In the aftermath of the 2008-09 recession, many individuals worried about their short-term and long-term financial security. In the nonprofit and philanthropic sector (hereafter referred to as “the sector”), there is speculation that such concerns among its workers are undermining the sector’s ability to attract and retain the new talent required to be successful, while simultaneously preventing senior leaders and older employees from retiring. Anecdotal evidence indicates that sector employees feel unable to prepare financially for personal goals, such as comfortable retirement or an “encore career.”1 But objective data is lacking to evaluate the scale of such sentiments and resulting impact. The sector faces additional pressures with demand for services rising at a time when public and private contributions have fallen.
The TIAA-CREF Institute and Independent Sector collaborated to examine the issue of lifelong financial security among the sector’s workforce and its impact on the leadership and effectiveness of nonprofit organizations. To that end, the TIAA-CREF Institute and Independent Sector developed the Survey on Financial Security in the Nonprofit and Philanthropic Sector to better understand the perspectives of full-time employees regarding their personal finances and its impact on their job satisfaction and career decisions.
In July 2011, 1,000 full-time employees in the sector were surveyed by phone. Respondents identified themselves as working for a nonprofit organization, such as a charity, foundation, museum, endowment or philanthropic organization. The demographics of those surveyed appear in Figure 1, on page 13. The sample was evenly distributed across the early- (age 21–34), mid- (age 35–49) and late-career (age 50 and older) stages. The sample accounted for different occupational groups within the sector as well. Those in executive leadership positions comprised 14% of the sample, management 21%, professionals 32%, and administrative staff 23%. The remaining 11% were in other positions or declined to specify their position. Just over one-half of those in the sample were married; two-thirds of respondents were women.
This final report draws upon the survey results2 and discussions at two related convenings where survey findings were presented: Financial Security and the Leadership Pipeline, convened by TIAA-CREF and Independent Sector on April 3, 2012, and the CEO Summit Session with TIAA-CREF President and CEO, Roger Ferguson, at the 2011 Independent Sector Annual Conference. Both gathered sector leaders to examine the financial security issue, identify roles for leaders, and consider next steps.
Summary of Findings
The majority of full-time employees in the sector are extremely or very satisfied with their current employment. While their career decisions are motivated less by financial considerations and more by personal satisfaction with the mission of their work, it appears that compensation is nonetheless a nagging issue for many. Almost one-half have considered leaving the sector for better compensation elsewhere. Career advancement opportunities are also a concern among the nonprofit workforce.
Almost one-half of sector employees are not satisfied with their ability to prepare financially for retirement. More than 40% do not feel that they are accumulating sufficient financial resources to ensure their long-term financial security. At the same time, over three-quarters report access to an employer-sponsored retirement plan or plans; almost one-third have access to a defined benefit pension plan and more than two-thirds to a defined contribution plan, such as a 403(b) plan.
What drives dissatisfaction with financial preparations for retirement? It appears that an inability to save enough concerns sector workers. While 76% are currently saving for retirement, less than 20% of these savers are extremely or very confident that they are saving the right amount.
Household debt is an issue for some – 20% of full-time employees in the sector classify their level of household debt as a major problem and 38% classify it as a minor problem. Those with a major debt problem are the least likely to be saving for retirement.
By comparison, research focused on the perceptions of financial security among all U.S. workers suggests that while some of these issues are specific to the nonprofit sector, some concerns are prevalent across sectors.3
Key survey findings
Satisfaction and career advancement
• A majority (59%) of nonprofit employees are very or extremely satisfied with their current employment. Personal satisfaction with the mission of their work is an important driver in these employees’ career decisions, with more than 90% saying it is a strong consideration.
• Nonprofit employees also deem salary and career advancement important. Sixty-seven percent of women and 47% of men reported salary as a strong consideration. Satisfaction with career advancement opportunities varies with career stage, but overall only 30% are very or extremely satisfied and 36% are somewhat satisfied.
• Almost one-half of employees have considered leaving the sector for better compensation elsewhere.
• Forty-two percent of employees feel they are not accumulating sufficient financial resources to ensure their long-term financial security.
• Most employees are covered by a retirement plan at work: 30% have access to a defined benefit plan and 69% have access to a defined contribution plan. More than three-quarters of those with access to a defined contribution plan make contributions.
• However, 45% of sector employees are not satisfied with their ability to prepare financially for retirement.
• Household debt is likely a factor contributing to a lack of confidence regarding saving for retirement; 70% of early-career stage employees and 60% of mid-career employees consider their level of household debt to be a problem.
Behind the uncertainty
• One-third of sector employees have received retirement planning advice within the past three years.
• Two-thirds have not tried to determine how much money they will need to accumulate so that they can live comfortably in retirement.
• Among savers who are confident that they are saving the right amount, one-third have not attempted such a calculation.
The survey results found that while 60% of full-time employees are extremely or very satisfied with their current employment, concerns regarding compensation, debt, personal finances and retirement persist.
These concerns are important and deeply affect workforce management at every stage: attracting, retaining, and rewarding.
Behind the commitment and passion among sector leadership and staff drive the success and sustainability of nonprofit and philanthropic organizations. The challenges the sector confronts make fostering leadership and cultivating a robust and diverse human resource pipeline a key strategic focus.
The survey results make clear that financial security must be given due attention in enabling organizations to attain and support talent throughout the leadership lifecycle, but that no single metric can respond to every question about leadership and human capital management. Independent Sector and TIAA-CREF are committed to providing the tools and information to focus the nonprofit and philanthropic sector on these issues. Through this partnership, both organizations intend to more effectively take action to help the nonprofit workforce thrive.
To view the rest of the article visit: http://www.tiaa-cref.org/public/pdf/A68420-212906_JointStudy_Bro_vs2_final5_n.pdf n TIAA-CREF Institute is a division of Teachers Insurance and Annuity Association (TIAA), New York, NY.
© 2014 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY 10017.
1 The term “encore career” originated with Marc Freedman and his organization, “Encore Careers.” It refers to “jobs that combine personal meaning, continued income and social impact – in the second half of life.”
2 Except where noted otherwise, data in this report is from the 2011 Survey on Financial Security in the Nonprofit and Philanthropic Sector.
3 Information on these sources can be found in the “Works Cited” section.
This article was written by TIAA CREF, various authors