Careers in the Nonprofit Sector

Lothar Holzke

Definition

The nonprofit sector employs a significant percentage of the total U.S. workforce, and makes up an industry that is economically vibrant and abundant in career opportunities. Nonprofits are generally considered by their tax exempt status and registry with the Internal Revenue Service (IRS) as a 501c(3) organization, however some may find valuable career opportunities with non-governmental agencies and organizations that are nonprofit in structure but not in legal status. Much of the research compiled around nonprofit employment averages data from thenearly 1.6 million organizations registered as nonprofits with the IRS, and ‘employment’ is generally characterized as all professions within the sector and not restricted to fundraising professionals.

The nonprofit workforce boasts a wide array of job roles and organization types distributed among several distinct subsectors including (but not limited to) health services, higher education, arts and culture, environment and animal welfare, foundations, and human services (Newhouse and Salamon, 2019). Whilemany think of nonprofit work as fundraising or development operations, a great number of nonprofit professionals specialize in fields such as advocacy and social work, communications and public relations, creative services, human resources, executive leadership, and finance, to name a few.

Historic Roots

Organized philanthropy is rooted in American tradition, connected in large part to the religious activities and strong influences in giving cultures of early settlers. Church groups fostered principles that called for members to act with benevolence, promoting individual acts of charity toward poverty relief and community betterment. The 18th century saw an expanding infrastructure for associationalism following the charge of Benjamin Franklin who believed collective charity was most effective for relieving suffering (Institute for Career Research, 2005).

The number of associations and organized fundraising increased dramatically between the American Civil War and the First World War. Much of this growth came in response to the overwhelming need for army resources, as well as medical aid and relief for soldiers and their families. The scale of wartime charity was significant in the development of organized philanthropy, advancing the professionalization of fundraising to a national level, leading to its recognition as a full-time occupation (Institute for Career Research, 2005; Sargeant and Shang, 2010).

1935 saw the first national association for fundraisers, the American Association of Fundraising Counsel (AAFRC), known now as The Giving Institute, which sought to “enhance professionalism and create high standards for the largely unregulated area of professional fundraising” (The Giving Institute). The AAFRC contributed to the legitimacy of professional fundraising by promoting a code of ethics comparable to doctors and lawyers (Sargeant and Shang, 2010), and defining standards to which professionals may be held accountable.

Importance

Representing roughly 10 percent of the total U.S. private workforce, the nonprofit sector stands as the country’s third largest workforce and a dominant force in the American economy. Of the approximately 1.6 million registered nonprofits, the sector employs twice as many as transportation, wholesale trade, and finance and insurance industries; 80 percent more than the construction industry; 25 percent more than scientific and technical services, administrative support, and waste management industries; and over five times more than the real estate industry, according to a 2019 report of nonprofit employment by the Johns Hopkins Center for Civil Society Studies. In total, the nonprofit sector paid workers $638 billion in wages in 2016, with higher average wages and job growth when compared to for-profits of similar industry (Newhouse and Salamon, 2019).

The nonprofit workforce is approaching a transition that will affect all aspects of the job market when combined with economic growth and developing nonprofit professionalism. With nearly 73 percent of nonprofit leaders belonging tothe Baby Boomer generation, it is expected that most will retire in the next decade, leaving a chain of job vacancies and prompting a generational shift in the makeup of nonprofit and public agency employment (Nelson, 2019).

Ties to the Philanthropic Sector

There are many variables that contribute to an individual’s desire to work in philanthropy such as early exposure to volunteerism, chance learning, and socioeconomic and racial demographic. However, in recent years, researchers have taken an interest instudying individuals’ career preference, particularly the events and motives that lead some to choose work in philanthropy over other sectors. Public service motivation is a theory that originally developed to explain government career preference, though some have taken the theory to explain why some are more likely to choose to work in the nonprofit sector.

Studies of nonprofit employee career motives have shown high (and sometimes higher) levels of public service motivation when compared to government employees, suggesting that public service motivation is a strong predictor of career preferences within the nonprofit sector (Bright, 2016). A central theme used by some as a unit of measuring public service motivation is altruism, a characteristic relatingto one’s selfless concern for others (Bright, 2016). The study of altruism has been closely tied to philanthropy buthas notable influences in comparing trends in both government and nonprofit career choice.

Those who work in nonprofits are more likely tothink altruistically, have a desire to contribute to social welfare, and are more philanthropic in their personal lives. It has been proven that nonprofit employees are more likely to volunteer than peers in other sectors, and are more likely to enjoy theimpact of their work in their communities (Nelson, 2018)

Key Related Ideas

• Compensation and Income disparities Compensation and salary vary widely across nonprofit subsectors andis an often-contendedsubject in the debate over equity and fairness. A recent study found that key employees at hospitals and medical centers were the highest paid with earnings averaging $750,550 per year, and some earning more than $1 million (Candid, 2019). Following health services, executives in nonprofit higher education earned on average $696,730 and “84 percent more than their peers at public institutions” (Candid, 2019). Some nonprofits cite competition with for-profit salaries for determining fair pay, however many are held to the common expectation of “reasonable and not excessive” (National Council of Nonprofits, 2019). Nonprofits are often regarded as a moral and social authority, and so they are exposed to harsh scrutiny in order to maintain the public’s trust and confidence.
• Degrees and Certificates in Philanthropy Although a degree in philanthropy or nonprofit management is not required to enter the nonprofit workforce, there are several university programs and certificate opportunities available to those who wish to gain industry credentials. Obtaining a degreeor certificate in philanthropy, nonprofit management, or nonprofit business or public administration affords one a competitive advantage in the job market and offers insights that one otherwise only gets with years of “bottom-up” industry experience.
• Diversity, Equity, and Inclusion The makeup of the nonprofit workforce is, as in all American workforces, overwhelmingly lacking in racial and ethnic diversity, an imbalance that is more prevalent in executive and leadership positions. According to a study done by executive recruiting firm Battalia Winston of 315 of the nation’s largest nonprofits, an alarming 87 percent of executive leaders were white, while Asian, Hispanic, and African American leaders remained underrepresented. Despite the work that many nonprofits do to advocate for and advance social justice, the nonprofit workforce requires systemic change and a concerted effort to prioritize issues of inequity by investing in recruitment of diverse talent and fostering a culture of inclusion (Battalia Winston, 2017).
• The Building Movement Project (BMP), which works tofurther nonprofits’ potential to advance social change, conducts studies on race and leadership in the nonprofit sector as part of aninitiative called ‘Race to Lead’ (Building Movement Project).In a 2017 report called Race to Lead: Confronting the Nonprofit Racial Leadership Gap, BMP determined from survey respondents that “people of color are more likely to aspire to be leaders” when compared to white respondents. In the same survey, respondents identified both skill acquirement and structural barriers as limitations to accessing leadership roles as well as mismatched opportunities.The report proposes a movement away from a focus onthe“perceived deficits”of applicantsand suggests rather educating and shifting responsibility to those who oversee practices. (Kunreuther and Thomas-Breitfeld, 2017).BMP provides tools and resources for nonprofit leaders to address the racial leadership gap and facilitate social change at the institutional level.

Important People Related to the Topic

• Robert Payton  Robert Payton was a co-founder and the first full-time director of the Center on Philanthropy at Indiana University, as well as a scholar of philanthropic studies. Payton was instrumental in framing nonprofit studies to answer the ‘why’ rather than ‘how’ question (counter to comparable degree programs that focused on business management) and advocated the importancefor students and nonprofit workers to study subjects that explored moral dimensions (Lenkowsky, 2011). As a significant contributor to nonprofit theory, Payton authored two books on the subject of philanthropy: Understanding Philanthropy: Its Meaning and Mission, and Philanthropy: Voluntary Action for the Public Good, which provide a foundational basis forunderstandingthe existence of the nonprofit sector and its role in civil society.
• Henry Rosso  Henry Rosso co-founded the Fund Raising School in 1974. The Fund Raising School, which offers education in philanthropic studies, fundraising theory, and practical applications for professionals of philanthropy, later integrated with the Center on Philanthropy at Indiana University and set groundwork for the Lilly Family School of Philanthropy (Haddad, 2017). Rosso authored two notable books in the field of fundraising: Achieving Excellence in Fund Raising, a guidebook for successful fundraising for professionals; and Rosso on Fund Raising: Lessons from a Master's Lifetime Experience, a collection of anecdotes and lessons to be taken from Rosso’s forty-five year experience in fundraising.
• Rusty Stahl  Rusty Stahl is the founder, president, and C.E.O.of Fund the People, a national campaign which serves to “maximize investment” in the nonprofit workforce. Fund the People offers an interactive toolkit and practical guidetostrategic talent investment in nonprofits as well as a team of experienced consultants to improve the performance and impact of nonprofits (Fund the People). Stahl is an experienced leader in the sector and has a demonstrated commitment to the development of the nonprofit workforce and advancement of nonprofit talent.

Related Nonprofit Organizations

• Nonprofit Academic Centers Council (NACC)  A membership association of accredited academic institutions with programs that focus curriculum on philanthropy and nonprofits.
• Council for Advancement and Support of Education (CASE)  An association of educational institutions that provides professional development opportunities in the fields of alumni relations, marketing and communications, fundraising and fundraising operations.
• Association of Professional Researchers for Advancement (APRA)  A membership association of professionals in prospect development and research, data analytics and data management. Apra hosts educational conferences and seminars, promotes career opportunities, and advocates for industry best practices in nonprofit prospect research and management.
• Association of Fundraising Professionals (AFP)  A global chapter organization for fundraisers. AFP offers educational and certificate programs for career growth in fundraising and development, professionalnetworking and career resources, and industry news.

Reflection Question

What steps might you consider taking if you wanted to pursue a career in nonprofits?

Bibliography

• “About Us.” Building Movement Project. Accessed December 10, 2019. https://www.buildingmovement.org/?/info/about_us.
• “About CASE.” CASE. Council for Advancement and Support of Education. Accessed December 10, 2019. http://www.case.org/about-case.
• “About NAAC.” Nonprofit Academic Centers Council, January 21, 2019. http://www.nonprofit-academic-centers-council.org/.
• Bright, Leonard. “Is Public Service Motivation a Better Explanation of Nonprofit CareerPreferences Than Government Career Preferences?” Public Personnel Management, vol. 45, no. 4, 2016, pp. 405–424., doi:10.1177/0091026016676093. 
• Candid. “Study Finds Wide Disparities in Salaries of 'Key' Nonprofit Staff.” Philanthropy News Digest (PND), June 7, 2019. http://philanthropynewsdigest.org/news/study-finds-wide-disparities-in-salaries-of-key-nonprofit-staff.
• “Compensation for Nonprofit Employees.” National Council of Nonprofits. Accessed November 12, 2019. http://www.councilofnonprofits.org/tools-resources/compensation-nonprofit-employees.
• Fund the People, May 29, 2019. http://fundthepeople.org/.
• Haddad, F. Duke. “Henry 'Hank' Rosso: The Impact of a Legend.” NonProfit PRO, April 28, 2017. https://www.nonprofitpro.com/post/henry-hank-rosso-impact-legend/.
• “History of This Career.” Careers with Nonprofit Organizations: Working for Charitable and Philanthropic Organizations: Executive Positions in Administration, Advocacy, Fundraising, Public Relations, Institute for Career Research, 2005, pp. 5–6.
• Kunreuther, Frances, and Thomas-Breitfeld, Sean. “Race to Lead: Confronting the Nonprofit Racial Leadership Gap.” Race to Lead: Confronting the Nonprofit Racial Leadership Gap, 2017.
• Lenkowsky, Leslie. “Robert Payton's Legacy: How to Educate Nonprofit Leaders.” The Chronicle of Philanthropy. The Chronicle of Philanthropy, May 25, 2011. https://www.philanthropy.com/article/Robert-Payton-s-Legacy-How/158357.
• Nelson, Erin. “They Pay People to Work Here? The Role of Volunteering on Nonprofit CareerAwareness and Interest.” Journal of Public and Nonprofit Affairs, vol. 4, no. 3, 2018, p. 329,doi:10.20899/jpna.4.3.329-349.
• Newhouse, Chelsea L., and Lester M. Salamon. “The 2019 Nonprofit Employment Report.” The 2019 Nonprofit Employment Report, January 2019. ccss.jhu.edu/wp-content/uploads/downloads/2019/01/2019-NP-Employment-Report_FINAL_1.8.2019.pdf.
• “The State of Diversity in Nonprofit and Foundation Leadership.” Battalia Winston, May 2017. http://www.battaliawinston.com/wp-content/uploads/2017/05/nonprofit_white_paper.pdf.
• “Who We Are.” The Giving Institute. Accessed November 12, 2019. http://www.givinginstitute.org/page/about.
• “Who We Are.” Apra. Association of Professional Researchers for Advancement. Accessed November 12, 2019. http://www.aprahome.org/page/about-apra.

This briefing paper was authored by a student taking a philanthropic studies course in 2019 at The Lilly Family School of Philanthropy.