Understanding Conflict in Nonprofit Organizations

by Jill Sarah Moscowitz

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The nonprofit sector in America employs a steadily increasing segment of the country’s working population. In recent years, the average annual growth rate in employment for nonprofits (2.5 percent) was significantly higher than for business (1.8 percent) or government (1.6 percent). In the coming years, more growth is forecasted specifically in the areas of health services and social/human services. As the baby boomer generation ages, reliance on health and social services will continue to grow as will reliance on healthy non-profits to deliver these services.

Living Organism

Nonprofits come in all shapes and sizes ranging in budget sizes of less than $500,000 to over $1 billion. They are advocacy organizations, health and social services agencies; arts, cultural, educational and religious institutions; nongovernmental organizations, and more. Their common purpose is simple: to serve. However, their ability to serve can be hindered if there is internal conflict in the organization. Like a living organism, disease in one part of the organization can have an impact on the whole. When the organization suffers, so may the community it intends to serve.

One might expect there to be less conflict in nonprofits because they are mission-driven and therefore create a labor-of-love work environment. But conflicts arise in nonprofits due to a number of factors such as unclear lines of communication, issues of compensation and financial transparency, competing philosophies and/or vision for the organization, interpersonal differences, issues related to diversity or lack thereof, and change due to organizational growth. Staff members, managers, executives, even members of the Board of Directors are all potential parties to workplace conflict.

Nonprofits may be hit harder by conflict than corporate or government agencies where integrated conflict management systems are more readily available. In their 2006 Annual Study, the Center for Nonprofit Success surveyed approximately 1,700 nonprofit executives or board members nationwide. Sixty-two percent of the respondents indicated that their organization possessed established conflict resolution procedures, but seldom put them to use. Unfortunately, many nonprofits simply lack the financial padding, operational capacity and human resources to manage conflict in a systematic fashion.

Survival Environment

Like other organizations, the economic environment substantially impacts nonprofits. For example, nonprofits in the social services sector have historically relied on government funds for a majority of their budget. Changes in funding streams have caused some nonprofits to “follow the money”. New programs are developed based on availability of grant money – even if the programs do not necessarily serve the community’s needs. This can cause problems related to over-diversification of the organization’s services. Changing demands in service delivery and job requirements can cause frustration for direct service staff, leading to decreased productivity and increased staff turnover.

According to the Center for Nonprofit Success survey, only 58 percent of all respondents reported that they had sufficient funds to run their programs effectively. The majority of respondents reported that they rely largely on individual contributions to raise funds. Increasingly, nonprofit executives are called to devote more time to developing relationships with donors. This results in less time for administrative and operational issues including the management of conflict when it arises.

Conflict Catalysts within Nonprofit Organizations. Nonprofits are unique workplaces because they are mission-driven (not profit-driven), governed by a volunteer Board of Directors; and can be largely influenced by the founder’s vision. These very qualities that make nonprofits unique also serve as underlying sources of conflict. Below is a description of some of the distinguishing features of nonprofit organizations and examples of how they might provide a basis for potential workplace conflict.

Mission-Driven. From top to bottom, staffs of nonprofit organizations are driven by the organization’s cause. However, this passion to serve may overshadow the organization’s ability to function as a whole toward achieving its mission. While a chief executive may feel passionate about raising funds to keep the doors open, the direct service providers are more likely to feel passionate about providing the highest quality services to their clients. For example, in a nonprofit community mental health center, the chief executive secures a multi-million dollar contract with an insurer. In order to satisfy the contract with the insurer, paperwork and administrative requirements increase for direct service providers. The staff becomes frustrated and resentful because the additional paperwork duty reduces the available time for direct care for their clients. This leads to decreased productivity, creating a conflict between the supervisor and front line staff. Both are focused on what they believe is necessary to fulfill to organization’s mission but fall short in recognizing the value of the other’s role. The “mission driven” culture actually serves as a catalyst to the organizational conflict. A dispute resolution professional possesses the ability and vision to facilitate the parties’ dialogue to identify options on how the agency can function more as whole and less as a collection of individual parts.

Founder’s Syndrome. Nonprofit organizations are birthed and usually nurtured by a founder or group of founders. The founder has invested time, emotional commitment and perhaps money toward the success of the organization. Founder’s syndrome occurs, usually in smaller nonprofits, when a founder (or other dedicated steward of the organization) has unparalleled authority as a decision-maker. It is evident that the organization is not run by an executive or by a team of managers and staff. The founder runs it. For example, a founder appears in the office and makes direct demands of the staff, by-passing the administrative authority of the chief executive. Clearly delineated roles and responsibilities for the founder, the executive and the staff are lacking. Conflict arises when the executive director feels unable to effectively administer the organization’s programs and staff become frustrated with feelings of being micromanaged. The founder unintentionally contributes to the conflict, out of fear that all their hard work will go undone if they relinquish control. An executive conflict coaching approach with the founder can generate options for addressing the future health and security of the organization, for example through succession planning. This in turn has greater potential for reducing the conflict experienced by the executive or staff around lines of authority and feelings of micromanagement.

Board Conflict. The Board of Directors holds ultimate responsibility for the organization regarding governance, fiduciary matters, and hiring or firing of the chief executive. However, many nonprofit organizations overlook the need for orientation or training for Board members. In the long run, this can be detrimental to the organization. For example, a member of a small Board who happens to be the agency’s largest donor, has decided to leave the Board because of a difference in opinion regarding the vision for the organization’s future. The Board has many new members and evidence exists that they are challenged in their skills in collaborative decision-making. The conflict appears on the surface as a difference in vision, but the underlying problem is that the Board lacks the skills to make crucial decisions collaboratively. Developing a more functional decision-making process for major decisions of the Board could turn this difference in opinion into a potential gain for the organization. Developing skills among board members in consensus building creates a process in which dissenting opinions may be viewed as helpful concerns. When those concerns are then addressed and resolved, the board achieves a stronger final decision.

Conflict as Catalyst for Change

Rather than being an enemy of the organization, could workplace conflict be an indicator of underlying organizational issues that are calling out to be addressed? According to Larry Greiner in his classic article entitled, “Evolution and Revolution as Organizations Grow” (Harvard Business Review, July-August 1972), organizations have a growth cycle and a “crisis” causes the move from one developmental phase to the next. Disgruntled staff, low productivity, high turnover, volunteer attrition and dysfunctional meetings may not reflect a “crisis” situations but they could certainly be viewed as a call to attention. In the above examples, conflict may be an indication of underlying organizational issues, which once addressed, can allow the organization to move to a higher level of effectiveness.

Dispute resolution practitioners represent a diversity of professionals such as mediators, ombudspersons, HR specialists, private practitioners, consultants, peer-mediators, facilitators and more. Some work directly with organizational leaders and others work in integrated conflict management systems. Regardless of the size of the organization or the internal/external role of the dispute resolution practitioner, curiosity regarding workplace conflict may identify opportunities for organizational growth. This curiosity, particularly in the nonprofit environment, impacts the health of the organization as well as the health of the community it serves.

Jill Sarah Moscowitz is a court-appointed employment mediator in New Jersey. She also works as an associate consultant with a NYC-based executive search firm that serves the nonprofit sector.