The Overlooked Power of Organizational Culture in Nonprofits

Nonprofit leaders often focus on mission statements, fundraising goals, and strategic plans. Yet one of the most influential drivers of success is frequently underestimated: organizational culture. Culture shapes how employees show up, how teams collaborate, and how communities perceive the nonprofit itself. For nonprofits, where purpose is paramount and turnover can be costly, culture isn’t just a “nice-to-have”. It’s the backbone of long-term impact. Stephen Halasnik, from Financing Solutions, the largest provider of unsecured credit lines for nonprofits, discusses with Gregory T. Miller, President and CEO of Penn-Mar Human Services, how a strong culture has contributed to the success of their 800-employee nonprofit. 

From Survival Mode to Cultural Clarity

Many nonprofits begin with good intentions but little time to think about culture. In the early years, the focus is often on survival:  keeping the doors open, securing funding, and meeting immediate needs. That was true for Penmar Human Services when it first opened its doors in the late 1980s. But as the organization matured, it recognized that culture had to evolve from an unspoken undercurrent to a defined, intentional framework.

The turning point for Penmar (and for many nonprofits) came when leaders realized that mission alone isn’t enough to keep employees engaged. People join nonprofits for the cause, but they stay when they feel valued, supported, and connected to the culture.

Why Mission and Organizational Culture Must Be Intertwined for Nonprofits

A nonprofit’s mission is its north star. But without culture, that mission risks becoming hollow. At Penmar, the mission is simple yet profound: to support people with intellectual and developmental disabilities in living courageous, self-directed lives. For that mission to thrive, the staff itself must feel supported, empowered, and aligned with the values of the organization.

In practice, this means culture isn’t just about values on a wall or a line in the handbook. It’s about ensuring that the everyday experience of employees reflects the same respect and dignity that clients receive. As Penmar’s nonprofit leadership emphasizes, employees must know the organization is “for them” just as much as it is for the people they serve.

Building an Organizational Culture of Belonging in Nonprofits

Nonprofit employees often face high emotional demands, long hours, and modest pay. This makes belonging and workplace culture especially critical. At Penmar, culture is defined as creating a workforce where people feel they belong; not just as employees, but as integral members of a community united by mission.

Belonging translates into retention, satisfaction, and improved service delivery. When direct support professionals (the frontline staff who build deep relationships with individuals with disabilities) feel supported, their commitment strengthens. When they leave due to poor culture, the ripple effect can be devastating for both the organization and the people it serves.

Dynamic Culture: Balancing Change and Core Values

The best nonprofit cultures are dynamic. They evolve with shifting times, social expectations, and workforce needs while staying rooted in unchanging core values. For Penmar, this balance means being open to new ways of supporting both clients and employees, while holding firm to the primacy of mission.

Dynamic cultures recognize that employees bring their whole selves to work. Unlike in decades past, today’s workforce does not simply “check life at the door.” Organizations must acknowledge the human experience, creating systems that value both professional contributions and personal well-being.

Leadership’s Role as Cultural Storyteller

Culture is shaped at every level, but leaders set the tone. Nonprofit executives are not just administrators; they are chief storytellers, translating mission into meaning for employees, donors, and the community. But this storytelling only works if it aligns with reality.

A leader can speak eloquently about mission and culture, but if frontline staff are experiencing burnout, neglect, or lack of support, the disconnect erodes trust. Penmar’s leadership stresses that culture must be authentic; the story told publicly must match the story employees live daily.

Why Organizational Culture and Turnover Are Interconnected

One of the clearest indicators of nonprofit cultural health is staffing. Experts often cite 10% annual turnover as a threshold; anything higher suggests deeper problems. While pay is often assumed to be the main driver of turnover, research and experience reveal otherwise. Employees usually leave due to poor leadership, lack of recognition, or cultural misalignment.

At Penmar, the emphasis is on hiring for culture fit first. This discipline avoids the costly mistake of filling vacancies quickly only to watch employees leave. In mission-driven organizations, turnover doesn’t just cost money — it disrupts relationships and can harm the very people the nonprofit serves.

Hiring for Culture, Not Just Function

As Penmar’s experience highlights, hiring for mission and culture fit is more sustainable than hiring for function alone. A candidate may have the technical skills to perform a role, but if they don’t resonate with the nonprofit’s values and culture, they are unlikely to thrive long term.

This mindset reframes hiring as more than filling a position. It’s about building a team of people who see themselves as part of something larger: a movement, not just a job.

Culture as a Daily Practice, Not a Slogan

Too often, nonprofits define culture in documents but fail to weave it into daily practice. Successful organizations use constant touchpoints to reinforce culture: onboarding sessions, team meetings, performance reviews, internal communications, and even signage in the workplace.

Over-communication is key. Leaders can’t assume staff have absorbed mission and cultural values just because they were once emailed. Instead, culture must be repeated, lived, and reinforced through every interaction. Remote work has only heightened this need for intentional culture-building.

Nonprofit Culture and Government Funding Realities

For nonprofits reliant on federal or state funding, like Penmar through Medicaid waiver programs, shifts in government policy can cause anxiety. While funding realities may fluctuate, the core cultural practices of a nonprofit must remain steady. In turbulent times, strong culture provides resilience, giving employees confidence that leadership is committed to supporting both staff and mission no matter the external challenges.

The Ripple Effect of Strong Nonprofit Culture

When nonprofit culture is healthy, its effects are far-reaching. Employees stay longer, reducing costly turnover. Clients receive more consistent and compassionate care. Donors and stakeholders see alignment between mission and practice, strengthening trust.

Conversely, poor culture undermines even the most compelling mission. A nonprofit may achieve short-term wins, but without an intentional culture, long-term sustainability falters.

Organizational Culture as the Foundation of Nonprofit Success

Nonprofits exist to serve communities, solve problems, and embody values greater than profit. But the ability to deliver on that mission depends on people: the employees and volunteers who make it possible. Their experience, shaped by organizational culture, is what determines whether a nonprofit thrives or struggles.

The lesson from Penmar Human Services is clear: culture isn’t separate from mission. It is mission in action. By treating culture as a strategic priority, nonprofits can ensure that their missions are lived daily, not just written in handbooks.

About the Experts

Gregory T. Miller is President and CEO of Penn-Mar Human Services, which supports people with intellectual and developmental disabilities. He has overseen Penn-Mar’s programmatic, financial, and strategic operations since 2012, including Board development. Greg has been with the organization since 1988, serving in various leadership roles, most recently as President and COO. He has spoken at the International Conference in São Paulo, Brazil three times on leadership and disability service models. His leadership reflects decades of experience in advancing opportunities for people with disabilities.

Stephen Halasnik is co-founder of Financing Solutions, a leading provider of lines of credit for nonprofits, and host of the Nonprofit MBA Podcast.