Nonprofit Leadership: 4 Leader Types

Leadership in the nonprofit sector means facing a different set of challenges unique to other industries. Not only are these leaders charged with directing day-to-day operations, they must also create a sustainable philanthropic motivation around the organization’s mission. Additionally, they’re vulnerable to outside forces like financial markets, legislative changes, and ever-changing donor needs and budgets.

Certain personality types are naturally more drawn to nonprofit leadership, and each leader takes on their own style to solve organizational challenges. A recent study called “A Study of Nonprofit Leadership in the US and Its Impending Crisis”, provides detailed research on nonprofit leadership models and shares how each leader type can use specific skill sets to create a culture of sustainable philanthropy.

Regardless of style, nonprofit leaders need high-level organization and technological vision to achieve their nonprofit’s often very lofty goals and vision. Understanding the style of how each leader operates—as well as what type of team they need to be surrounded by—can help determine how they should manage time and resources, how their style is impacting the nonprofit, and finally, how they should best steward the next generation of leaders.

We’ll take a look at the study’s four modern perspectives on leadership styles as it relates to the nonprofit sector. These styles are:

  1. Servant leadership
  2. Transformational leadership
  3. Charismatic leadership
  4. Transactional leadership

Let’s explore each leadership type and the typical behaviors associated with each style.

1. Servant leadership

This type of leader in the nonprofit world takes a different approach than the “top of the pyramid” style that is often associated with executives in other industries. Rather than consolidate at the top and take on sole decision-making power, servant leaders look to share power, desiring to put the needs of others first. They are motivated by the well being of people, by creating value for communities, and by empowering others—especially subordinates—to grow and succeed. With these characteristics in mind, it’s certainly no wonder that 53% of those surveyed identified themselves as servant leaders.

2. Transformational leadership

Transformational leadership is the second most popular nonprofit leadership style with 35% of participants agreeing that they fit into this category. While the term “transformational” probably sounds enticing, how does this style play out for someone in the top role of a nonprofit? Transformational leaders are often characterized by acting with high levels of morality, optimism, and confidence while moving towards the future. But they also walk-the-talk by both emphasizing and embodying values that are important to their internal colleagues as well as their external members and contributors.

While a servant leader’s motivation comes from a natural desire to serve, transformational leaders are motivated by the nonprofit’s vision and its ideal future—they are the dreamers that can envision what’s possible and then bring it to life. They make sure their organization and its stakeholders understand not just what they are doing, but WHY they are doing it and how it’s related to the nonprofit’s mission.

3. Charismatic leadership

Similar to transformational leadership, charismatic leaders focus on drumming up excitement and enthusiasm for a vision or goal, which is why it shouldn’t be a surprise that just under 30% of survey respondents resonated with this style.
These leaders motivate certain behaviors through force of personality or persuasion and because of these tendencies, are usually very effective communicators. Rather than pulling team members and contributors into the vision, these leaders use their own convictions and confidence to benefit the nonprofit’s mission.
Leaders who fall into this category often create higher levels of self-assurance and job satisfaction for team members, helping them to see that they’re providing meaningful work. If not checked, however, charismatic leaders can develop a high need for power which can lead to narcissism and a tendency to exaggerate their own abilities. In addition, these types of leaders are known to take high risks, which can damage long-term sustainable philanthropy. These tendencies demonstrate why a strong surrounding team is important.

4. Transactional leadership

Transactional leadership is a rarity in the nonprofit world (only 5.1% claimed to fall into this category). These types of leaders find motivation through goal setting and achievement—not all that dissimilar to a commission-based sales executive. Defined, transactional leadership is “an exchange process based on the fulfilment of contractual obligations and is typically represented as setting objectives and monitoring and controlling outcomes”.
This style—while perhaps not viewed as forward thinking or selfless like the prior two categories—does have its unique benefits. Some research argues that providing tangible rewards for individuals within the organization can motivate them to perform. Others have found that it can create an unhealthy level of organizational competitiveness. However, as it relates to fundraising in the nonprofit world, this type of drive and goal setting can certainly be advantageous. After all, nonprofit leaders need to be comfortable asking for donations, be forward in goal setting, and be direct with donors about the financial needs of the organization.

For more information on the 4 leadership types and to hear industry experts discuss sustainable philanthropy, check out our recent State of NonProfit Leadership 2018 webinar.