New Report Shows Area Nonprofits Still Struggling with Workforce Recovery

LONDON, Ont, May 31, 2023 – Nonprofit employers in the London region continue to face severe human resources challenges. In new data released today, nonprofits report greater difficulty compared to business employers in finding, hiring and, especially, retaining qualified workers, continuing conditions that are likely impacting equity-denied groups that make up much of the nonprofit workforce.

Pillar Nonprofit Network and the Elgin Middlesex Oxford Workforce Planning and Development Board (EMOWPDB) have mined data from the regional EmployerOne Survey conducted in January, 2023 and compared the responses from nonprofit employers to those from businesses. After comparing the findings to a similar analysis by the two organizations last year, they find that area businesses are reporting slightly improved conditions over the past year, but area nonprofits are showing fewer signs of recovery in almost all measures. 

• Nonprofit employers were almost 10% more likely to lose staff in 2022 than for-profit employers (80% vs 72%), just as in 2021.
• Nonprofit employers reported much higher rates of employees quitting and of permanent layoffs than businesses (65% vs 48%).
• Nonprofit employers remain more concerned about employee retention at the start of 2023 than for-profit employers by a margin of 10% (63% vs 53%), up from a gap of only 4% at the same time last year.
• Nonprofit employers were less likely than businesses to identify “regular pay increases” than businesses as a retention strategy, selecting "job flexibility" (64%) and "training opportunities" (53%) even more often than in 2021 when these were also the top two, but nonprofit employers were also more likely to identify time and resources to train new and existing staff as a challenge.
• Nonprofit employers were more likely to identify COVID-19 and its fallout as a factor in persistent retention challenges.
• In selecting reasons for ‘hard-to-fill’ positions, 1 in 3 nonprofits named “inability to compete with other employers (wage, benefits, profile)” where only 16% of businesses named this as a barrier.

In a media release today, representatives from the two organizations say the data has implications for the region’s social and economic recovery and for ongoing efforts to improve the safety and prosperity of women, racialized people, Indigenous people, and newcomers. They suggest the need for greater attention to nonprofit workforce planning and development. 

“The data shows that local nonprofit organizations are having real difficulty offering stable, well-compensated work,” says Paul Seale, Pillar’s Manager of Public Policy, Advocacy, and Impact in a media release. “As a major employer and economic driver in our region and a major social driver, a struggling nonprofit sector will likely slow recovery for the whole region. And, as with all things, the effects will likely be uneven for individuals, mostly affecting the women, racialized people, Indigenous people, and newcomers that make up much of the nonprofit workforce and slowing local and national efforts to make equity-denied groups safer and more prosperous.”

According to information published in 2022 by Imagine Canada, a national charity network, women make up more than three-quarters of the nonprofit sector’s workforce; almost half of sector workers are immigrants; and nearly a third are racialized. Half of all jobs held by immigrant women are in the nonprofit sector, and almost a third of jobs held by Indigenous and racialized women are in the nonprofit sector. Local data released recently by the London Middlesex Local Immigration Partnership showed that nearly 1 in 4 newcomer women are employed in health-care, education, law, social, community and government services occupations, most of which (with the exception of government services) are likely nonprofit occupations. 

Nonprofit employers and sector advocates have identified wage disparities, precarious work, and workforce development gaps as persistent problems in the sector long before the pandemic, “so ‘the old normal’ was never great.” Seale says. “And, until recently, the sector has also had a long-standing lack of hard data to demonstrate these issues to policy-makers. We began this project to help measure the recovery of the local sector, knowing that it’s important to show concretely what gaps need attention. At a minimum, we hope it will demonstrate the need for supporting equitable work conditions, including wage parity, and a nonprofit workforce development strategy, things that Pillar advocates for at all levels of jurisdiction and that we see getting more attention, at least locally.”

The information can also help local nonprofits assess their own performance, says Chuck Lazenby, Executive Director of Unity Project, a nonprofit that helps adults struggling to escape and avoid homelessness. “We’re always in go-go-go mode and don’t have the time and resources to do this kind of analysis, so it’s really helpful to have organizations that collect and share this data. First, it’s so validating to see that our experience is part of a larger problem. It can spur us to reach out to other organizations and work on solutions together. And it can also be helpful to see where we’re doing better than average so we know what practices to continue.” Lazenby also echoes the call for workforce strategy and development. “We have incredibly dedicated long-time staff  but, if we’re not able to invest in upskilling and ongoing training, we’ll see a growing skills gap that’s not fair to them and, ultimately, makes it harder to do our best work.”

Emilian Siman, executive director of the EMOWPDB points out that with local unemployment rates at record lows, the region has a very competitive labour market. Any imbalance in organizations’ ability to compete will likely exacerbate current trends. “There are organizations in every sector that are challenged to meet their workforce needs but, while more businesses might be reaching that ‘cautious optimism’ stage we associate with pandemic recovery, more nonprofits are reporting real difficulties. Specifically, where it’s widely understood that Canada has not experienced ‘the Great Resignation’ to the same degree as the United States – and the London region is a leader in job recovery – there may still be a substantial workforce exodus happening in some sectors, in particular, in the nonprofit sector. The nonprofit organizations are critical socio-economic drivers; therefore, there is no social and economic recovery without them.”

More findings:

• As in 2021, Nonprofit employers were almost 10% more likely to lose staff in 2022 than for-profit employers (80% vs 72%), with striking asymmetries in the reasons. 
• Almost two-thirds (65%) of staff losses in nonprofit organizations were due to “quits” as compared to fewer than half (48%) for-profit organizations. This is a significant increase from 2021 when quits accounted for only one third of separations in the regional nonprofit sector, and layoffs were the leading cause of separations. 
• In this past year, nonprofit employers and for-profit employers imposed layoffs at roughly equal rates (24% vs 25%), but layoffs in nonprofits were much more likely to be permanent (12% vs 3%). 
• The high rates of separations, quits, and permanent layoffs in the nonprofit sector might be attributed to any or all of several factors – a higher proportion of contract positions in nonprofits, a mercurial funding environment including the end of most emergency relief measures, employee burnout, and lower wages – with any of these conditions potentially exacerbated by a rising cost of living for employees and the rising cost of delivering services for employers.

• In 2022, a greater percentage of nonprofit employers reported hiring an employee (90%) compared to for-profit employers (86%). For both sectors, this represented a small increase over 2021, but a continuation of the gap between sectors. Increased recruitment in either sector might be attributed to efforts to rehire for positions that were affected in previous years, which might also account for the greater need to hire in the nonprofit sector after a high number of separations in 2022. 
• As in 2021, a significantly smaller proportion of nonprofits hired for full-time permanent positions (32%) than for-profits (69%). Nonprofit organization hires were more likely to be for part-time (36% vs 14% for-profits), contract (13% vs 5%) and seasonal (19% vs 17%) positions.  The types of jobs available are worth keeping in mind with respect to difficulties attracting and hiring workers.
• 84% of nonprofits and 83% of for profits reported plans to hire in 2023, very slightly below the 2022 actuals, but the majority of respondents from both sectors also report that they anticipate their staffing levels to remain “about the same.”
• Of those anticipating change in staffing levels, the largest groups expect to increase staffing, with 1 in 4 nonprofit employers and 1 in 3 for-profit employers expecting to increase staffing by 25%.

• Nonprofit employers remain more concerned about employee retention at the start of 2023 than for-profit employers by a margin of 10% (63% vs 53%), up from a gap of only 4% at the same time last. Notably, the nonprofit sector experienced a higher rate of separations in 2022 and 2021, making the concern understandable. 
• Selecting up to 5 strategies they are currently using to encourage retention, nonprofits selected "job flexibility" (64%) and "training opportunities" (53%) as their top two tactics, even more often than in 2021 when these were also the top two. For-profit employers indicated “regular increases in salary” and “employee perks” as their top retention strategies in 2022.
• With respect to its greater retention challenges, nonprofit employers were more likely to identify COVID-19 as a factor in persistent retention challenges (48% as against only 36% for for-profit employers). 

• At the start of 2023, a worrisome proportion of both nonprofit and business employers identified workforce challenges, but nonprofits reported challenges at greater rates and at steep increases from the same time in 2022.

• The greatest difference in response comes in the responses around retaining qualified workers, with nonprofit employers choosing “very challenging” rather than “somewhat challenging” at a 10% higher rate than for-profit employers. 
• In questions asked this year, nonprofit employers also reported greater difficulty finding time and resources to train new and current employees.

• Perhaps the most striking finding is the change in year-over-year responses, with 12-15% of nonprofits reporting greater challenges at the start of 2023 than did at the start of 2022. 
• In short, outlooks seem to have improved very slightly over the last year for for-profit employers but worsened considerably for nonprofit employers.

• With respect to hard-to-fill positions, we should be concerned that greater than half of both nonprofit and for-profit employers reported difficulty in staffing some positions, just as they did in last year’s survey. 
• Just as in 2021, nonprofit employers were more likely than for-profits to identify “inability to compete with other employers (wage, benefits, profile)” as a reason for hard-to-fill positions. This reason was one of the two most selected this year, chosen by 34% of nonprofits (along with “lack of qualifications (education level/credentials) after being the second most chosen reason last year (by only 21% of nonprofits).

• Non-profit employers reported a more positive perception of the availability of qualified candidates in the London region compared to for-profit employers. A greater proportion (42%) of non-profit employers rated the "availability of qualified workers" as "good", while only 24% of for-profit employers shared this opinion. Furthermore, fewer non-profit employers rated the "availability of qualified workers" as "poor" in comparison to their for-profit counterparts, though they were also less likely to choose “excellent” (1% vs 8%).

• Fewer than half of nonprofits and only 1 in 3 for-profit employers have plans in place to deal with projected retirements over the next 3-5 years.

Pillar and the EMOWPDB look forward to sharing this information and future collaborations – including year-over-year analysis – with governments and with stakeholders across all sectors seeking an equitable social and economic recovery for the region.

The Workforce Planning and Development Board report with illustrations is available on their website here, along with aggregate data from an EmployerOne Results Reveal earlier this year.

Pillar and the EMOWPDB collaborated previously in 2022 on analyses of last year’s EmployerOne Survey, focused on care economy employers and nonprofit employers.

For more information about the new report or media inquires, contact:

Paul Seale, Manager, Public Policy, Advocacy, and Impact, Pillar Nonprofit Network, 519-859-7672, pseale@pillarnonprofit.ca

or

Emilian Siman, Executive Director, Workforce Planning and Development Board, 519-672-3499 x 103, emilian@workforcedevelopment.ca