In the corporate world, companies often overlook the pool of potential future leaders developing within their own ranks. However, those employees provide multiple succession options who can step in at a moment’s notice if an executive leader has to step down quickly. That’s not necessarily the case in nonprofits, where operations are leaner and meaner, more regulated, and where leadership, especially at the very top, often stays in place for decades. Nonprofits stand to lose so much if changes in leadership are not handled well. Nonprofit succession planning is crucial during leadership transitions in order to maintain everything from employee morale to the donation pipeline to an organization’s very mission.

Nonprofit succession planning is just as important as it is on Wall Street, yet recent research by Board Source found just 27% of nonprofits report having a written executive succession plan. The aim of nonprofit succession planning is, of course, to enable transition with as little disruption as possible. When a long-term leader leaves the organization, a vast amount of institutional knowledge walks away with them.

This is more than the process of identifying and developing new leaders to succeed the current executive. Succession planning offers an opportunity to take a fresh look at the nonprofit’s strategy and vision, goals and governance, and even the roles of the current leadership.

It’s essential to start sooner rather than later. Begin by considering the following:

• What risks do we face if our CEO leaves today?
• What is the best way to delegate authority on a temporary basis?
• What long-term leadership needs does our organization have?
• Are our hiring and onboarding processes sufficient for a quick succession?

While nonprofit succession planning is a key element of duty of care, a nonprofit board or executive committee doesn’t have to do this alone. Senior leaders have valuable experience to help set expectations and put in place efficient processes, while foundations and grant-makers have a vested interest in making sure the nonprofit succeeds. Many philanthropists, often themselves from the corporate world, offer formal board development programs.

When these conversations begin, current leadership often gets nervous. They may prematurely conclude that their performance prompted a desire for succession planning. Keeping communication open and being transparent throughout the process helps frame succession planning as an opportunity to increase focus on the nonprofit’s mission and results.

Expand the culture and practice of the nonprofit to one that champions leader development, inclusion and diversity while ensuring you address shifts in the funding and political environment. Bringing in outside counsel to help with your succession planning can help ease any fears of bias and bring fresh thinking and new experiences.

Make your nonprofit succession planning even more powerful by taking the time to review organizational sustainability. More than just who’s next in role, you should review the board and executive leadership’s roles and responsibilities, the strategy and business model, resource allocation and the organizational culture.

Re-examine assumptions, especially if your CEO has been in place for a long time. You may find that there are more efficient ways of working, new technologies that can help you achieve your objectives or new roles that could help your executive be more impactful.

But don’t lose sight of the objective: accompany nonprofit succession planning with a solid plan to develop talent. Whether your plan is to promote internally or look outside for your successors, you must understand the leadership capabilities required to achieve your organization’s strategy and assess the potential of current staff to become future leaders. Ensure you have effective hiring, onboarding and training programs, and regularly benchmark against best practices.

It is critical for nonprofit boards and executive leadership teams to have conversations about succession planning, and to get a system in place that is robust. Make sure your plans fit your mission and culture and review them regularly to keep them that way. And remember to recognize the contribution the leadership makes to the organization; after all, a leader with a clear role that feels successful in their work is less likely to need a successor quickly.

If you’re ready to begin succession planning, the Aldrich Nonprofit + Governmental team is ready to help.