Less money, more rewards

Hiring in the non-profit sector can be a challenge

By Lilly Rockwell

When it was time to hire a new chief executive for Big Bend Hospice, a large Tallahassee-based non-profit organization with a $22 million budget and more than 200 employees, the board of directors faced an uphill battle.

Recruiting an experienced executive for a non-profit can be a tricky dance for board members, who have to find someone with the right business and technical experience while competing with the salaries offered by for-profit competitors.

“This is a mission-driven business,” said Bob Inzer, the chairman of the Big Bend Hospice board who also is the clerk for Leon County Courts. “We were looking for someone who had a heart for the mission of hospice, but we have to operate like a business.”

In other words, the board was looking for a needle in a haystack: someone who would know the ins and outs of Medicare, understand complex health care regulations, be able to schmooze with donors and be content working in an industry whose grim mission is to help people die comfortably. »

Fortunately for Inzer, after an exhaustive six-month search, the board finally settled on Cathy Adkison, who came from a for-profit hospice in Birmingham, Ala.

The long search for Adkison underscores the challenges non-profits face in recruiting top executives. Being in charge of a non-profit can require the same skill sets as running a private company, but more challenging, with longer hours, less pay and the never-ending, daunting task of fundraising. Adding to this is the wrinkle that at non-profits, CEOs report to a volunteer board that can have frequent turnover of its members and varying goals.

Non-profits are also facing fallout from the economic turbulence over the last four years, with increased competition from other non-profits and private companies and greater scrutiny from the government and consumer watchdog groups.

“It sets up a real interesting recruitment process,” said Pamela Kaul, the president of Association Strategies, a search firm that specializes in non-profits and associations. “They look at their CEO to fix these problems. There are very high expectations.”

But along with these challenges come intangible rewards that cannot be matched by the private sector. Chief executives of non-profits say they are drawn to the profession for the promise of a career that is about more than the bottom line.

“I want to be able to make a difference,” said Cheryl Phoenix, the executive director of America’s Second Harvest of the Big Bend, a North Florida food bank.

Finding the right fit

For most non-profits, the responsibility of finding a CEO or executive director is left to a volunteer board of directors. This board is comprised of people who have a passion for the mission of the non-profit and who typically have a business background or expertise in the area the non-profit focuses on, are community leaders or have experience running a similar organization. But these boards also have high turnover, with new members annually.

“The CEO essentially has a new boss every year,” Kaul said.

Some boards turn to search committees to help find the right fit.

In the case of Big Bend Hospice, Inzer convened a search committee within the board and asked it to find a new CEO. The committee turned to a search firm that specializes in the hospice industry. The firm conducted a national query looking for candidates that had the right qualifications, coming up with an initial list of about 100 names.

Running a hospice or hospital requires a special set of skills, Inzer said.

“It’s a highly technical business,” he explained. That’s because hospices make most of their money not from direct payments from the patients but from health insurance companies, such as Medicare, as well as through private donations.

Hospices are also highly regulated, primarily through the state government.

“It requires a high degree of sophistication from our corporate leadership,” Inzer said. Adkison was the perfect fit, he added, noting her background in hospice care, deep understanding of the complex regulations and the fact she is a registered nurse.

“It is very difficult to hire health care executives for hospice or home health,” Adkison agreed. “The level of information and background and education and all of those things are going to be different than what is required at other non-profits.”

Not to mention finding someone willing to relocate to Tallahassee, no easy feat for anyone in this turbulent economic climate, when many sought-after recruits are reluctant to move because they cannot afford to sell their homes.

Adkison, who speaks with a soft Southern accent and was raised in nearby Albany, Ga., said she liked the Tallahassee community and wanted to shift back into non-profits after working at a privately owned hospice for years.

“(At non-profits) you are more concerned about patient care … we don’t have to pay stockholders and investors,” Adkison said. “Any money we might have from profit goes back into the business or we save for a rainy day.”

Motivated by more than money

One of the biggest hurdles in hiring for non-profits is the salary, board members say. On average, managers of non-profits make less than their counterparts in the private sector, according to data compiled by the U.S. Bureau for Labor Statistics.

The CEO of a private company makes an average annual salary of $87,069 while the CEO of a non-profit organization makes an average annual salary of $71,219, according to data compiled by the Bureau for Labor Statistics.

“I can’t tell you how many people come to us every day — physicians, attorneys, people who have had longstanding careers in other professions — and now they want something that is mission-centered,” Kaul said. “But we have to impress upon them that the compensation is completely different.”

Experts say chief executives of non-profits are willing to accept lower salaries as a trade-off for the feel-good satisfaction of fulfilling a non-profit’s mission, whether it be feeding the poor or counseling victims of domestic abuse.

Non-profits also sometimes offer more flexible hours and better benefits.

Another reason for the salary difference is the board of directors’ reluctance to open up the organization to scrutiny from donors who want to see their money go toward the organization’s mission, not into the CEO’s wallet.

Still, that doesn’t mean non-profit executives make pennies. Ken Armstrong, the head of United Way of the Big Bend, makes more than $135,000, according to the non-profit’s tax forms from 2010. But board members argue that a high salary can be a reflection of the financial value that chief executive brings to an organization.

Kaul believes it’s important to pay as close to a competitive salary as possible.

“You sort of get what you pay for,” Kaul said. “Boards notoriously want to do it on the cheap.” She said some people find non-profit salaries outrageously high but she defended those salaries as less than what that person would make in the private sector.

Passion for the mission

Not all executive directors or CEOs make six-figure earnings.

Marcia Hull clearly has the passion for the arts. She can speak without interruption for five minutes, only pausing to catch her breath, on the benefits that the Mattie Kelly Arts Foundation brings to the Destin area, from funding theater productions at local schools to art shows, festivals and concerts. The foundation helps put on 14 events a year and now has taken on the Herculean task of raising money for a performing arts center.

Hull is the executive director of the Mattie Kelly Arts Foundation, which has a mission to bring arts and cultural opportunities to the Emerald Coast. She oversees a budget of more than $300,000 and makes less than $40,000 a year, a far cry from a comparable job in the private sector. She has received offers to work elsewhere and make more money but has turned them all down. “Here we are making a difference,” Hull said. “That has motivated me, not the paycheck.”

Most executive directors of non-profits say they reached a point in their careers where money was no longer an important part of their aspirations.

Hull has worked in real estate, banking, public relations and human resources, but had never worked at a non-profit before coming on board as the director of the foundation in 1998. She was drawn to the idea of helping people through art.

“My parents put me in tap and ballet. I didn’t have any artistic ability,” Hull said. “But I’m not shy about raising awareness.”

She said her connections in the community helped her land the job at the foundation. She was already acquainted with nearly half of the board members.

In the private sector, Hull said she disliked the natural competition that developed between her and her business rivals. “When I came aboard this non-profit I got to reach out and be a friend and have them as a member,” she said. Her foundation has more than 250 members. “You don’t see as much of that competitiveness.”

A business brain

Like Hull, Sonya Davis also transitioned into non-profits in the middle of her career. Davis owned a temporary staffing agency in South Florida for 20 years. When she was approached about selling the business, she realized it was the perfect time to do something that was more closely aligned with her longtime interest in art.

“My academic background is in visual arts,” she explained. “My master’s is in art history. I felt like I wanted to be engaged in the area I had studied.”

Davis said she knew making the switch from running her own company to a non-profit meant a downgrade in salary, but she was committed to a lifestyle change.

Boards in charge of hiring should never have to persuade someone to accept a lower salary, Davis said. “If you have to talk someone into moving from the for-profit to non-profit, that is dangerous territory,” she said. “You want someone who is committed to the mission and is fully prepared.”

In her case, she landed a string of jobs working at arts organizations in Palm Beach County, such as the Norton Museum of Art and the Palm Beach County Cultural Council. She was in charge of the Lighthouse Center for the Arts for three years before being recruited for the job of executive director of the Pensacola Museum of Art in 2009.

Davis said her background in business has been an asset while working at non-profits because she was familiar with looking for ways to cut costs and find efficiencies. For instance, when she came aboard the Pensacola Museum of Art, Davis overhauled the accounting system.

“It was designed to be a cost savings, but also to put in place internal controls that perhaps were not as strong as they needed to be,” Davis said.

She also upgraded the museum’s computers and brought in an in-house server for the first time, thanks to a special $100,000 grant for technology upgrades. “It was really sorely needed,” Davis said.

While Davis agrees that a passion for the mission is crucial, she believes having a basic understanding of running a business is just
as important.

“A passion for the mission is not going to necessarily create ... a successful non-profit,” Davis said. It’s important that non-profits be treated like a business, with a specific plan in place for how to make money. Donors and board members also have high expectations for accountability and good business practices, she added.

Without a business plan, “the potential for failure is really high,” Davis explained.

“You can’t operate with only heart, you have to operate with head.”

Economic fallout

Most non-profit executive directors say their organization has been walloped by the economic recession. With most families tightening their belts, giving to charity has taken a back seat to more pressing concerns, like paying the mortgage.

At the same time, non-profit executives say grant money has dried up. Most non-profits rely on grants from the county, state or federal government to survive.

This double whammy has caused nearly all non-profits to miss their fundraising goals, lose out on grants and cause a re-calibration of the mission.

Top executives at non-profits say now more than ever boards must look at how well a candidate can respond to economic turbulence.

At Second Harvest, the Tallahassee-area food bank, Phoenix said she has seen demand rise while donations and grants have become hard to come by. Over the last three years, she has seen the number of people Second Harvest serves rise from 22,000 a month to almost 35,000 in the greater Tallahassee area.

“The need has increased so much,” Phoenix said. That in turn creates more pressure to make sure donations, grants and other funds can keep pace.

At the Mattie Kelly Arts Foundation, Hull said she is constantly in fundraising mode. “One of the challenges we face is that there are so many worthy charities in any community,” Hull said. “Philanthropic giving has gotten very selective for donors.”

So convincing a company or person to donate money for an arts program is competing against a request for money to feed the homeless.

The foundation has had to cut back on its own expenses, resulting in a salary freeze for Hull and the other full-time staff member. This year, Hull said they both received their first raise in four years. “We are really below the pay scale and we still are,” Hull said. The foundation also lost some members but gained new ones.

Kaul said many non-profits and associations have cut back on perks like signing bonuses, care allowances and other fringe benefits because of the recession. In some cases, pay cuts and furloughs are also widespread. When the organization is hurting, Kaul said, it doesn’t make sense for the top executive to be getting pay raises, and boards are sensitive to that.

“Interestingly, it does not seem to adversely impact job satisfaction,” Kaul said. “People believe in the mission of the organization and are willing to sacrifice for it.”

At the Pensacola Museum of Art, Davis said it’s difficult to know what the museum’s budget will be from year to year, given its reliance on the unreliable funding streams of grants, donations and admission fees. “In the private sector, you have your client base, you have a sense that you can grow your client base, you can grow the revenue from your existing clients,” she said. “But in the non-profit sector, you really have to look into a crystal ball and try to guesstimate what kind of things are going to happen.”

For example, any dramatic dip in the stock market can impact how willing donors are to send in checks, she said. “Overall it’s much more uncertain.”

But even with these turbulent economic times, non-profit executives say there is no place they would rather be and shrug at suggestions that a private sector job might bring higher pay and fewer hours. At the Mattie Kelly Arts Foundation, Hull said she finally found her calling after years of dabbling in other careers. “I feel this is my ministry,” she said.

“I can’t tell you how many people come to us every day — physicians, attorneys, people who have had longstanding careers in other professions — and now they want something that is mission-centered. But we have to impress upon them that the compensation is completely different.”

—Pamela Kaul, President of Association Strategies

Non-Profit CEO Pay

Average Pay for CEOs in Florida:

(Includes private sector and non-profits)

Average salary of a CEO in Florida: $183,390

In Panama City: $167,080

In Pensacola: $152,480

In Tallahassee: $174,480

Average Pay for Non-Profit CEOs Nationally:

With a budget of $250,000 or less: $46,826

With a budget between $250,000 and $500,000: $58,203

With a budget between $500,000 and $1 million: $75,519

Source: Bureau of Labor Statistics, Guidestar.org

Advice for Non-Profits

What to look for in a CEO or Executive Director

Non-profits have some of the highest turnovers for CEOs or executive directors. This can stem from big expectations placed on these leaders, as well as long hours and low pay. Here is some advice for boards in charge of hiring a top executive of a non-profit.

» Look for passion. Above all else, find someone who is truly passionate about the mission of the non-profit. “It’s important to believe in what you do,” said Cheryl Phoenix, the executive director of America’s Second Harvest of the Big Bend in Tallahassee. “You can learn all those other things.” Even if the candidate has no experience running a similar non-profit, look for someone who has shown an interest in the non-profit’s service area through volunteer work or personal experiences.

» The right kind of experience. A great CEO can come from the non-profit arena or outside of it. What’s most important to a given non-profit can vary depending on size, but look for previous management experience, knowledge about the service area, good communications skills and a plan for how to respond to a fluctuating budget. “It’s real important for a (candidate) to have knowledge of the constituent group, profession or industry,” said Pamela Kaul, the president of non-profit search firm Association Strategies. If you are hiring for a technical area, like health care, it is vital they understand regulations and insurance. “They need incomparable communications skills, both verbal and written, and the patience to adapt and be flexible,” Kaul said.

» Knowing the community. Because non-profits raise money within the community, it is crucial to hire someone with strong ties and deep relationships within that community. “My business is really fundraising and awareness,” said Marcia Hull, the executive director of the Mattie Kelly Arts Foundation. “I’m the leader of this entity and I do a lot of networking. My job is to be out there and visible.” Look for someone who has lived in the community or has the right networking skills to quickly build those relationships.

» Fundraising prowess. This is the lifeblood of any non-profit. If an executive director or CEO isn’t comfortable asking people for money, then working in non-profits may not be the right fit. “When I get up, every day I am thinking about how much money I can raise for the foundation,” Hull said. A large organization may be able to hire someone who is just in charge of fundraising, called a development director. Still, it doesn’t hurt to have a chief executive who is comfortable working a room on behalf of his or her organization.