Rethinking the CDO Search: Setting Your Nonprofit Up for Long-Term Success

Chief Development Officer Vacancy

Whether sudden or planned, these four words can—and often do—trigger a crisis response within nonprofits. Boards and senior leadership rush to launch a CDO search and fill the role quickly, hoping to preserve stability and prevent disaster with a swift hire. 

This approach overlooks an important truth, though. Rushing into a search without evaluating the program first almost guarantees that the same circumstances that led to the vacancy will happen again. And this is true for both voluntary and involuntary separations.

[Throughout this post, I’ll use ‘chief development officer (CDO)’ and ‘chief executive officer (CEO)’ to refer to an organization’s top fundraising and executive positions, regardless of specific titles.]

This is why, at Principal Gift Solutions (PGS), we see CDO vacancies not as gaps to fill hastily but as opportunities to assess and transform the fundraising program, ultimately recruiting a CDO who is equipped to succeed and have a long, successful tenure. 

Our approach, The PGS Way, offers an alternative to the hasty hiring revolving door. Our dual-track model begins by stabilizing operations with interim support. Then, we assess and develop a strategy for addressing performance-limiting issues and a potentially lackluster CDO candidate pool. The result is a dynamic strategic plan to maximize program resources and productivity.

Current Challenges in the CDO Search Landscape

The landscape of CDO recruitment has long been fraught with pitfalls and disappointments. Since the pandemic, these challenges have grown more dire.

Nonprofits, which represent 10% of the national workforce, have a higher turnover rate than other sectors (19% on average, versus 12% for all industries). Beyond that, the CDO role itself has specific challenges that lead to the highest turnover and vacancy rates across all nonprofit leadership roles.

In a 2011 national study, 50% of CDOs anticipated leaving their current roles in two years or less. In fact, 22% had already resigned or were actively considering resigning. (For context, only 34% of executive directors reported that they expected to leave their roles within two years.) 

60 percent of nonprofit leaders reported feeling “used up” at the end of the workday, according to DDI World’s Global Leadership Forecast for 2021.

Small- to medium-sized organizations were even more vulnerable to voluntary CDO turnover, likely due to a shortage of resources and increased competition from larger organizations for talent.

On average, organizations retain CDOs for just 16 months.

The CDO role is a highly specialized one that requires a rare mix of skills: strategic leadership, relationship building, negotiation, and operational expertise. Moreover, the stress of donor acquisition, retention, and aggressive revenue goals—along with dwindling resources—leads to widespread burnout.

A 2022 survey conducted by the Chronicle of Philanthropy found that:

• 89% of fundraising professionals reported insufficient staff to raise money successfully.
• 92% agreed that turnover and vacancies increased their workload significantly.
• 48% were planning to leave their organization within the next two years (i.e., by 2024), and most alarmingly,
• 28% were planning to leave the profession altogether within two years.

This burnout-fueled career exodus has created a CDO talent pool that is both small and increasingly underprepared for the rigors of the role.

So it should come as no surprise that an ever-growing number of nonprofit CEOs with vacant CDO roles report vacancy lengths of two or more years. Many CEOs are effectively giving up on filling the role after multiple unsuccessful searches. Again, for organizations with budgets under $10 million, this effect is even more pronounced.

The Pitfalls of a Rushed CDO Search

With such a challenging environment, you may be thinking, “I need to launch a search yesterday, not a month from now!” And, unfortunately, this is the conclusion that many organizations come to, but this path is riddled with pitfalls.

Hiring in Crisis Mode

In a search driven by a crisis mentality, boards and CEOs often prioritize speed over strategy. Almost invariably, this urgency leads to short-term hires that do not align with the organization’s long-term vision nor with the true requirements of the role given the organization’s culture, structure, and donor pool.

Missed Opportunities for Program Transformation

As mentioned earlier, CDO turnover is often caused by unaddressed systemic issues within the organization and/or the fundraising program. By stepping back, an organization can rigorously assess its fundraising programs and operations. More importantly, issues can be addressed before a new CDO begins. 

This has two chief benefits. First, a stable, high-functioning program aligned with organizational strategic goals makes employers more attractive to candidates. In a tight market, this can be the difference between hiring your first-choice candidate and settling for second or third best. Second, providing a new CDO with an optimized program means that on day one they are positioned for long-term success.

Potential for Turnover Creep

CDO turnover can become a pernicious cycle that eventually trickles down to other program staff, adversely affecting team morale and retention. Studies show that frequent turnover in leadership creates a revolving door effect, which can be devastating to program consistency and donor relationships.

Developing a strategic plan for a development program during a time of transition can help nonprofits attract and retain future leaders. It makes the CDO position more appealing to candidates and breaks the turnover cycle that compromises continuity and productivity.

The Real Cost of a Poor CDO Hire

We know intuitively that CDO turnover—both voluntary and involuntary—is costly. But the data show that direct turnover costs can exceed 75 to 100% of a CDO’s annual salary, which compounds over time and with every short-term hire.

• Executive Search: A high-level nonprofit executive search for a CDO typically costs 30 to 35% of the role’s annual salary. Repeating this process represents a significant expense. (Oh, and by the way, some estimates put the executive search fail rate as high as 70%.)
• Onboarding and Training: Once a new CDO is hired, onboarding and training add another 10 to 15% of their annual salary. It covers orientation, relationship-building with key donors, and team integration.
• Productivity and Opportunity Loss: A new CDO takes a minimum of 12 months to reach peak productivity. During this time, productivity losses are estimated at 30 to 40% of their annual salary, leading to lost revenue and missed fundraising opportunities​.

Impact of Additional Turnover: Instability in the CDO role also increases turnover among other team members, adding disruption that adversely impacts retention, recruitment, and staff morale.

Total Estimated Impact

The financial impact of a rushed hire mounts quickly, with costs totaling between 75 and 100% of the annual salary. For a CDO earning $120,000, this translates to a range of $90,000 to $120,000. For a CDO earning $300,000, the cost could reach a quarter of a million dollars or more. As eye-watering as these figures are, they don’t even touch upon the difficult-to-quantify reputational losses.

• Impact on Donor Trust: Nonprofits have a unique challenge. Their survival depends on institutional reputation that inspires donor confidence. Donor confidence is mostly achieved through meaningful relationships with organizational leadership, which becomes compromised when turnover occurs.
• Resource-Intensive Rebuilding: High-level fundraising is predicated on building and maintaining strong relationships with donors and stakeholders. When relationships with donors and stakeholders are ruptured, particularly in a sudden way, it takes a significant amount of time and resources to re-engage them in the organization’s core mission.

It’s hard to put a dollar amount on reputational losses. However, nonprofits with key leadership turnover face high indirect costs in addition to the direct costs of turnover. These factors support the case for stabilizing leadership transitions. Strategic solutions, like The PGS Way, can help. They maintain nonprofits’ effectiveness, reputation, and donor confidence during times of transition.

How The PGS Way Dual-Track Model Can Transform Your Approach

The PGS Way is a unique, transformative framework that empowers nonprofits to achieve their goals and maximize their impact during times of transition or organizational change. We understand that success requires both a long-term vision and the ability to be highly productive in achieving short-term goals and priorities. That’s why our model focuses on two parallel workstreams:

Strategic Momentum: Program Development & Sustainability

Our first step is a thorough evaluation of an organization’s development program and strategic priorities. With diagnostics and benchmarking, we align fundraising capacity with organizational goals. This phase finds strengths and gaps that help PGS create a tailored strategy for the development program and the next CDO hire.

Impact Engine: Principal Gift Focus

While the assessment is underway, PGS ensures continuity with seasoned interim leadership. Fundraising activities continue uninterrupted, reassuring donors and maintaining revenue streams. This support offers stability and prevents revenue disruptions while strategic planning unfolds. Special attention is directed to nurturing (or establishing) the principal gift program. This can also start the quiet phase of a targeted pilot campaign, which generates immediate energy, engagement, and much-needed revenue. It also provides a perfect environment to test new fundraising priorities and strategies.

Funding Transition and Transformation Through Salary Savings: Reframing Vacancies as a Chance to Invest Strategically

For most nonprofits, the CDO role represents one of the highest salary commitments within the organization. When a vacancy occurs, it opens a significant budgetary opportunity that can be reinvested into a strategic transition plan, like The PGS Way. This approach allows nonprofits to use salary savings to support both transitional and strategic needs, transforming the vacancy into a period for rebuilding, strengthening, and, in many cases, achieving unprecedented fundraising success during a time of transition.

Use of salary savings is not only budget-neutral—or even budget-positive—but also forward-looking. It boosts nonprofits’ efficiency and fundraising culture, which in turn attracts skilled CDO candidates and bolsters the program’s long-term success—all while eliminating the high costs and high risk of rapid turnover.

Conclusion

Nonprofits are increasingly encouraged to reassess and adapt their business models due to financial pressures and labor market shifts. Nearly 44% of nonprofit workers report leaving organizations for lack of career growth and strategic vision. A well-planned change during a CDO vacancy can attract top talent, foster sustainable growth, and lead to maximized fundraising results.

The choice to assess, strategize, and realign through The PGS Way is a powerful investment in your organization’s future. This strategic approach helps nonprofits avoid a hasty, high-risk hire and empowers them to make lasting changes. By developing innovative strategies that provide a roadmap for future success, our clients help their next CDOs succeed—and save money while doing so.

To explore how you can transform a crisis into a success story, book a free consultation today. Discover the benefits of The PGS Way and learn how we have developed budget-positive transition plans for our client partners.

Book a Free Consultation

 

Sources

Cornelius, Marla, Rick Moyers, and Jeanne Bell. Daring to Lead 2011: A National Study of Executive Director Leadership. CompassPoint Nonprofit Services and the Meyer Foundation, 2011. https://www.giarts.org/sites/default/files/Daring-to-Lead-2011.pdf.

Bell, Jeanne, and Marla Cornelius. UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising. CompassPoint Nonprofit Services and the Evelyn and Walter Haas, Jr. Fund, 2013. https://www.compasspoint.org/sites/default/files/documents/UnderDeveloped_CompassPoint_HaasJrFund_January%202013.pdf.

Pepelko, Kristina M. “Untangling Turnover: Why Development Directors Leave and What Nonprofit Organizations Can Do About It.” SPNHA Review, vol. 16, no. 1, 2020, article 7. https://scholarworks.gvsu.edu/cgi/viewcontent.cgi?article=1092&context=spnhareview.

Haynes, Emily, and Rasheeda Childress. “Desperately Seeking Fundraisers.” Chronicle of Philanthropy, vol. 35, no. 1, 2022. https://www.philanthropy.com/article/desperately-seeking-fundraisers.

Kotsi, Telesilla, and Alfonso J. Pedraza Martinez. “Spending on Fundraising and Admin Makes Nonprofits More Resilient, Research Shows.” Chronicle of Philanthropy. https://www.philanthropy.com/article/spending-on-fundraising-and-admin-makes-nonprofits-more-resilient-research-shows.

Nonprofit HR. “2021 Nonprofit Talent Retention Practices Survey.” 2021. https://www.nonprofithr.com/wp-content/uploads/2021/09/Infographic-2021-Retention-Survey-For-Publish.pdf.

Cerini, Kenneth R. “2024 Nonprofit Trends.” NFP Advisor, vol. 29, 2024. https://ceriniandassociates.com/2024-nonprofit-trends.

Davis, Kylie. “Nonprofit Burnout Statistics: The High Cost of High Turnover.” Givebutter Blog, 2022. https://givebutter.com/blog/nonprofit-burnout-statistics.

Development Dimensions International. “Global Leadership Forecast 2021,” 2021. https://www.ddiworld.com/global-leadership-forecast-2021.

RKD Group. “8 Major Nonprofit Fundraising Trends as We Close Out 2023.” RDK Group Thinkers Blog, 2023. https://blog.rkdgroup.com/8-major-nonprofit-fundraising-trends-as-we-close-out-2023.

Herschander, Sara. “The Great Nonprofit Leadership Turnover.” Chronicle of Philanthropy, 2022. https://www.philanthropy.com/article/the-great-nonprofit-leadership-turnover.

Jaeggi, Olivier. “How Nonprofit Organizations Use Reputational Risk Management.” MIT Sloan Management Review, 2014. https://sloanreview.mit.edu/article/how-nonprofit-organizations-use-reputational-risk-management/#article-authors.