Why We May Soon See An Increase In Fractional Leadership At Nonprofits

Over the past five years, nonprofit organizations have absorbed two major labor shocks: the pandemic and the post–Great Resignation talent crunch. One important consequence has received surprisingly little attention—nonprofit compensation has risen sharply, particularly for roles with skills that easily transfer to the private sector.

Before Covid, a nonprofit marketing director might have earned 40 percent less than a counterpart in a for-profit firm. Today, that gap has narrowed considerably. Based on what many leaders are seeing, the difference may now be closer to 20 percent, driven by wage increases and greater pay transparency. For professionals who carried enormous workloads for years, this correction is long overdue.

But for nonprofit executives and boards, it has created a serious structural challenge.

Why Pressure Is Building Heading Into 2026

While salaries climbed, revenue did not keep pace. Many organizations are facing flat philanthropic giving, slow-moving government contracts and the expiration of pandemic-era relief funds. At the same time, funders are rarely persuaded by explanations rooted in rising payroll costs—even when those increases are justified and unavoidable.

The most dramatic wage growth has occurred in back-office roles such as finance, development, marketing, HR and operations. These professionals are highly capable—and highly mobile. They can often move into higher-paying industries with relative ease.

By contrast, program staff—artists, educators, frontline service providers and community specialists—tend to have mission-specific skills that don’t translate as easily across sectors. These roles are central to organizational impact, yet they often have the least leverage in compensation discussions.

The result is a squeeze from both sides: leadership and administrative talent has become more expensive to retain full-time, while program staff must be protected to preserve mission delivery. This dynamic is driving growing interest in fractional leadership.

Four Trends Nonprofit Leaders Should Be Watching

As these pressures intensify, several shifts are likely to shape the sector in 2026:

1. Fractional executive roles will become standard.
Fractional CFOs, CMOs, CHROs and development leaders will no longer be viewed as temporary solutions. Instead, they’ll be recognized as legitimate, board-approved staffing models.

2. Boards will increasingly request them.
Not as a cost-cutting trend, but as a practical way to access senior expertise without diverting resources away from programs.

3. Hybrid teams will become the norm.
Organizations will pair lean internal teams with fractional specialists who bring advanced skills, broader perspective and modern systems.

4. Funders will quietly favor the approach.
Efficiency, transparency and measurable impact matter to investors. Fractional leadership often leads to stronger strategy, clearer reporting and better outcomes per dollar.

Making Fractional Leadership Work

For organizations considering this model, execution matters. A few principles can help ensure success:

Align leadership time with actual needs.
Not every function requires a full-time executive. Many organizations benefit more from eight to 20 hours per week of senior-level thinking paired with a capable internal coordinator.

Separate strategy from execution.
Fractional leaders should act as architects and mentors, while internal staff handle day-to-day implementation. That division of labor is often where the greatest value emerges.

Rebalance spending toward mission delivery.
Reducing fixed overhead can free up resources to better support and retain program staff—the people whose work defines the organization.

Expect board-level engagement.
Effective fractional leaders don’t operate in the background. They collaborate with CEOs, present to boards and funders, and help navigate complex organizational decisions.

This shift isn’t about lowering standards—or even primarily about saving money, though many organizations do. It’s about safeguarding missions in a post-pandemic labor market that no longer functions like it did in 2019.

Nonprofits are finally paying closer to market rates for roles with transferable skills. That’s progress. But funding models haven’t adjusted accordingly. Fractional leadership offers a bridge—delivering high-quality strategy while keeping missions financially viable. For nonprofit leaders facing personnel budgets that no longer add up, it’s a model worth serious consideration.

Source: Forbes