In the Hawai'i Community Foundation's latest nonprofit study released late last year, two of the greatest challenges that nonprofit leaders identified, with increasing importance since the foundation's first study in 2001, were attracting effective board members followed by the difficulty of attracting quality staff.

With Hawai'i's low unemployment rate and compensation levels in the nonprofit industry typically lower than the government or private sector, the competition for talent is heating up for local nonprofit organizations.

Since 2001, the number of nonprofit organizations that filed federal tax returns (required for those that had more than $25,000 in revenues) increased by nearly a third in Hawai'i to nearly 2,100. For most of these organizations, a staff leader is an essential ingredient, along with a committed board of directors. The sheer numbers suggest an increasing demand for talent, but that demand is exacerbated by the fact there is also a growing level of complexity for nonprofits as they face more scrutiny and stiffer competition. In fact, the challenges are even deeper.

Our study showed that over half of the executives in Hawai'i's nonprofit industry are 55 or older, old enough to be card-carrying members of AARP (85 percent are older than 45). Further, 42 percent of executive directors surveyed expect to leave their current positions by 2010. And based on findings from an earlier Hawai'i Community Foundation executive tenure study, most executives don't plan on taking another nonprofit executive-director position.

The challenges extend into the boardroom as well. Study findings show that 44 percent of organizations find it hard to attract effective board members. With governance practices suggesting more oversight and independence by nonprofit boards, it is growing increasingly difficult to find people capable of contributing and willing to spend the time, and even the best board members are reducing their board service as the demands from each organization increase.

With the increasing number of organizations and the attrition of paid and volunteer leadership, strategies to compensate for the growing gap for leadership talent will require the three R's: retention, recruitment and reinvention.

While board terms are an important governance practice, it will be important for organizations to look at their current term limits and decide whether extending those limits make sense. After all, good board members are hard to replace, especially ones who know the organization well.

Conversely, boards will need to implement strategies to extend the career of high-performing executives. Our studies revealed that the major reasons why nonprofit executives leave include workload issues, compensation and lack of training, and professional development opportunities. Expanding the suite of support mechanisms to retain high-performing executives is cost effective; especially considering the cost of replacing them (almost always requiring higher salaries) and the loss of momentum for the enterprise.

In addition to retention, the sector needs to recruit and develop the next generation of leaders, both paid and volunteers. We are fortunate to have a great number of young men and women who are eager to give back to their communities. They will want and expect the opportunities to grow, and to have increasing leadership roles. We need to find ways of translating those desires into professional development pathways that will encourage them to choose a nonprofit career, and of creating similar opportunities for board service and leadership.

But perhaps the greatest unrealized strategy is the reinvention of the nonprofit work force to accommodate a growing pool of older Americans who, by choice or necessity, will work well into their 60s, if not longer. Perhaps finished with their primary careers, these folks will remain healthy and vibrant for decades. Most will want to remain active, and a growing number want their engagement to be around causes that matter.

Although there is a lot of experience and talent available from the baby-boomer generation and older, organizations will have to create more flexible workplace conditions such as job-sharing, less than full-time work, greater vacation benefits and different salary/benefit mixes. "Unlike their parents, boomers plan to stay on the job longer," says Marc Freedman, CEO of Civic Ventures — a think tank and program incubator helping society achieve the greatest return on experience (www.civicventures.org). "As they age, they are looking for more from work, not less — more flexibility, yes, but also more meaning and just as important, more impact. If the old dream was freedom from work, they are after the freedom to work, in new ways and to new ends."

Kelvin Taketa is president and CEO of the Hawai'i Community Foundation. E-mail him at kelvin@hcf-hawaii.org.