Business Executives Sign up to Lead Nonprofits

Nonprofits want the expertise of business executives, and many of them are signing up

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     Neil Takekawa joined the Japanese Cultural Center after a
     career that included executive posts at the Hawaii
     Superferry and Aloha Airlines.
     Photo: David Croxford

As a former top executive at Aloha Airlines, Aloha Island Air, Roberts Hawaii and the Hawaii Superferry, Neil Takekawa has had more than his share of high-flying corporate jobs, with their big salaries and big headaches.

Now, as COO at the nonprofit Japanese Cultural Center of Hawaii, Takekawa says he is enjoying life as never before. He's not making the money he once did, and the job is anything but cushy, but the rewards are immeasurable.

"The mission has to be the right one on the nonprofit side. … It has to tug at me for me to be passionate about it. At the cultural center, for example, we brought in about 1,600 kids from high-poverty, Title I schools, and, if we hadn't done this, they wouldn't have had the chance to go on an excursion at all. … You watch the laughing faces and it makes you happy."

Takekawa is part of a national and local trend in which executives from for-profit businesses are becoming leaders of charities and other nonprofits.

Kathryn Inkinen, president and owner of Inkinen & Associates, which focuses on executive job searches for local businesses and nonprofits, says nonprofits are no longer satisfied with presidents and CEOs who are simply enthusiastic about their missions – although that remains important.

"The model is changing," Inkinen says. "You need someone with certain skill sets. Boards are looking for someone with a business sense to run their operation. It is no longer an altruistic thing. They are looking for entrepreneurs, someone who can raise funds, maximize sales and run the operation like a business."

The agencies are not abandoning their missions, she says. "But if you cannot run the operation efficiently and provide services, then your clients are hurt."

Linda Lampkin, research director for the Economic Research Institute based in Redmond, Wash., which conducts salary surveys of executives, says she has seen a gradual increase in people moving from the for-profit to the nonprofit sector.

"There are some middle managers who have been laid off and want to be reemployed. Then there is an aging of the workforce in the nonprofit sector as well," she says.

Generally speaking, Lampkin says, nonprofit pay lags behind that for similar jobs at for-profit companies. Yet, the work can be just as challenging, or even harder.

"People think: I'll just retreat from the world and have this easy job," she says. "It's not so."

"I've seen more and more people interested in crossing the boundary," says Kelvin Taketa, president and CEO of the Hawaii Community Foundation. "We are the Baby Boomer generation and there is some residual idealism – Peace Corps, Earth Day, things like that. Also, I think people start entering a stage in life where they want a greater intrinsic value in the work they are doing."

However, he says, it's a mistake to think that the people in the nonprofit sector do the work simply for love.

"The complexity of running a high-performing, large nonprofit is as difficult or harder than it is to run a similar business," Taketa says. He quotes Tom Tierney, co-founder of the Bridgespan Group, which tries to link the for-profit and nonprofit communities: "The best CEO of a large nonprofit could run a Fortune 500 company, but the opposite is not true."

A Bridgespan study found that the increasing complexity and regulation of nonprofits, plus other factors, have fueled a substantial jump in the demand for highly skilled leadership.

The study, based on a survey of some 433 top nonprofit leaders, concluded that the "functional skills" to manage a complex organization are critical. But equally important is the "fit." Does the new hire understand and believe in the agency's mission?

"Cultural fit is the deal-breaker," the report says. "While functional expertise is desired and relevant, Bridgespan's study indicates that only cultural fit can seal the deal."

Hawaii Foodbank board chair Linda Chu Takayama makes that point when recalling the time the charity needed to find a new executive director 11 years ago. What the board wanted, she says, was a combination of high-level business skills and a passion for the organization's mission. They found it in long-time board member Dick Grimm, who was then GM at KGMB TV.

"Hands down, he was the best candidate," says Takayama. Grimm has been leading the Foodbank ever since.

More recently, other TV people have made the move to nonprofits. Three years ago, KGMB anchor Kim Gennaula joined the Kapiolani Health Foundation, and this summer she took over as president at Aloha United Way. Reporter Darryl Huff left KITV in June after 22 years, to join the nonprofit medical-services provider AlohaCare.

While salaries for nonprofit executives have been rising, they lag behind comparable roles at for-profit companies, say people on both sides of the divide. However, "There is no Hawaii-specific data in terms of aggregate salaries," says Hugh Jones, state deputy attorney general in charge of charity oversight. He says there is no prohibition against making as much in the nonprofit sector as in the for-profit sector, as long as the compensation is "reasonable." But reasonable for nonprofits rests on a separate set of metrics that is set by donors, clients and the IRS.

"You do more for less pay, no question about it," says John Howell, who took over at Easter Seals Hawaii in 1993 after a quarter-century with for-profit firms such as Xerox, Wang Computers and Hawaiian Telephone. Howell recently stepped down as the charity's leader, but remains on the board.

While pay for nonprofit executives has improved in recent years, he says, "It is still way behind what you find in downtown Bishop Street." 

 

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