of this service line is that there are many residents throughout Charlotte who could benefit from a nonprofit’s programming, but they are unknown, unmapped and, as-of-yet, unreached. The first phase of Next Stage’s work aims to build an understanding of the organization and its ideal client population, identify neighborhoods with residents who match those traits, and design a plan for community voice engagement.
  • Step 2: Community Listening – With geographies selected for engagement, we conduct relational outreach and community listening to build understanding and spark relationships.

    We believe that every voice matters – and that diverse perspectives belong at every table. Our team engages community members and gathers data to provide clients with actionable insights into the needs of their community. We see community engagement as a two-way street – constituents must be given an opportunity to inform the programming that will serve to intervene in their lives to make for a better future.
  • Step 3: Program Aligning – Feedback from community listening efforts inform an effort of aligning programming and services to match needs and leverage community assets.

    It is a fallacy to assume that the absence of knowledge about your programming is the missing ingredient holding economically-vulnerable Charlotteans back. The absence of trust in systems is a decades-long trendline that will not be overcome through digital marketing or one-time efforts. We utilize community-voice research as a jumping-off point for aligning programming and determining a pathway forward.
  • Step 4: Neighborhood Linking – The last step in our process is to link neighbors to service providers through informed marketing and engagement efforts that lead to new relational networks and an ongoing pipeline.

    With a strong, community-informed plan for programming deployment and neighborhood-level communication in place, we partner with our nonprofit clients to onboard the organization to the communities engaged. This includes brokering key relationships and implementing neighborhood-level events and activities that will launch the organization’s services.

We aim to be a catalyst for these activities and make no assurances that these efforts alone will ignite resident demand for services. As Helen wrote last week, “people need staying power with intentionality and action,” and becoming a mainstay in these communities will be essential to realize positive outcomes.

But we believe it will never happen if we don’t prioritize it as a need and do something about it.

Our vision is the creation of new referral pipelines constructed through trust-building, where service providers originating relationships in new parts of the county can serve as an entrypoint for other nonprofits with reinforcing programming.

We are piloting this service line in 2023 with the goal of expanding it in 2024 and beyond. If your organization would like to learn more, we welcome the opportunity to discuss.

Together we can activate a new approach to winning the trust of the communities our missions call us to serve.

The Moneyball of Social Impact

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This month we are celebrating Next Stage’s ninth anniversary. Nine years?! Are you serious? It astonishes me how much time has passed. And yet in the same breath, it feels like only yesterday I was sitting at my old kitchen table, trying to figure out what it meant to own a company.

I think I’m proudest of having lost the Next Stage pub-style trivia Haley designed for our team meeting this past week, with questions culled from the nine years of the company’s existence. That others on our team know more about Next Stage’s history than me? That’s pretty special.

Another anniversary? It was 20 years ago that Michael Lewis published Moneyball, a book that in some ways contributed to laying the core philosophies for what would become Next Stage. I was reminded of it multiple times this past week, and it serves as inspiration for this essay.

We Are Family

Moneyball is one of the first books post-college that I can distinctly remember not just reading, but obsessing over. Some of that relates to my lifelong love of baseball. Or rather, my lifelong passion for a specific baseball team – the Pittsburgh Pirates. I was born into a family with Pittsburgh connections and ever since I could hold a baseball, I have been a bit fixated on the Battlin’ Buccos.

And yet, the Pirates are a very bad baseball team. They have been most of my life. As a small market franchise with an owner unwilling to invest what it takes to compete, I am relegated to cheering for victories that are sort of random – where the team picks in the draft, the development of players in the minor leagues, and incremental improvement as demonstrated by statistics. Where others root for pennants, I tend to geek out on analytics.

That love of statistical analysis was forged with Moneyball, a book that followed the 2002 season of the Oakland A’s and highlighted the unique approach to winning led by the team’s general manager, Billy Beane. Rather than go after players who had classically strong performance attributes, the A’s sought those who were undervalued in the marketplace, and yet performed in ways that made for a successful team.

It is an asset-based approach, of finding the competitive advantage that is often hidden from view, that felt so fresh and inspiring. The applicability to social good is obvious – like the Oakland A’s, most nonprofits are cost constrained and have to find system hacks to make progress.

They would go on to make a movie from the book with Brad Pitt in the GM’s seat, but back when it was published, I pictured someone else. Someone… more like me.

The Art of Winning an Unfair Game

I realize now that my love of the hapless Pittsburgh Pirates has fully informed much of my life. I am forever a fan of the underdog. No matter the situation, whether in sports or life, I find myself almost always choosing the side with the least opportunity to succeed. My compass has been wired for social justice in this way, of believing that an unequal playing field is just wrong.

And while I am an advocate for system change – like a salary cap in baseball or a change to public policy to assist disinvested people – there is also something I love about the challenge of overcoming great odds. Like Billy Beane, I enjoy that outsider status, of finding ways to be competitive even against the backdrop of an unjust system.

It is certainly the mindset that caused Next Stage to launch Cultivate as an incubator for emerging nonprofit organizations in 2018. Pre-pandemic, it was incredibly difficult to get local leaders of social impact to make time for small nonprofits early in their founding. “Too small, too little experience, too inconsequential.” And yet, we knew the founders of these organizations as true disrupters, often with lived experience, who offered new ways of doing things that deserved to be recognized. They also had the trust of the people they sought to serve. They were so worthy, in our eyes, and the lack of an onramp to the systems that support nonprofits was, we felt, unjust.

So, we built a curriculum to help “the little guy” get a leg up, find the marketplace where they could be competitive despite their size, and grow a plan for increasing their impact. It was in keeping with the work Next Stage has done since its humble beginnings, of identifying strategies to help level the playing field by looking to grow impact, resources, capacity and trust in places where others don’t.

The Hidden Side of Everything

I was reminded of Moneyball while listening to one of my favorite podcasts, Freakonomics Radio, based on the musings of its host, Stephen Dubner. The original Freakonomics book was another seminal influence on the founding of Next Stage, published in 2009, soon after my arrival in North Carolina. In it, co-authors Steven Levitt and Dubner uncover “the hidden side of everything,” turning conventional wisdom on its head.

Rejecting conventional wisdom is right up my alley. It is certainly the energy fueling our Profit & Purpose series, examining the intersection of the private sector and nonprofits. We are publishing our next report at the end of this month – Profit & Purpose: The ESG Addendum – and pitching it to Freakonomics Radio is something I hadn’t even thought to do until writing this very sentence.

In a recent podcast, Dubner revisited Moneyball to explore its continuing impact even two decades later. While Lewis would go on to write many great books, including The Blind Side and The Big Short, one could argue none had the cultural or industry impact of Moneyball. The title itself has been often aligned to other domains (like the title of this essay), with the goal of getting a leg up on the competition. It also transformed Major League Baseball, where the principles outlined in the book have gone on to be considered best practice.

The concepts themselves may have been revolutionary to find in a book on the New York Times bestseller list, but it turns out, they were not exactly new. Israeli economists Danny Kahneman and Amos Tversky had previously pioneered research into the field of behavioral economics. As noted by Dubner:

“One big takeaway from their research was that we all use mental shortcuts to make decisions, even important decisions, and those shortcuts can create cognitive biases.”

Mental Shortcuts and Cognitive Biases

My journeys have shown me that most people are essentially good. As a humanist, I believe strongly in people and communities, and that what leads to injustice is most often a combination of factors – economic limitations, limited data, a lack of intellectual curiosity, and yes, cognitive bias.

It turns out, trusting your gut is a really bad way of making decisions. And yet, people do it all the time. When it comes to the world of social impact, there are a bunch of wrong directions and missed opportunities that come from mental shortcuts that do harm. Here are a few of our least favorite:

  • “Low overhead for a nonprofit is good.” – Paging Dan Pallotta! Add his must-watch TED Talk to your list of to-dos if you are unfamiliar. Speaking of anniversaries, this year also marks a decade since Pallotta dropped a mic on “the overhead myth” that suggests a moral victory for organizations that talk about low overhead as a virtue, about driving your contribution primarily at their direct services. That is a great way to make sure your nonprofit never grows its impact! And yet we still find nonprofits every day bragging about their low overhead, feeding into a cognitive bias that does active harm to other nonprofits. What misguidedness!
  • “The largest nonprofits are best equipped to create positive impact.” – Not so fast! While there is no question larger nonprofits have more resources to serve more people, the pandemic taught everyone that ‘might doesn’t make right’ when it comes to effectiveness. In fact, it is more often the smaller, community-based organizations that have trust built with the people in their communities. Many large “agency” organizations proved wholly ineffective at getting services to the people who needed them most throughout COVID-19. The time has come to recognize that a new supply chain of social impact is needed – one that recognizes the needs of both large and small nonprofits alike.
  • “Need to raise money? Host an event!” – Uh, what? Even if the abundance of rubber chicken fundraising lunches in your city or town hasn’t reached a saturation point, certainly the pandemic laid bare the reality that event-centric fundraising is no longer sufficient. Organizations overly dependent on event revenue found themselves unable to host their galas, golf tournaments, 5Ks and breakfasts. Younger generations are far less inclined to participate in the events made so popular by their parents (and grandparents!).
  • “There is little a nonprofit can teach my private sector company.” – Ugh! We still run into this mindset, of thinking of nonprofits as children, benefitting from the largess of the grown-up private sector companies that provide “corporate gifts.” In truth, companies are looking more and more like nonprofits these days, with purpose statements and employee engagement strategies designed to create an increased sense of belonging. Nonprofits have been winning in this space for years. In fact, we tend to think of it as a competitive advantage for nonprofits that succeed at creating true partnerships with companies.

Reframing My Point of View

Our ninth anniversary finds Next Stage at the precipice of some amazing opportunities. Our company has grown as a result of finding ways to work with bigger clients featuring more complex challenges than ever before. We now talk about “working at the intersection of social good,” where nonprofits, companies, government, philanthropy and residents come together to make a more lasting change.

Critical to this shift was a personal reckoning, of no longer seeing myself and the company our team has built from a purely outsider perspective. The strategies we have been pioneering for years are now ways of thinking that intrigue large institutions and systems as well. Everyone has been disrupted in some way over the last few years, and leaders at all levels are realizing that “getting back to normal” may not ever be possible.

Embracing new realities means also wrestling with the truth that what once worked is no longer a go-to. It is an environment in which Next Stage can thrive. It’s in our name, after all. Working towards the collective next stage for our communities has always been our raison d’être.

And that has meant starting a new chapter personally as well.

I’m ready. Because nine years in, Next Stage isn’t just me anymore. It’s a team. And our team is amazing.

Happy New Year.

Halloween Hangover: The Scary Realities of the Workforce Shortage

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Every day is something new at Next Stage. We are in such a unique position to be proximate to the leaders and institutions wrestling with all aspects of social impact across issues like healthcare, housing, education, workforce and the environment.

As a lifelong learner, I love this aspect of my job. When we partner with nonprofits, companies or municipalities, our team gains insights into ‘how things run’ which helps to illuminate a larger system of interconnectedness. Nothing is ever in a silo.

Sometimes these conversations shed light on an approaching crisis that has the potential to have devastating effects.  Such is our recent exploration of the workforce talent shortfall – an existential threat to society that frankly has us all a little freaked out.

The Silver Tsunami

We have known for a long time about a looming disaster. I first heard the phrase ‘the Silver Tsunami’ more than a decade ago, which referred to the aging of the Baby Boomer generation. At the time the phrase was coined, concerns for housing and health care topped the list. With an unprecedented number of older adults living for much longer than previous generations, concerns for funding Medicare and Social Security dominated discourse.

These days, the phrase has taken on a new level of importance as people retiring from the workplace are leaving behind a significant talent shortfall – one that could, as reported by Korn Ferry back in 2018, “cost nations trillions of dollars in unrealized annual revenues.”

Added to this, what was called ‘the Great Resignation’ at the start of the pandemic has evolved instead into what Fast Company coined as ‘the Great Reprioritization’ – a fundamental shift in how workers are choosing to earn a living. It has led to a whole host of challenges impacting every industry and workplace.

The Great Repriorization is hitting retail and the service sector particularly hard, and is a contributing factor to the current levels of inflation. Your favorite restaurant or dry cleaner is likely holding on by a thread as increasing labor costs make it difficult to generate a profit. It is also being deeply felt in all the skilled professionals and trades, including construction, HVAC, plumbing, nursing and information technology.

But if we knew workforce shortages were coming for so long, why does it seem like business and civic leaders are only just now really taking it seriously?

A talent shortfall with a myriad of factors

A key report that has greatly influenced Next Stage’s work is The Demographic Drought: Bridging the Gap in our Labor Force from Emsi Burning Glass, one of the world’s leading authorities on job skills, workforce talent and labor market dynamics.

The underlying drivers of the global workforce shortage are fairly simple to understand – “fifty years of birth rates below replacement levels, combined with a recent precipitous drop in immigration, has left us with fewer and fewer young, working-age people.” The labor pool is aging and there are fewer young people to fill the roles left behind by those exiting the workforce.

But if this was previously thought of as a decades-long trendline, the pandemic was a big catalyst of speeding things along. Next Stage has taken to calling it a ‘trumpet flare,’ exacerbating already existing workforce gaps. The slow unfolding of a generational trendline of workforce shortage skipped ahead considerably as COVID-19 disrupted the status and shut down traditional workplaces globally.

Baby Boomers still in the workforce saw an easy exit as workplaces opened up again against the backdrop of healthy retirement investments, electing to retire rather than come back to work. Meanwhile, Millennial and Gen-Z employees saw an opportunity to reframe the arc of their careers, revisiting the ‘gig economy’ they embraced during the worst of the Great Recession while insisting on making the hybrid style of work a permanent feature.

The result? A challenge that will only get worse in the years to come if we don’t come together as communities to address it systemically. No one strategy or program is going to get it done in isolation – we must work together. And if we don’t, the consequences will be dire for all of us.

Solutions like Old Wine in New Bottles

As scary as the path forward is, the good news is that there are already some consensus approaches identified:

  • Rise of automation – This one is a bit of a double-edged sword for those of us who work in social impact. Technology will certainly take center stage as we work to create less costly ways to get work done. The downside will be how automation will negatively impact front-line employees and low wage earners who are disproportionately minority populations.
  • Increased skills training and economic mobility – As an upshot to the role technology will play, preparing for the work of tomorrow means driving economic mobility for disengaged populations. That means investing in skills training for typically divested communities. In fact, economic mobility is now viewed as an economic imperative – capitalism will only survive if we are able to build increased economic opportunity for those who are not just unemployed but also under-employed.
  • Focus on new immigrant populations – One of the most surprising recommendations of the Demographic Drought report is a need for more progressive immigration policies that increase immigration into the United States at a time when it has been declining. As political as the topic of immigration has been in America, an increase in new immigrant populations is viewed as one of just a handful of must-happen activities to fuel future success.

In North Carolina, a focus on economic mobility and new immigrant pathways is old hat for those of us involved in social impact work. But what has changed are the stakes. These are economic imperatives, and the preservation of life as we know it is at stake.

That is some rich irony, isn’t it? That the key to “preserving life as we know it” for the American middle class requires addressing systemic wrongs and creating greater pathways to prosperity for those who have traditionally been left out and not invited to the proverbial table?

As a team that looks for win-wins to get stuff done, we’ll take it.