Fall marks a season of renewed energy for many nonprofit boards. As members return from summer breaks and settle back into meeting rhythms, there's a natural momentum building toward year-end. This is the perfect time to tackle those important governance priorities that may have been on the back burner—turning the final quarter into your board's most productive and impactful months of the year.
What is a Succession Plan?
Succession planning is about ensuring that the nonprofit continues to move forward as leaders change. This includes having a plan in place for both planned and unplanned transition, ensuring the effective and efficient transfer of knowledge, systems, and processes.
Identifying a successor is integral to the process, but the plan should also include ensuring that successors have all the tools they need to be successful in their role. It is critical to be aware of your state nonprofit laws and your Directors and Officers Insurance policy around CEO and board leadership. Potential liability exists with the state and with the insurer if the board cannot demonstrate that its governance structure is aligned with laws and its corporate documents.
Transition 1: Executive Leadership
Executive leadership transition refers to the departure of the CEO or Executive Director of the organization. Do you have a plan for this critical transition? When was the last time it was updated? Are all board members and key staff up to speed on the elements of the plan?
Common elements include a policy that outlines what happens in the event of either a planned or unplanned transition. Who will step in as an interim leader? How will the vacancy be filled? What steps will need to be taken to mitigate risk to the organization? Risk mitigation strategies should address access to data, passwords, keys, etc. as well as reputational risks that may result from broken relationships with donors, funders, and community confidence.
Planning for the transition of executive leadership is a core function for every nonprofit board. Boards who wait until the crisis of a transition hits to make the plan can put the organization at risk by rushing the hiring process, finding themselves unprepared for the costs associated with filling the position, or missing key deadlines that imperil financial health.
Succession planning should be a shared responsibility between the board and existing CEO/Executive Director. Having a conversation annually is good practice to ensure that that staff and the board have this on the radar and that resources are invested adequately for training and development. Regardless of the type of transition, preparing the staff team is crucial to equipping them to step up when needed.
Transition 2: Chief Volunteer Officer/Board Chair
Another important leadership transition to consider is with key board leadership positions. While term limits often dictate the date of transition, unplanned transitions for the Board Chair/Chief Volunteer Officer (CVO) can impact the health of the organization and should be considered in the planning process. Are the roles and responsibilities clearly defined? Do your by-laws include processes or policies around the transition of the chair position?
Care should be taken to ensure that the Vice-Chair is adequately prepared and intends to take the helm if needed. Too often, the Vice-Chair role is occupied by a board member who does not wish to be chair and declines to step into the role when needed, placing the organization at legal, reputational, and governance risk. Check in with the Vice-Chair on an annual basis to assess and confirm their readiness to assume the responsibilities if needed.
Transition 3: Treasurer
The Board Treasurer is key in overseeing the annual audit process, financial statements, financial controls, and is often a signatory for the organization. It is wise to have a transition plan in place for this important role as well. The treasurer is the financial watchdog for the organization and provides important service to staff as well. Not just any board member will be equipped to take on this role. It is an important part of board development to ensure that you are recruiting people with the experience and acumen to serve this vital role and developing the bench strength of the finance committee adequately so that a successor can step in if necessary.
Managing Your Succession Plan
Staff and board turnover happens naturally in the lifespan of the organization. It is up to the leadership of the organization to ensure that these natural events aren’t debilitating. Having strategic conversations and refreshing the policy today can limit future negative influences on morale, community confidence, financial sustainability, and organizational health. Now is the time to ensure that this item is on the board’s chart of work annually.
Need a little help sprucing up your plan? Contact us for ideas on how to ensure your organization is prepared. https://www.dbd.group/board-governance
Have advice to share from your own succession planning experience? Tell us about it in the comments below.