Armanino Blog

Passing the Baton - Succession Planning

by Tom Schulte
November 20, 2015

In 1975 many nonprofit leaders were just seeing their start in the nonprofit world. But 40 years later baby boomer nonprofit leaders are retiring in vast numbers nationwide.

Does your organization have key people who are nearing retirement? If so, is there a concrete plan to replace them? A succession plan can be the difference between a nonprofit carrying on its mission without interruption and its operations grinding to a halt.

These are some approaches to succession planning common among nonprofits, and one may best fit your needs. The strategic leader development approach focuses on identifying talented individuals who have, or are capable of developing, skills to carry on your organization’s goals before the top executive or another key person has left. As soon as a successor is identified, the executive director (ED) should begin delegating some leadership duties to this individual. This approach gives the ED time to train and assist the incoming leader until he or she can competently handle the new duties.

A defined departure plan is appropriate when the key person has announced his or her retirement one to two years in advance. The goal is to build leadership strength: The key person wants to know that the organization can function well after his or her retirement, and the nonprofit requires the same degree of assurance. Setting a target departure date with the board of directors is typically the first step because it prompts those involved to develop a timeline.

Emergency succession planning emphasizes continuing to achieve the organization’s goals and carry out its mission after an unforeseen event, such as the old “getting hit by a bus” scenario. In preparation, the top executive or executives should develop a list of their duties and step-by-step details on fulfilling them. They should ask themselves: How was I trained for this position? How have my responsibilities changed over time? What did I learn later that I wish I’d known from the start?
Board members should be involved in any type of succession planning, but especially in emergency planning, because they’re obliged to see that the organization is competently led without interruption. A small nonprofit, even if it has limited capacity for strategic planning, should have an emergency succession plan for its ED.

There is another step your nonprofit can take to prepare for an ED’s unanticipated departure. Key person insurance can protect an organization in the event of a sudden death or disability. This type of plan can help ensure that the nonprofit’s operations and mission are still carried out without major disruptions due to the loss of a key employee.

No matter which approach you use, consider forming a succession planning committee if more than one key person eventually will be replaced. This will allow members of the organization with various types of expertise to provide feedback in the areas most affected by the departures.

It’s also important to document the succession plan. Although it might take some time away from other duties now, it could prevent a host of problems later.

In the scheme of everyday activities, putting together a succession plan for your top executive may end up on the back burner. Don’t let it happen. Charting the future of your nonprofit’s leadership is too important of a responsibility to be left to circumstance.

November 20, 2015

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