Fund the People is the national campaign to maximize investment in the nonprofit workforce. Launched in 2014, it is supported by major funders including W.K. Kellogg Foundation, Ford Foundation, Kresge Foundation, Packard Foundation, Annie E. Casey Foundation and others. You can learn more at fundthepeople.org.

Talent-Value Chain in the Social Sector As part of their effort to help funders understand the value of investing in the workforce of grantee organizations, Fund the People developed the “Talent-Value Chain in the Social Sector”, a logic graph that shows how investing in staff leads to valuable results. This is also a summary of the top three reasons to invest in nonprofit talent, and shows how they are linked. It is analogous to the Value-Profit Chain in the for-profit business space, but is customized to the demands of the social sector.

Effective Management Practices Associate Satisfaction Value-Profit Chain in For-Profit Sector Excellence in Execution Effective Management Practices Associate Satisfaction Customer Satisfaction Profitability and Growth Enables Drive Drive Drives Innovative Approaches Here is the Value-Profit Chain in the for-profit, business sector. This is taken from a book called Building Profit through Building People. The primarily boxes (in orange) show how effective management practices drive employee satisfaction, which in turn drives execution and innovation. This leads to customer satisfaction, which makes for profit and growth. The supplemental boxes (shown in green) add dimension to how this process occurs. Effective management practices highlight people characteristics, corporate culture, and workplace norms. Performance is enabled through people, technology and processes. These capabilities, plus excellent performance lead to high-quality products or services, which results in customer satisfaction. And, as with all things in business, this leads to revenue coming in above costs, enabling profitability. This management construct offers an intriguing starting place for understanding how businesses can invest in their employees to create a strategic advantage, but it does not exactly apply to the social sector…. People Characteristics: • Composition • Competence • Commitment • Behavior • Culture Core Capabilities: • People • Technology • Processes Valued Customer Outcomes Revenues vs. Cost Carrig and Wright, Building Profit through Building People: Making Your Workforce the Strongest Link in the Value-Profit Chain. Society for Human Resource Management (SHRM), 2006.

Talent-Value Chain in the Social Sector Funders Invest in Grantee Staff Better Reputation, More Resources High Staff Morale and Engagement Excellent in Organization Performance Impact in Communities and Society Drives Drives Enables Drives Drives Nonprofit Investment in Staff Nonprofit management is different from for-profit management. Our inputs, processes, outputs, and outcomes are significantly different from those in the business arena. For example: Most nonprofits have inputs that are significantly more restricted (by line item, time, product, etc.) than most businesses (which have venture capital, completely unrestricted earned revenue, shareholder investments, lines of credit, etc.). This, along with cultural norms in the nonprofit sector, make it more challenging for executives to plough money, time and other investments into staff development. And nonprofits don’t see profit as an end, but rather a means toward some mission-driven social end. This makes it more complex and challenging to measure the “return on investment” for staff development in the nonprofit setting. To begin addressing these differences, Fund the People drafted our own Talent-Profit Chain that looks at the same issues in the context of the social sector. Starting with the primary (orange) boxes on the upper-left, we show the interplay between funders and nonprofits – how funder investments in grantee staff development can challenge and enable nonprofits to invest in their staff, as well as how nonprofit fundraising can initiate and encourage such investments. These investments can increase employee engagement and morale, which lead to excellent performance. This improved effectiveness leads to better programmatic results in communities, which in turn drives sustainability. The supplemental (green) boxes, again, show the components that enable these changes. A Pro-Talent culture can be rare to find In the social sector, especially in small and mid-sized nonprofits. The components here reflect Fund the People’s menu of talent-investment, and encompasses the people-systems needed for a healthy workplace primed for employee recruitment, development, retention, transition and retirement. The core capabilities that enable this culture to translate into high performance include people, programs, technology, and processes. Rising performance and capabilities yield the outcomes valued by stakeholders (the people the organization serves, those who invest in the nonprofit, etc.). While there is no simple nonprofit formula equivalent to revenue versus cost, inputs versus results seems to be roughly analogous. Pro-Talent Culture: • Recruitment • Engagement • Professional Growth • Retention • Healthy Transitions • Competence • Workplace Norms Core Capabilities: • People • Program • Technology • Processes Valued Stakeholder Outcomes Input vs. Results

Talent-Value Chain in the Social Sector Rising Investment in People: Funders and nonprofits intentionally, substantially, and continuously invest in nonprofit professionals… The preceding slides are very linear. Fund the People sees the Talent-Value Chain as more of a virtuous cycle that builds upon itself, rather than a linear chart with a clear end. So here is a summary of that cycle, emphasizing our top three reasons to invest in nonprofit talent: performance, impact and sustainability. Greater impact enables organizations to gain brand credibility and visibility, so that they can recruit even more talented staff and board members, and attract more funding from existing and new funders. Increased resources mean they have more capital to invest in their people, thus enabling the cycle to repeat.

Talent-Value Chain in the Social Sector Rising Performance: Rising investment leads to high staff motivation, morale, and ability to execute with excellence. This increases productivity and decreases burnout … Increasing investments in nonprofit people leads to higher staff motivation, engagement, morale, and the skills to execute against plans. This both decreases conditions like burnout which harm performance, while increasing efficiency, effectiveness, and overall productivity.

Talent-Value Chain in the Social Sector Rising Impact: Rising performance leads to greater achievement of program, organizational, and mission goals… Greater performance results in greater impact, as organizations are able to achieve objectives, overcome obstacles, and move their mission forward in communities and society.

Talent-Value Chain in the Social Sector Rising Sustainability: Rising impact leads to greater reputational capital among prospective staff, board members, funders, etc. This leads to more resources for rising investments in people… Greater impact enables organizations to gain brand credibility and visibility, so that they can recruit even more talented staff and board members, and attract more funding from existing and new funders. Increased resources mean they have more capital to invest in their people, thus enabling the cycle to repeat.

Talent-Value Chain in the Social Sector That is the Talent-Value Chain in the Social Sector. It is worth noting that this chain can operate at various levels. It works at the levels of the individual nonprofit professional; team; organization; network; and field of work. So, for example, at the individual level, increased investment in an individual nonprofit person can increase their personal performance, their personal impact, and their personal sustainability for the long-haul in this work. This clearly will impact the organization(s) in which that individual works. Similarly, the increased performance, impact, and sustainability of any given organization will have positive results for the networks and fields in which that organization operates. Thus, by placing nonprofit people at the center of our work, the Talent-Value Chain can improve the performance, impact, and sustainability of the social sector at all levels.

Thank you for your interest in the Talent-Value Chain in the Social Sector. To find these slides and many more resources, visit fundthepeople.org.