Budgeting for Nonprofit Executive Recruitment

By Laurie Minx
Director of Communications
The Moran Company “We Find Great Nonprofit Executives”

At the end of each year, nonprofit organizations work diligently to complete their budget planning process. Upcoming annual revenues are projected, and expenses are estimated. Most mission-driven agencies funnel the lion’s share of their resources towards programming in order to have the greatest impact on those they serve. This ensures that all short-term goals are met but often leaves very little funds left over for the organization to invest back in itself for future sustainability.

A nonprofit’s long-term goals, such as transition planning and recruitment, must also be considered when making fiscal plans for the coming year. Survey data consistently shows that three of the biggest challenges within the nonprofit sector are 1.) Hiring qualified staff with limited budget constraints, 2.) Finding qualified staff, and 3.) Finding time to recruit and interview. Fortunately, working with a qualified search firm like The Moran Company can provide solutions to the last two issues. However, only the nonprofit itself can ensure that enough resources exist to overcome the first and primary challenge related to budgetary constraints.

So be sure to set aside funds when possible each year for recruitment costs, including incentives for staff retention and expenses related to upcoming leadership transitions. If you know that your Executive Director is planning to leave or retire soon, you can budget for this change by earmarking reserve funds in a Board designated account, for example. Remember, you might need to increase the salary range for this important leadership position in order to stay competitive and attract top talent. Search firms like The Moran Company often use research and experience to help nonprofit clients determine appropriate compensation packages based on sector, agency size and location.

Also, depending on where your applicants live, you might want to be prepared to offer some level of support for relocation costs. Relocation costs, if any, vary widely in the nonprofit sector and are not as significant as in the for-profit sector. If a formal package doesn’t exist, you can quantify a capped amount that is available for this purpose.

Finally, if you know you’ll need the professional guidance of a nonprofit executive search firm to lead your recruitment efforts, you can begin to plan in advance for this important investment. Many retained search firms base their fees on one-third of the position’s first year’s salary, plus any direct expenses that are incurred as part of the search. For example, the cost of travel and job postings can add up to $3,000 give or take. Yet the peace-of-mind knowing that your entire search process will be expertly handled from start to finish, and that your new hire will be guaranteed for a year, is priceless.

If any of these numbers seem overwhelming at first, it is all the more reason your nonprofit should start budgeting for recruitment needs in advance. All of us at The Moran Company have spent decades of our careers in the nonprofit sector and understand firsthand the financial difficulties that can exist at the agency level. Yet we also know that earmarking the right funds for your annual recruitment efforts – and especially any upcoming leadership transitions – will be the best investment you could ever make back into your organization. Talented staff members are a nonprofit’s most valuable resource – and your organization is worth it.

To learn more about how The Moran Company can assist your nonprofit with an upcoming executive search, simply contact us for a free 30-minute consultation for your organization.

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© 2017 The Moran Company, “We find great nonprofit executives.” We specialize in searches for nonprofit executive directors, directors of development/fundraising staff, and other top nonprofit leadership. www.morancompany.com