Experienced development directors a hot commodity

October 17, 2016 | Crain's

Good development professionals are as scarce and as expensive as "Hamilton" tickets.

The Chicago office of Facing History and Ourselves began searching for a major-gifts officer in June. It has yet to hire someone. "I was hoping we'd have an easier time," says Maureen Loughnane, Chicago office director at Facing History, which aims to stop racism, anti-Semitism and bullying through education. Despite a steady stream of "really good" applicants and seven interviews, the right candidate has yet to walk through the door.

"You get a lot of people who are interested and motivated, but not a lot of people who have the experience," Loughnane says, noting that the job pays about $70,000 a year, and that her development team must raise about $2.75 million this fiscal year.

Her experience is more the rule than the exception. Searches for fundraising professionals, tasked with raising millions or more for nonprofits, take months longer than the average C-suite search. Skilled development professionals command a premium salary, particularly if a capital campaign is on the horizon.

It's largely an issue of supply and demand. "Valuable, effective (development professionals) in this country are something everyone holds on to tightly," says Bob Carter, immediate past board chair of the Association of Fundraising Professionals, an industry group.

Meanwhile, the rising number of nonprofits has created huge demand for development professionals. In 2015, there were 363,771 active nonprofits in the United States, nearly double 1995's tally of 188,714, according to the Urban Institute's National Center for Charitable Statistics. "Everyone's always looking for the goose to lay the golden egg," says Mary Lee Montague, a nonprofit specialist and retained-search executive at DHR International, Chicago.

The average nonprofit search can take three to five months, and even longer for development officers, Montague says. The search gets tougher if an organization wants capital campaign experience. "You will really pay a premium" for those credentials, she says. Meanwhile, top candidates are on the lookout for good organizational governance, including board term limits, a give-or-get and 100 percent participation in that give-or-get.

Average salaries for development professionals range from $47,503 for nonprofits with budgets less than $250,000 to $231,633 for those with budgets over $50 million. By comparison, CEOs at nonprofits with budgets more than $50 million earn, on average, $688,748 annually, according to the 2016 Nonprofit Compensation Report from GuideStar.

KNOWING HOW TO LISTEN

Recruiters and searchers look for candidates who "can listen very carefully to the donor as they're articulating their vision to see if they can assess and seek out the match," says Joan Sherman, an adviser at Strategic Philanthropy, a Chicago-based firm that counsels donors and foundations.

They avoid bending the organization's mission to fit the donor's wishes and know when to walk away when the fit isn't right. The key is to keep the door open gracefully in hopes of securing a donation in the future, Sherman says.

Nonprofits in hiring mode find themselves sifting through lots of resumes, many from salespeople who think the skills are transferable. "A lot of people think they could be fundraisers because they have marketing or sales backgrounds," says Stephanie Lieber, vice president of development at Chicago Children's Museum, who has hired four development people in the last year. She and her six-person staff raise about $3.6 million annually, or about half of the museum's annual budget.

Rather, "you need to understand the culture of philanthropy," Lieber says. "It's much different when you're making a pitch for a mission or impact, rather than selling gum or beer."

Searches become tougher when an organization has a unique mission or fundraising challenge. That's the case at the U.S. Fund for Unicef's Midwest Regional office, where development professionals raise money for causes halfway across the globe. "There's not a ton of nonprofits doing (global fundraising) in Chicago," says Elizabeth McCostlin, managing director, Midwest region, for the U.S. Fund for Unicef.

McCostlin has three development staffers focused on major gifts and in October began the search for a major-gifts officer. The four must raise about $5 million a year to support Unicef's mission. The time frame for the hire, who ideally will have seven years of experience, is "as soon as possible," McCostlin says.

Long searches pay off because the right development person can help an organization reach its financial goals. In January, Collaboraction Theatre Company in Chicago hired a director of development, Schoen Smith, after being without one for six months. Almost immediately, Smith pulled in a $5,000 gift from an individual donor who had never given at that level.

The organization plans to raise 10 percent more from individuals over the next year. Over the next five, it wants to increase individual and foundation funding by 30 percent, says Darcy Addison, executive director at the theater, which has an annual budget of about $500,000. "Schoen is focused on moving us in that direction," Addison says.