Headhunters reshaping leadership at Minnesota nonprofits

When Kathy Gaalswyk decided to retire after three decades as founding president of the Initiative Foundation in Little Falls, Minn., board members realized they'd need a more sophisticated strategy to fill her shoes than a simple help wanted ad.

The foundation, dedicated to rural economic and community development, controls $63 million in assets. Gaalswyk, whose own Minnesota kin have felt the pain of shuttering the family farm, had embodied that mission.

So the board hired nonprofit headhunters Marcia Ballinger and Lars Leafblad to oversee its national search. They found Matt Varilek, chief operating officer of the Small Business Administration in Washington, D.C., and a man with small-town South Dakota roots.

As the anticipated wave of baby boomer retirements starts to hit Minnesota foundations and nonprofits, volunteer boards faced with the task of replacing longtime leaders are increasingly seeking outside help in making those critical hiring decisions.

Nonprofit executive searches, just a trickle of the search business two decades ago, have become a torrent.

According to a 2015 national study conducted by the Bridgespan Group, more than 400 nonprofits surveyed indicated they had replaced 43 percent of their executive staff in the past two years.

"There is a lot of pent-up transition going on in the sector. Boomers are retiring or moving into encore careers," Leafblad said. "A lot of the leaders have been in their roles for 10, 20, 30 years."

Ballinger Leafblad, launched three years ago in St. Paul, is one of an emerging group of Twin Cities executive search firms focused on nonprofit, educational and civic searches for the next generation of philanthropic leaders.

Minneapolis-based search firm CohenTaylor, started in 2015, has devoted 80 percent of its practice to nonprofit and civic searches. Seven-year-old LymanDoran, also in Minneapolis, spends nearly a quarter of its time conducting searches for the do-good sector.

Some of the nonprofit and foundation leaders placed by the three Twin Cities firms include Minnesota Zoo President John Frawley, Big Brothers Big Sisters of the Twin Cities CEO Michael Goar, YWCA of Minneapolis CEO Luz Maria Frias, Minnesota Chamber of Commerce President Douglas Loon, Lifeworks CEO Jeffrey Brown and Generation Next Executive Director Michelle Walker.

It's not just that there are a number of transitions being triggered by retirements. Nonprofit boards also are seeking new leaders with fresh ideas and broader skill sets, said Chris Cohen, co-founder of CohenTaylor. Once reticent to spend donor dollars on search firms, nonprofit boards more aware of what's at stake are borrowing from the corporate playbook to fill critical roles on their executive team.

"It's an inflection point where they have an opportunity to pause and think about strategic direction and how they want leaders to help them get there," said Libby Carrier Doran, co-founder of LymanDoran.

Larry Korf, chairman of the Initiative Foundation's board of trustees, said that for them outside help in making such a critical hire was a must.

"They helped us find the right fit for our culture and the passion required to run a nonprofit. You really have to have it in your heart and in your head to be a successful nonprofit leader," Korf said.

Ballinger Leafblad is one of only a few search firms known to work exclusively with nonprofits, schools and civic searches.

That instinct has paid off; Ballinger said their clients value the specialization.

"We've been at capacity or past capacity since the day we launched. We are not able to take every nonprofit that inquires with us. It's a good problem to have, and we are extremely grateful," she said.

The decision to specialize also was born out of personal convictions. "I did feel drawn to the fact [nonprofits] are mission-driven and community-focused," Leafblad said.

The nonprofit focus is one of the reasons why the regional Ronald McDonald House Charities chose Ballinger Leafblad to help find its new CEO, Jill Evenocheck, in 2015.

"We just liked their energy and their connections and their focus on nonprofits. They really seemed to know the market," said businesswoman Karin Gessner, who sits on the McDonald House board.

Searches through Ballinger Leafblad cost between $45,000 and $65,000, depending on the scope. For Korf, the cost was a no-brainer. "Did we get our value for the dollar? Yes," he said. "We are making an investment."

Replacing a nonprofit leader poses different hurdles than a corporate hire. A number of decisionmakers — staffers, key donors, even the departing executive — often need to be satisfied. "All of those organizations tend to hire by committee," Leafblad said.

They want to move as fast as possible. Nonprofits often don't have a large executive staff to cover while the top job is empty. "They aren't 15 VPs deep to float the team while they have a three-year ramp up," Leafblad said.

And nonprofits want a leader with both proven business acumen and strong ties to its mission.

"Fit is the number one reason we stay, and it's the number one reason we leave," Taylor said. "We spend a lot of time trying to understand the organization — who they are and what they do."

Gessner said that weighed heavily when selecting the Ronald McDonald House's new CEO. "It's so about the mission. You really have to find people true to the mission," she said.

Nonprofits also typically demand that new leaders are fluent in cultural competency.

Jennifer Ford Reedy, president of the Bush Foundation, said search firms help them find diverse candidates. "They can help organizations get the thought diversity that makes their organization richer and more effective," she said.

One upside to hiring a new leader: It's an opportunity to create a buzz about the nonprofit and its mission.

"This is a moment in time where people give us their rarest gift — their attention," Leafblad said. "Historically, nonprofits have missed the opportunity. Marcia and I are attuned to that: How do we create more brand awareness and stakeholder engagement?"

Shannon Prather • 612-673-4804