The Hidden Leadership Gap Holding Nonprofits Back (And What They Can Do About It)

When most nonprofit leaders think about sustainability, they think about funding, financial resilience, and program delivery.

 

But according to new research, many organizations are overlooking one of the biggest risks to long-term success: their managers.

 

Not because managers lack commitment or passion. But because too many are promoted into leadership roles without the preparation, coaching, or ongoing support needed to succeed.

 

This negatively affects fundraising performance, staff engagement and retention, organizational culture, and ultimately, the mission.

 

The Leadership Gap No One Is Talking About

Brenna Holmes Advisory Consulting, together with Katy Jordan Consulting and Incubate Growth Consulting, recently released The 2026 Nonprofit Management Readiness Report: The Hidden Risk Undermining Nonprofit Impact, combining interviews with nonprofit leaders, survey responses from 88 nonprofit managers, and industry research to better understand how organizations prepare new managers.

 

The findings should give every executive director and nonprofit CEO pause.

 

Among the key findings:

• 95% of respondents said leadership capability directly affects whether teams achieve organizational goals.
• 77% reported that new managers are only somewhat prepared—or not very prepared—for their role.

While nonprofits recognize that great management matters, they aren’t consistently equipping people to become great managers.

 

The Costs Extend Beyond Employee Satisfaction

When we think about nonprofit performance, conversations often focus on fundraising strategy, board engagement, donor acquisition and retention, or grant readiness.

 

While these priorities are important, people management underpins every single one of them.

 

Managers influence:

• Staff retention
• Employee engagement
• Donor experience
• Cross-functional collaboration
• Organizational culture
• Execution of strategic initiatives

 

The report also highlights several sobering industry trends:

• 54% of nonprofit leaders report difficulty preventing staff burnout.
• Seven in ten nonprofit employees are considering looking for a new job.
• Research shows that 60% of new managers fail within their first 24 months.

 

For organizations already operating with lean teams and limited resources, replacing employees is expensive, and losing institutional knowledge is even more costly.

 

So, what can nonprofit organizations do to develop great managers and improve their sustainability?

 

Actionable Steps for Nonprofits to Develop Great Managers

The report recommends a few key priorities for organizations looking to strengthen their management bench:

 

1. Establish Clear Management Standards

Define what effective management looks like across your organization rather than allowing every department to develop its own expectations.

 

2. Personalize Leadership Development

Move beyond generic training and build development plans based on each manager's experience, responsibilities, and growth areas.

 

3. Move Beyond Self-Paced Learning

While nearly half of organizations offer self-paced online learning, respondents rated it among the least effective development methods.

 

By contrast, live training combined with coaching and real-time feedback was overwhelmingly viewed as the most effective approach, followed by virtual cohorts and hybrid learning experiences.

 

4. Develop Trainings Focused on Soft Skills

According to the report, strong interpersonal skills are the most important for managers to develop, with special focus on:

• Giving and receiving feedback
• Building trust and psychological safety
• Conflict resolution
• Cross-functional collaboration
• Managing up, down, and across the organization
• Strategic influence

 

Coaching and trainings should strengthen these skills to move the needle on manager performance.

 

5. Create Ongoing Coaching Opportunities

Leadership development is a continual process. Coaching, mentoring, and continuous feedback help managers build confidence over time.

 

6. Treat Management Development as a Long-Term Investment

Strong managers aren't created during a single workshop. They're developed through continuous learning, reflection, and support throughout their careers.

 

7. Consider Outside Help to Train Your Team

Nonprofit consulting firms like Brenna Holmes Advisory Consulting specialize in helping nonprofits solve challenges such as process and team optimization, finding hidden strengths and upskilling internal staff, and cultivating cross-departmental collaboration. You can learn more about her and request services at brennaholmes.com.

 

Her new joint venture, Partners On Purpose, designed the Management On Purpose Framework to help nonprofits reduce the turnover tax and solve the accidental manager dilemma uncovered in the Report.

 

Where Technology Fits Into Leadership Development

Technology can't teach empathy, it can't replace coaching, and it can't build trust between managers and their teams. But it can remove much of the administrative burden that prevents managers from actually leading.

 

When nonprofit leaders spend less time reconciling spreadsheets, manually transferring donor data, chasing reports, or managing disconnected systems, they gain something increasingly rare: time.

 

At Arreva, we've seen firsthand how unified nonprofit technology helps organizations create the operational capacity needed for stronger leadership. When fundraising, donor management, volunteer coordination, events, and reporting live in one unified platform, managers can spend more energy developing people instead of managing processes.

Technology isn't the solution to the leadership gap, but it can create the space for leaders to lead.

 

Leadership Is an Investment in Mission

One of the strongest messages from The Nonprofit Management Readiness Report is that management readiness is a core piece of organizational resilience and sustainability.

Organizations that intentionally develop managers create healthier teams, retain more talent, execute more effectively, and build stronger cultures capable of sustaining long-term impact.

 

As nonprofits continue navigating increasing demands, changing donor expectations, and ongoing workforce challenges, investing in people leadership may become one of the highest-ROI decisions an organization can make.

 

About the Research

This article summarizes findings from The 2026 Nonprofit Management Readiness Report: The Hidden Risk Undermining Nonprofit Impact, an original research report by Brenna Holmes Advisory Consulting, Katy Jordan Consulting, and Incubate Growth Consulting. The study combined in-depth interviews with nonprofit professionals, survey responses from 88 nonprofit people managers at organizations with more than $5 million in annual revenue, and published industry research to better understand nonprofit management readiness.