Think you know what it takes to be a great nonprofit leader? Think again. A recent Australian study shines a light on the attributes that make a top-shelf community executive. Henriette Rothschild and Yen-Yen Leong report.

Think you know what it takes to be a great nonprofit leader? Think again. A recent Australian study shines a light on the attributes that make a top-shelf community executive. Henriette Rothschild and Yen-Yen Leong report.

Chief executive officers within the nonprofit sector are operating in an increasingly challenging and complex environment. This is driven by a range of factors such as: an increasing devolution of welfare services to the nonprofit sector; constant changes to legislation; involvement in fundraising programs and commercial operations; managing human resources issues including staff and volunteers; and dealing with a board and diverse range of stakeholders.

For nonprofit organisations to not only survive, but also thrive in this context, leadership is a critical factor. A recent study in Australia by the Hay Group reveals the characteristics of nonprofit leaders with ‘the right stuff.’

Engaging Leaders Findings

The study, called Engaging Leaders, found that while many nonprofit CEOs demonstrated excellent competencies, the most outstanding demonstrated a combination of all of these four factors:

Personal Alignment with the Cause Story Telling Managing the External Interface Creating the Freedom to Lead Personal Alignment with the Cause

Outstanding CEOs within the nonprofit sector demonstrate a strong sense of “why we are here” and personal connection to the cause. This guides their actions and decision making to align with the purpose of the organisation.

They are seen to behave with a level of humility that clearly positions the cause as something greater than themselves, and are seen to make personal sacrifices or compromises in order to achieve the greater good. They are also able to harness their energy for the cause to connect with the diverse stakeholders they interact with and to unify and amplify their efforts.

Specific characteristics demonstrated by the best nonprofit leaders in this area include:

Humility Positive regard for all stakeholders


Many CEOs, especially from disability services, health and welfare organisations spoke about the broader purpose of their organisation in a manner that clearly put the needs of the stakeholders and the organisation well before their own ego and personal agenda. Leaders nominated by their peers as outstanding in this regard included Elaine Henry, CEO of The Smith Family, and World Vision head Tim Costello.

Story Telling

The most effective CEOs have a unique ability to “tell a story” that engages all stakeholders. This story brings to life the cause and purpose of the organisation and is communicated with genuineness, warmth and passion. The story helps to maintain the history and values of the organisation but also articulates a clear and compelling vision for the future.

Characteristics that differentiate nonprofit leaders who are outstanding in “story telling” include:

Use of emotion Genuineness Timing


Though a few years ago now, a good example of this was evident in Tim Costello’s approach to media relations during the aftermath of the Asian Tsunami. By expressing his emotion and sincerity, he was able to engage the public in a deeper appreciation of the human impact. Through timing the messages he was able to bring people along a journey of understanding and engagement resulting in an overwhelming public response of support.

Managing the External Interface

The most effective CEOs demonstrate leadership in their interactions with, and management of, the external environment. While all good CEOs are aware of the dynamics of their environment, the most outstanding nonprofit CEOs have a unique depth of understanding and use this insight for the benefit of the organisation.

They develop and implement a range of techniques for gathering information to better understand the needs of various stakeholders and to keep abreast of activities in the broader operating environment. They use this information to engage with a wider audience, including other nonprofits, government stakeholders and corporate partners, and to identify new sources of revenue and funding.

CEOs more able to navigate this complex environment are able to:

Understand and read stakeholders Think about a broader operating environment Demonstrate commercial savvy


Lindsay McMillan, formerly CEO of MS Society (Victoria), was nominated by many of his peers as a nonprofit leader demonstrating an outstanding ability to think and act beyond traditional boundaries. This was illustrated in a number of ways within previous organisations he led, and particularly through his leadership of the nonprofit Leadership Summits.These summits brought together private, public, and nonprofit leaders to build the capability of leaders within the nonprofit sector and strengthen the sector itself.

Creating the Freedom to Lead

The most effective CEOs are able to step away from day to day management in order to lead the organisation. This is facilitated by two key factors: the quality of their management team and their relationship with the board. In comparison with their peers, the outstanding CEOs are able to manage these relationships to ensure they are freed up to lead the organisation. The best CEOs in this regard are able to:

Make tough calls to ensure they have the right management team Invest significant time building relationships with board members Manage the politics


Many CEOs struggle with this issue. In some cases leaders do not feel empowered to make the management decisions required to change members of their executive team. One well-regarded CEO commented that her job required her to spend up to 30% of her time ‘managing the board’ to allow her to make the decisions needed, in particular to build the strength of her leadership team.

Further Insights – The Role of the Executive Team

Further work with the nonprofit sector since the Engaging Leaders study was completed reinforces the finding that the most effective CEOs actively build a great top team. To be successful a leader must utilise the full capabilities of the leadership team, since the CEO role is simply too large and complex for any one individual.

The lone ranger/hero model of leadership of the past is no longer sustainable. Effective leadership involves a strategic organisation-wide agenda and connection with a broad network of stakeholders, not a functional or service specific approach.

Arguably the single most important factor in being an outstanding organisational leader is building an outstanding leadership team.

Corporate vs Nonprofit Leaders

The findings of the Engaging Leaders study suggest that the gap between the corporate and nonprofit sectors is diminishing. In many ways the nonprofit sector has a more sophisticated and ‘connected’ approach to leading. The general requirements of leadership within the corporate environment all apply to the nonprofit sector, however the critical differences between the two lie in the unique personal characteristics of CEOs identified by the study.

Yen-Yen Leong is a consultant with the the Hay Group, and Henriette Rothschild is a director with the Hay Group

About the Research

The Engaging Leaders report is the result of an 18-month research project by the Hay Group, a global management consulting firm. The study was based on in-depth interviews with more than 30 Australian CEOs and other leaders of nonprofits, as well as a broader survey of approximately 50 leaders in the sector.