photo of Brad Odsen

The Charitable Dilemma – Part 2

[In this, the second of a series of commentaries, Brad Odsen, Executive Director of the John Howard Society of Alberta continues his examination of issues impacting charitable organizations across Canada, with particular relevance to community agencies in the human services business, including the John Howard Societies in Alberta.]

In my first commentary, I discussed the ramifications of community agencies being required to “do more with less”, every year, over at least the last 25 years. I went on to discuss the move to short-term project funding that has been growing over that same period, the restrictions that are being imposed on the funds that are received, and reporting requirements that are becomingmore and more detailed and requiring very specific expertise. Lack of resources, and inability to utilize those resources thatavailable in the manner that the Boards of community-based organizations identify as requiring attention, will inevitably lead to a crisis in the sector. In this, my second commentary, I want to explore that further, by providing an example of how funding restrictions are having a dramatic impact now, but the effects of which won’t be felt for another 5 to 10 years.

The John Howard Societies in Alberta have been very fortunate over the years in that they have had, and continue to have, highly qualified individuals serving as Executive Directors. Indeed, the length of time that some Executive Directors have been with their organizations is somewhat of an anomaly in the non-profit sector; no doubt a testament to the personal value they place on the work of the Societies.

But like in business and government across Canada, the non-profit sector, including John Howard Societies in Alberta, are facing a coming crisis at the executive management level arising from an aging workforce. Within the next 10 years, better than 60% of middle and executive level management, in business, government, and the charitable sector, will be eligible for retirement. But while business and (particularly) government arstarting to prepare for this by engaging in succession planning, the charitable sector lacks the resources, the the expertise, and the funding, to undertake this vital work.

One factor that will seriously impact the ability of charitable organizations to address the coming workforce issue is that of employee compensation. The Canadian Centre for Philanthropy has reported that employee compensation in community agencies,particularly at the managerial and executive level, is 50% or leof that for those employed with comparable responsibilacademia, business, and government. So while current management may be willing to “stick it out” to retirement, the real issue is whether community agencies will be able to recruit the highly qualified individuals that are necessary to continue the organizations' efforts over the coming years.

The issues of executive competency and executive recruitmeare inextricably tied to that of executive compensation; yet more and more funders are setting conditions on their funding that make it exceedingly difficult for charitable orgto adequately fund executive positions within the organization. This suggests an “organizational disconnectamongst funders, particularly government or government-related funders, who have recognized and are addressing workforce and succession planning issues within their realmbut maintain funding policies for charitable organizationsdirectly or indirectly1, that negatively affect the ability of charitable organizations to effectively address this critical issue.

This is exacerbated, in a sense, when one takes into account the fact, as recently revealed in the Highlights of the National Survey of Nonprofit and Voluntary Organizations2, that government funding accounts for the lion’s share of funding for community-based human service organizations (like the John Howard Societies) in Canada.

Now this is not necessarily to suggest that the executive management of charitable organizations ought to be compensated at levels comparable to those in business, nor even at the same levels as those in comparable management levels in government, health care, or academia; certainly this an element of “the value of the work” and the personal satisfaction the individual in the charitable sector derives from doing that work which offsets, to a certain extent, the lower level of compensation. But the future ability of organizations to recruit and retain individuals possessing the qualifications needed is nevertheless clearly constrained by current funding policies that restrict the ability to offer compensation that is at least near to the comparable range offered by government.

It is indeed anomalous that while more and more expertise and knowledge are being demanded of the executive leadership of charitable organizations yet, at the same time, the notion that an individual employed by a charitable organization ought not to be comparably compensated for the value they bring and the work they do continues to persist.

1 Directly when government funding is by contract with a government department/ministry (e.g.: Alberta Solicitor General) or grant from same, and indirectly when the funding source is a Board, Commission, or Foundation “controlled” by government (e.g.: Alberta Liquor & Gaming Commission; The Wildrose Foundation).

2 Statistics Canada, September 2004, Catalogue no. 61-533-XPE, Ottawa.