Nicky Goren, president and CEO, Eugene and Agnes E. Meyer Foundation

Most nonprofit executive directors have experienced running an organization where cash is tight. In my first foray as a nonprofit executive director, I walked into an organization with unrealistic revenue projections and an operating budget tied to those projections. This meant that we were facing a potentially dramatic shortfall. And so, in my first year, my goal shifted from how to take the organization to the next level, to how to cut costs to give us the space we needed to plan for the future. That meant all discretionary spending was slashed or eliminated and only the absolutely “necessary” expenditures remained. Those tough decisions did help us stabilize and reorient the organization–but at a cost.

Like most executive directors, I believed investing in the staff of the organization and building and retaining talent were critically important, and that leadership and professional development investments were smart investments. I had greatly benefited from professional and leadership development opportunities in my prior roles in the federal government, which contributed to growing my skills and expertise, and positioned me for the leadership opportunities that eventually came my way. But as an executive director struggling to make the numbers work, I viewed it as something that could be cut if necessary to stay in budget. If it was a choice between paying staff and leadership development, the answer to me was clear.

I greatly benefited from professional & #leadership development opps, which contributed to growing my skills & expertise and positioned me for the leadership opps that eventually came my way. ~@nickygoren, @meyerfoundation Click To Tweet

This is a choice that many executive directors–especially those operating with little margin for error financially–are forced to make. They will often rationalize leadership development as important but less urgent than other expenditures, including expenditures for other types of capacity building. I would guess, for example, that many executive directors would prioritize capacity building for fundraising over professional and leadership development. And yet, data from the Eugene and Agnes E. Meyer Foundation’s capacity-building investments over a fifteen-year period show that non-financial related capacity building–including professional and leadership development–had a greater positive impact on the organization’s revenue than financial-related capacity building. And still, we too often short-change the areas that actually might have the biggest long-term impact.

At the Meyer Foundation, where I currently serve as president and CEO, we have long believed in providing maximum flexibility to our grantee partners via general operating support and in dedicating funding to capacity building–including for professional and leadership development. We do not view these activities as “overhead,” but as core to any organization functioning at a high level. Meyer’s organizational effectiveness grants program (formerly known as the Management Assistance Program), together with our cohort-based training and leadership development for nonprofit leaders, boards, and their staff, has been core to our work and has helped transform the nonprofit landscape, particularly in the District of Columbia, over the last several decades.

We view capacity building–including professional & #leadership development–not as “overhead,” but as core to any #nonprofit organization functioning at a high level. ~@nickygoren, @meyerfoundation Click To Tweet

We have numerous examples of organizations for whom Meyer was among their first funders, who then strategically availed themselves of our support for capacity building–either through a grant or through participation in one of our cohort trainings–and who are now best-in-class or have scaled from a church basement to a full-fledged, high-functioning organization–at least in part due to those investments. One example includes Friendship Place who, in addition to other types of funding, received a significant capacity-building investment in human resources and professional development training from Meyer. Over the years, Friendship Place has grown their budget from under $1 million in 2010 to over $11 million today. This type of growth, scale, and excellence would not happen without some focus on leadership and professional development for staff and investment in human capital. Whether through our training in collaboration with CompassPoint for new executive directors, our partnership with BoardSource related to board-CEO relationships, or our more recent partnership with Bridgespan who has worked to develop broadly-defined leadership teams with targeted professional and leadership development–these types of investments in building the leadership and talent of organizations continue to have enormous impacts for the organizations and, therefore, for the region. It’s through these types of investments that we help build resilient, sustainable organizations who can produce better and bigger results for people and communities.

Investments in building the #leadership & talent of organizations help build resilient, sustainable organizations who can produce better & bigger results for people & communities. ~@nickygoren, @meyerfoundation Click To Tweet

Funders need to get away from the notion that this type of capacity-building investment does not directly support programs. In so many nonprofits, staff ARE the program–providing the services or leading advocacy campaigns. Intentionally and explicitly strengthening leadership and staff is the work that needs to be done for programs to succeed. I often hear the idea that if we just provide general operating support, then the executive director has the freedom to spend that on whatever is most important. In some ways, that’s true. But the reality for most executive directors is that they have so many competing demands and rarely enough funding; it’s always a zero-sum game and there are rarely easy tradeoffs. Dedicating funding specifically to support building and retaining talent–including the executive director–actually gives the organization the freedom it needs to use the funding for that purpose.

Intentionally and explicitly strengthening #nonprofit #leadership and staff is the work that needs to be done for programs to succeed. ~@nickygoren, @meyerfoundation Click To Tweet Dedicating funding to support building and retaining talent – including the executive director – actually gives the organization the freedom it needs to use the funding for that purpose. ~@nickygoren, @meyerfoundation #nonprofits Click To Tweet

As Meyer moves forward with a more intentional focus on racial equity, we will be looking for ways to further investment in the development of nonprofit leaders of color in order to reach those who are often overlooked for support, development for network leadership and community organizing, and building the capacity of leadership teams. We will also be supporting the development of racial equity competencies for leaders and staff. We have always believed–and continue to believe–that these types of capacity investments are priceless; without them nonprofits are hampered in their ability to grow, thrive, and be all they can be for the communities with which they work.

Nicky Goren (@NickyGoren) is president and CEO of the Eugene and Agnes E. Meyer Foundation, which pursues and invests in solutions that build an equitable Greater Washington community in which economically disadvantaged people thrive.