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JCF Blog

Investing in Talent: What's Good for Business is Essential for Philanthropy

Posted by: Jewish Community Foundation of Greater Hartford on 1/27/2016

 “The team with the best players wins.”  Jack Welch

If you ask the most successful business leaders in the world to list the most important reasons for their business success, nearly all will list talent management in their top five. Some, like Jack Welch former Chairman and CEO of General Electric, believe that managing people is not only the most important role of a business leader, but also the one that provides the most definitive competitive advantage. And it’s not just talk. By one estimate, American businesses spend more than $14 billion annually on leadership development (Source: “Leadership Development Factbook 2012:Benchmarks and Trends in U.S. Leadership Development” by Karen O’Leonard and Laci (Barb) Loew).

Leadership development is only becoming more important as the pace of change in our society continues to accelerate. Leadership expert John Kotter of Harvard Business School notes that “We know that leadership is very much related to change.  As the pace of change accelerates, there is naturally a greater need for effective leadership.” 

So if it is widely accepted in the private sector that leadership is critical in an environment of accelerating change and that leadership development is key to business success, why does the nonprofit sector spend only 0.03% on leadership development? 

A recent series in the Stanford Social Innovation Review called Investing in Talent (see links below to several articles in the series) has been grappling with the nonprofit world’s woeful under investment in leadership development. Not surprisingly, the themes that surface in the series echo some of the comments that we have been hearing from nonprofit leaders across our community.

Nonprofit professionals are feeling overwhelmed with the ever accelerating pace of change and the increasingly sophisticated operational demands of running a complex nonprofit organization. What’s more, two constraints placed on nonprofits make it nearly impossible for them to improve the abilities of their leaders: resource limitations and a culture that considers investing in talent as unnecessary overhead. 

And what of our next generation of leaders? How can we be prepared for the inevitable transition of long standing community leaders if we have no professional development programs for those highly talented middle managers that we hope will one day lead our organizations? 

No private sector investor in their right mind would put money into a business that had no plan for developing and retaining their strongest talent, but we assume that it’s unnecessary overhead in the organizations that conduct society’s most important social service work. It’s time for this attitude to change.

As Ira Hirschfield from the Evelyn and Walter Haas, Jr. Fund recently said, “Leaders who have the opportunity to reflect on their strategies and hone their skills make better choices, develop innovative solutions and forge stronger collaborations.“ (“Investing in Leadership to Accelerate Philanthropic Impact”, Stanford Social Innovation Review September 11, 2014).

Another writer in the Talent Matters series put it well:“Investing in leadership development isn’t a distraction from programs, it’show you ensure that your organization achieves its potential impact.”

As our social problems grow more complex and interconnected,how are we going to develop, train and retain our next generation of leaders if we aren’t putting resources into their growth and development? 

As part of our ongoing thinking about how to build the capacity of our community’s nonprofits, the Foundation has begun to consider if and how an investment in professional development could have an important strategic impact for our nonprofit partners and for the community as a whole. Studies of nonprofits, for-profit and governmental organizations alike show that investing in professional development is likely to pay for itself. To put it another way, investing in professional development may offer one of the highest returns on investment for our dollars.  

What’s clear is that the philanthropic world is under investing in talent. We’d like to see a nationwide philanthropic commitment to increasing our investment in senior and mid-level professional nonprofit development programs.

What if every funder in the nation dedicated just 1% of their annual grant making to leadership development efforts? Here at JCF that would translate into approximately $40,000 per year. It’s probably not enough, but it would be a start. 

What do you think about the 1% idea?

Additional Links from Talent Matters:

http://www.ssireview.org/blog/entry/the_business_case_for_investing_in_talent

http://www.ssireview.org/talent_matters/entry/investing_in_leadership_to_accelerate_philanthropic_impact

http://www.ssireview.org/talent_matters/entry/investing_in_people_pays_big_dividends

http://www.ssireview.org/blog/entry/leadership_development_five_things_all_nonprofits_should_know

http://www.ssireview.org/blog/entry/building_values_based_results_driven_leaders

Michael Johnston is president and CEO of the Jewish Community Foundation of Greater Hartford. 

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