Nonprofit Management for Social Workers: Navigating Funding and Organizational Leadership

With their high level of expertise in community resources, community support, counseling, and advocacy, social workers are endowed with a unique capacity to fill roles in mission-driven organizations, such as nonprofits. In nonprofit leadership roles, social workers have the opportunity to work directly with clients, doing micro social work, or at a broader level, helping advocate for systemic change at a macro level.

In these positions, social workers can effect positive change in the world by entering a variety of nonprofit segments, including:

Advocacy
Community service
Social assistance
Healthcare
Religious and spiritual institutions
Civic organizations
Education services
Museums
Universities

In addition, opportunities in the nonprofit sector are growing. Research from Philanthropy Roundtable shows that, since 2000, the number of nonprofit organizations in the United States has increased by 36%, and the segment of nonprofits that experienced the most growth was public and social benefits and human services organizations. In 2022, more than 300,000 nonprofits employed 12.8 million people, according to data from the U.S. Bureau of Labor Statistics (BLS). Plus, the sector continues to grow with an estimated 7% annual increase in jobs estimated between now and 2033. That's 3% higher than the average growth rate for all occupations.

Understanding Nonprofit Management

Whether you're about to graduate with a degree in social work or are still weighing your education options, taking the time to imagine how nonprofit management fits into your future goals could set you up on a path to make a positive difference in your community and around the world.

The Role of Leadership in Nonprofits

The effectiveness of a nonprofit organization largely depends on its leadership, especially its executive director. At the helm of an organization, a nonprofit's executive director wears many hats and has several responsibilities, including:

Outlining a visionary strategy for the nonprofit's future, mission statement, statement of need, and value propositions
Board development and fostering board engagement
Communicating with the board of directors, taking their advice, and executing their strategy
Developing programs and activities
Ensuring mission alignment
Creating alignment throughout the organization, its staff, board of directors, and stakeholders
Developing stakeholder engagement strategies
Taking the reins of fundraising strategies by overseeing the development staff
Leading community outreach initiatives
Financial management and financial reporting
Optimizing resource allocation for capacity building and financial strategy for long-term sustainability
Satisfying compliance requirements
Grant writing and management
Human resources and employee management
Volunteer management
Operational management and technology oversight
Seeking and fostering community partnerships

The executive director, of course, doesn't have to handle every aspect of an organization's operations on their own; this role is one of collaborative leadership supported by knowledgeable staff and volunteers who help manage the daily tasks and operations that are necessary for achieving the organization's mission and making an impact. The executive director is primarily responsible for ensuring that all aspects of an organization operate around a unified, mission-centered strategy and vision.

Additional leadership roles in nonprofit organizations include:

Program directors
Development directors
Community outreach specialists
Policy writers
Advocacy specialists

Most social workers excel at nonprofit mission and program development as well as advocacy and community outreach. Nonprofit management, however, can present some challenges (or learning opportunities) for social workers:

Financial Management

Nonprofit financial management can be especially challenging. While nonprofit organizations aren't traditional businesses, they must still run like traditional businesses. In fact, nonprofit organizations are often held to even higher standards than for-profit businesses in terms of financial transparency and accountability.

Nonprofit financial management presents budgeting challenges where organizations face high expenses and limited resources. They rely on a range of diverse funding sources, in addition to fund categories such as restricted and unrestricted funds. This means that individual programs, grants, and funding channels often require their own budgets.

Thus, it's essential that nonprofit leaders develop their financial literacy skills, understand how to read and use nonprofit financial reports, and establish sound nonprofit governance policies and procedures.

Human Resources Management

Executive directors are typically responsible for recruiting, hiring, motivating, managing, and retaining employees. Nonprofit leaders face challenges like staff shortages and employee burnout. Human resource management comes with its own set of employment laws and requires team-building skills that a social worker who is new to a leadership role might not have developed yet.

Ethical Considerations

Under the pressures and constraints of the nonprofit sector, leaders must navigate complex systems where they are often forced to make difficult decisions while balancing individual needs with the demands of the greater good. Through their leadership role, the executive director must focus on the nonprofit's mission while also ensuring ethical management, accountability, and transparency to nurture public trust.

Outsourcing Non-Core Functions

In organizations with the budgetary capacity, outsourcing non-core business management functions can be an excellent solution for overcoming some of these challenges. Many nonprofit organizations save money and benefit from using outsourced professional bookkeeping and accounting services, human resources management services, IT management, and external legal counsel. Savvy executive directors can often team up with local professional service providers to access some of these essential operations for free through the in-kind donation of services and expertise. By connecting a nonprofit with the right resources, executive directors can lighten their load and supplement their skills with professional expertise.

Building a Solid Funding Base

Grant Writing Basics

Successful grant writing for nonprofits is essential to operations and mission impact. About 33% of nonprofit funding comes from grants, and that figure only includes government-based grants and not grants awarded by private foundations. With such a significant portion of funding coming from a single channel, nonprofit leaders must develop solid grant-writing skills.

Grant writing is a complex endeavor that can be a full-time position in a nonprofit. Leaders can benefit from understanding some basic grant writing tips and tricks for creating award-winning grant proposals:

Read the entire grant description before applying so that you can tailor your proposal to the opportunity.
Be prepared to provide copies of your organization's financial statements.
Specifically explain how the grant funding would help you accomplish your mission or expand your impact.
Describe your plan for using the funds to achieve your goals; this should entail a strategy, budget, key personnel, and tools.
Concretely describe the impact the funding will have on your organization and your mission.

Budget Planning and Financial Oversight

Executive directors work with their board of directors and any financial committees on budgeting, planning, and financial oversight. This aspect of nonprofit leadership touches every part of the organization — from compliance, human resources management, and nonprofit marketing strategies to donor relations and fundraising strategies for nonprofits. Operational efficiency, productivity, and smart spending are directly related to mission impact.

Capacity building for nonprofits largely focuses on maximizing the mission-related ROI of every dollar spent. This can be achieved through savvy financial planning and budgeting, detailed grant management, thorough data collection and reporting, and a back office that's equipped with tools and technology to help you track key metrics for program stack ranking and impact measurement. A nonprofit's financial management should empower executive directors to make data-driven decisions to maximize impact.

Stakeholder Engagement and Community Outreach

High emotional intelligence is a critical skill for social work professionals and in nonprofit leadership alike. Nonprofit leaders are responsible for many people-centered responsibilities (such as building extensive networks of stakeholders). Having the ability to manage, understand, recognize, and even influence emotions in yourself and others can help nonprofit leaders develop strong relationships within their networks.

Collaborating With Donors and Sponsors

Donor relationship management is an essential component of nonprofit fundraising, and the executive director is responsible for creating, cultivating, and nurturing relationships with donors and corporate sponsors or partners. These relationships are essential to donor acquisition, retention, and giving.

Volunteer Recruitment and Management

Executive directors are responsible for volunteer coordination and the development of strategies for engaging the community to recruit volunteers. While nonprofit organizations have paid employees, they rely heavily on support from community volunteers. Volunteers can help execute the mission, educate the community, raise money through peer-to-peer fundraising efforts, or help run fundraising events.

Developing a Strong Organizational Structure

Nonprofit best practices should support a solid organizational structure by defining governance practices, facilitating strategic planning, and creating sound operational policies and procedures.

Board Governance and Strategic Planning

A nonprofit executive director works with the board of directors to develop, implement, and execute strategies. The board also oversees the director's performance and verifies compliant, ethical operations. To ensure sound governance and oversight of all strategies and operations, the board should:

Record and maintain detailed minutes of every meeting.
Conduct an annual review of policies.
Routinely review the organization's finances.
Review the annual report (IRS Form 990).
Create a public record of the most recent annual reports and tax-exemption documents.
Review and approve the executive director's compensation and benefits.
Work with the executive director to create and approve an annual budget.
Assist with goal-setting and strategic planning to carry out the mission and work toward goals.

Operational Policies and Procedures

The annual report filed with the Internal Revenue Service (IRS) to maintain tax-exempt status also requires an organization to disclose whether or not they have the following written policies and procedures:

Executive directors work with the board to develop, write, implement, review, and revise these policies.

Measuring Impact and Sustainability

Program Evaluation and Data Management

In nonprofit organizations, data management extends beyond finances. Social workers working in nonprofit leadership roles will need to learn to use enterprise-wide data collection and reporting tools to facilitate sound metric tracking and program evaluation.

Carefully collecting data on expenses, programs, events, services, and beneficiaries enables executive directors to evaluate the mission impact of their programs. They can then rank programs in terms of impact and make decisions regarding which programs deserve an increased focus, which require improvement, and which could potentially be cut.

Long-Term Growth Strategies

Long-term growth strategies in nonprofit organizations require foresight, forecasting, and a high level of planning. As an organization grows, its executive director will need to implement strategies for expansion. This may include appropriately timing the hiring of new staff, accounting for the increase in expenses that occurs with organizational growth, and acquiring new sources of funding to cover these costs.

To facilitate growth, nonprofit leaders can begin by setting SMART goals and outlining the steps that will need to be taken along the path of achievement.

Do you aspire to make a positive difference in your community and the world? Pursuing a bachelor’s or master’s degree in social work can help you step into a change-making, leadership role in a nonprofit organization.

At Indiana Wesleyan University, students become equipped to take on any challenge or mission they choose through a well-rounded education that fortifies them academically, spiritually, socially, and emotionally. To discover available educational opportunities in social work, we encourage you to start the next leg of your journey by requesting more information today.

Sources

https://www.bls.gov/ooh/community-and-social-service/social-workers.htm

https://joblink.socialworkers.org/career-resources/navigate-social-work-9/understanding-micro-mezzo-and-macro-social-work-practice-30

https://www.bls.gov/opub/mlr/2024/article/nonprofits-a-look-at-national-trends-in-establishment-size-and-employment.htm#:~:text=(See%20appendix%20table%203.),jobs%20were%20in%20nonprofit%20organizations

https://www.philanthropyroundtable.org/resource/growth-of-the-nonprofit-sector-more-charities-better-solutions/#:~:text=Since%202000%2C%20the%20number%20of,public%20and%20social%20benefit%20organizations

https://www.bls.gov/opub/ted/2024/nonprofits-accounted-for-12-8-million-jobs-9-9-percent-of-private-sector-employment-in-2022.htm

https://fundingforgood.org/the-10-main-responsibilities-of-a-nonprofit-executive-director/

https://headstart.gov/fiscal-management/article/most-common-financial-management-risks-facing-nonprofits

https://www.councilofnonprofits.org/running-nonprofit/employment-hr/managing-nonprofit-employees

https://nonprofithub.org/outsourcing-for-nonprofits-what-it-is-and-why-it-matters/

https://www.councilofnonprofits.org/nonprofit-champion-november-27-2023

https://donorbox.org/nonprofit-blog/grant-proposals