Internal Conflict in Nonprofits: Unraveling the Root Causes

In the world of nonprofit organizations, where noble causes are taken up by dedicated individuals, one might assume that harmony and unity dominate. Yet, behind the scenes, nonprofits seem to grapple with internal conflict at a rate higher than most other industries.

One study found that the “charity/not-for-profit sector” was one of the top sectors in which disagreements are most likely to become inflamed, behind only marketing. This begs the question: why do nonprofits, driven by a shared passion for doing good, find themselves tangled in discord?

In this blog post, we’ll explore the underlying factors that contribute to nonprofits’ susceptibility to internal conflict. By unraveling the causes of internal conflict in nonprofits, we pave the way for the development of effective conflict management strategies, empowering these organizations to thrive in their mission-driven pursuits.

1. Financial constraints and resource allocation

Defined as the disagreement or discord among individuals or groups within an organization, internal conflict can arise due to a number of characteristics unique to the nonprofit sector.

First and foremost, the financial model that nonprofits, by definition, follow is often a root cause. Nonprofit organizations operate within a challenging financial landscape, often grappling with limited funding and constant financial pressures.

Heavily relying on funding from donors, grants, and other sources to sustain their operations can easily lead to an environment where every program, project, or department competes for limited and inconsistent resources, instead of working on the same team. With rising operating costs cited as one of the top challenges among nonprofits, this scarcity of funds can fuel tension among team members who compete for funding, jeopardizing collaboration and alignment.

A nonprofit’s pursuit of financial stability can eventually overshadow its mission.

Additionally, financial limitations often require difficult choices regarding resource allocation. Balancing competing priorities and making trade-offs can be a complex and emotionally charged process. Inevitably, clashes arise as decisions favor some programs over others, fostering resentment and internal discord.

As such, a nonprofit’s pursuit of financial stability can eventually overshadow its mission. As different programs and departments compete for funding, their focus may shift from the collective purpose to self-preservation, undermining the overall objectives of the organization.

2. Diverse stakeholder interests and power struggles

The wide range of stakeholders unique to nonprofit operations can also set the stage for internal conflict to emerge. Board members, staff, volunteers, and donors each bring their unique perspectives, interests, and objectives to the table, creating a complex web of mixed interests and priorities.

On one hand, board members often represent different backgrounds and expertise, bringing diverse ideas and visions to the table. While diverse board leadership has been found to have a positive impact on the performance of nonprofit organizations, when an effective model of communication and cooperation is lacking, there’s no doubt that this diversity can also lead to conflicting viewpoints on strategic decisions and organizational direction.

When an effective model of communication and cooperation is lacking, diversity can also lead to conflicting viewpoints on strategic decisions and organizational direction.

Then, you have staff members who, as the ones deeply invested in the organization’s day-to-day operations, may have differing views on how resources should be allocated or how programs should be executed.

Volunteers, driven by personal passions, may bring additional perspectives and expectations that may not always align with the organization’s strategic goals. Donors, who contribute financial support, may wield significant influence and seek to shape the organization’s priorities based on their own interests.

In other words, the influence of all these different stakeholders on decision-making processes can intensify power struggles. Aligning these diverse interests can be challenging, leading to tension and internal conflict in nonprofits.

3. Difficulties finding effective leaders

Leadership plays a crucial role in setting the tone and culture of an organization. Effective leadership has the power to either foster or mitigate internal conflicts within these organizations. However, attracting and retaining such capable leaders can be a significant challenge in itself.

As one respondent of CEP’s annual State of Nonprofits 2023 study explained, “Our growth and impact are also challenged by the difficulty in finding staffing with the level of experience and leadership needed to meet our organizational need.”

The consequences of inadequate talent and leadership can manifest in a lack of clear direction, conflicting priorities, and a weakened organizational culture.

The unique challenges and constraints of the sector, such as limited resources and competing demands, can make it challenging to find individuals with both the necessary skills and a passion for the organization’s mission. Additionally, the compensation disparity between the for-profit and nonprofit sectors can further hinder the recruitment of top-tier leadership talent.

As the study reports, nonprofits are grappling with the difficulty of “hiring and retaining engaged and future-oriented employees when the applicant pool is limited, and our pay scales cannot compete with the private or public wage scale.”

Ultimately, the consequences of inadequate talent and leadership can manifest in a lack of clear direction, conflicting priorities, and a weakened organizational culture — all fertile ground for internal conflict to take root.

4. Complexities of a mission-driven organization

For nonprofits, the pursuit of a mission-driven agenda lies at the very core of their existence. It’s this strong sense of purpose that propels their work forward but it can also be a catalyst for internal conflict.

The intensity of nonprofits’ mission-driven work often carries emotional weight as individuals invest their time, energy, and personal beliefs into the cause. Unlike most of their counterparts in for-profit companies, nonprofit teams find themselves emotionally invested in their organization’s cause. This intense emotional involvement can become a breeding ground for high-stress situations, internal conflict, and, ultimately, burnout.

The weight of the mission, combined with high expectations, places immense pressure on employees within mission-driven organizations.

From struggles to secure funding to pressure from funders’ unrealistic expectations, the conflict-ridden nature of the sector can itself be a source of mental and physical stress. As the State of Nonprofits study reports, common consequences include “chaos, overload, and staff burnout,” with “people…[leaving] the sector — that brain drain hurts our communities.”

The weight of the mission, combined with high expectations, places immense pressure on employees within mission-driven organizations, which is then made worse by the complexity of the issues at the core of nonprofits’ missions — issues that frequently have no easy solutions. The result is often a state of chronic stress and high tension that permeates the workplace.

5. Lack of clear performance evaluation metrics

Evaluating the performance and success of nonprofit organizations is a complex endeavor. Unlike their for-profit counterparts, where financial metrics often serve as clear indicators of progress, nonprofits face the challenge of measuring an intangible or subjective impact.

Considering the fact that “positive change” is often the goal of these organizations, evaluation of their performance is essential. However, the intangible nature of their work, such as advocacy, education, or community building, makes it difficult to quantify and assess their impact. This ambiguity can create different interpretations and expectations among team members, leading to disagreements and conflicts.

Nonprofits face the challenge of measuring an intangible or subjective impact, unlike their for-profit counterparts.

For example, a study on nonprofit leaders’ perceptions of organizational efficiency found that “in more than half of the cases, nonprofit leaders’ perceptions of their organizations’ efficiency failed to align with a commonly accepted objective measure of efficiency applied to those organizations.”

Subjective performance evaluations further heighten the issue. When evaluations rely on personal opinions or preferences, they are prone to bias, inconsistencies, and misunderstandings. This subjectivity can fuel internal tensions as individuals may perceive unfair treatment or favoritism. Without clear and objective evaluation criteria, conflicts can arise, eroding trust and hampering organizational alignment.

Turning understanding into action

Recognizing the causes of common internal conflicts in nonprofits is the first step toward proactive resolution. From there, leaders should develop effective conflict resolution mechanisms and mediation processes. By fostering a culture of open dialogue, empathy, and collaboration, nonprofits can proactively mitigate conflicts and strengthen their organization.

Undoubtedly, successful conflict resolution in nonprofits requires organizational alignment, where shared values, goals, and strategies are clearly communicated and embraced by all stakeholders. Aligning the organization’s mission with its core values not only guides decision-making but also fosters unity and minimizes potential conflicts. Through urgent organizational alignment, nonprofits can create a shared identity, reinforcing a sense of purpose and cohesion.

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Photo by Eilis Garvey