Most of us have fantasized about what we’d do if we were to win big on the lottery.

Among the thoughts of dream vacations, a new home, or becoming a philanthropist, usually comes the question: what about work? Are you staying or taking early retirement?

Your executive director probably dreams of winning the lottery, too. While that will likely remain a dream, there are still many other potential reasons why an executive director may decide that it’s time to move on. They might have a sudden emergency requiring that they leave quickly, they may retire, or a new career opportunity may arise.

Regardless of the reason for departure, it’s a big deal for most nonprofits. Who is ready to succeed in your executive director role? The transition can be tricky, which is one reason why your nonprofit should have a succession plan in place.

Succession planning involves documenting policy and procedures for what to do if an executive director (or other key roles) leaves the organization. It also covers preparing for this eventuality before it ever happens. The aim is to facilitate a smooth transition.

This article discusses helpful tips to ensure that succession planning goes smoothly for your nonprofit. Find out what to prepare and how to prepare it.

Why Is Succession Planning Important for Nonprofits?

There are two key elements to succession planning that ensure nonprofits can continue with minimal interruption: emergency planning and long-term planning.

Emergency planning covers situations such as “the executive director just won the lottery” or “the director of philanthropy is sick and needs to take extended leave.” In other words, emergency planning is for sudden departures or extended absences (typically three or more months).

Long-term succession planning is a process for planned retirements or the possibility of key staff members moving on. Long-term planning generally involves activities such as training other team members for the tasks associated with the role.

Succession planning is important in both forms for the following reasons…

Continuation With “Business as Usual”

In the for-profit sector, companies refer to “business continuation planning” as part of their succession plans. The nonprofit sector has this need, too; nothing should grind to a halt within operations just because a key person isn’t there.

For example, consider processes such as sign-off on hiring or spending. In many nonprofits, the sudden departure of the executive director would leave such requests in limbo and could severely impact the organization’s ability to complete its mission. Succession planning helps to define responsibilities so that important tasks can continue.

Nonprofits need succession planning to continue with “business as usual”

Answers Key Questions for the Nonprofit

What happens if the executive director departs and there isn’t a succession plan? For many boards, this would lead to months spent trying to answer key questions that a succession plan would have resolved for them. Questions such as:

• How do we fill the position? Do we hire externally or promote internally?

• How do we address any concerns of staff or donors over the departure of leadership?

• What do we need for this position? Do we need to adjust the job description?

• What do we do if an interim plan is required? Who acts in the role, and what does their contract determine?

• How long should the succession process take?

• Who will be the organization’s spokesperson for this period?

Succession planning, in case of an emergency and for the long term, answers these questions so you’re not spending your time scrambling to make arrangements.

Reassure Donors

Leadership's departure from your nonprofit can leave your key donors uncertain and hesitant to commit funds. Effective succession planning and a commitment to continuation reassures your donors and can help limit the financial impact on your nonprofit. Basically, the donors want to know that your organization will run with at least the same level of skill and competence as before.

Preserve Valuable Knowledge

When the executive director or any other key team members depart, there’s always a risk that valuable knowledge goes with them. For example, they tend to have vast networks of contacts and knowledge about specific vital areas for the organization.

Succession planning should include a plan to harness and preserve that knowledge so it’s not lost to the organization. It can otherwise take years to build back up.

Tips for Nonprofit Succession Planning

Let’s look at some general tips for both emergency and planned succession.

Emergency Succession Planning

In many cases, the executive director drafts an emergency succession plan and presents it to the board for approval. They know the role well and can generally cover all the aspects needed for the plan. This is the “we know we need it, but hope we never actually need to use it” plan.

Some key aspects to include in an emergency succession plan include:

• Naming the first and second acting successors. This may be by name or by job role.

• Identify any limitations the acting successor may have in their role. These limitations are usually noted along with how they can get approval. For example, if it’s signing off on spending over a certain amount or the ability to fire staff, who do they go to for sign-off?

• Identify any contingencies needed for the acting successor’s current position. It’s difficult to fill in and do two jobs well!

• Contractual elements for the acting successor. For example, how will they be compensated?

• The top three to five priorities from the strategic plan; these are essential for the executive director role.

• The interim responsibilities of the acting successor.

• Define an internal and external communication plan. This should also state who is responsible for what communication and when.

• Define a training plan for interim appointees. This should also include clear directions about where and how they can seek help.

• A process to select a new permanent person in the role.

What If You Don’t Have a Plan Yet?

If a key executive leaves suddenly and you don’t have an emergency succession plan, then you need your board to convene as soon as possible to complete some key tasks. Here’s what to consider:

1. Naming an interim spokesperson for the organization. Word tends to get out if an executive director leaves, and people will want questions answered.

2. Prepare a communication plan, covering internal and external communications.

3. Define a process to hire a new executive. This should include deciding whether you’d like to promote from within or hire externally.

4. Identify an interim executive and approve compensation for them. Define their responsibilities and any limitations on their role.

5. Identify a support person (or persons) for the interim director.

6. Form a committee to search for a new, permanent director.

Planned Successions

Planned successions are always the preference because you have time to get effective systems and processes in place. However, even a planned succession can have challenges. For example, you’d generally expect the incumbent executive director to support succession and transition activities, but sometimes they struggle to hand over the reins. You may want an experienced board member acting as a “champion” for the succession process. Similar to our recommended overall champion role for strategic planning, a succession planning champion increases accountability to the process. They are committed to ensuring the plan is implemented and they provide the needed support for team members during the transition.

When entering into a planned succession, your board should carefully define how they want the role to operate and whether they want any changes. For example, would your organization benefit from a different style of leadership? Do the responsibilities of the role need to evolve?

Planned successions can be challenging; the successor must have credibility with team members and stakeholders. If they don’t, they may not last in the role.

When the board has decided that they’d like significant changes in the leadership role, many organizations deliberately choose to hire an interim executive director for a period first. This can help to keep the mission moving forward while providing room for a cultural shift and for the organization to embrace a different kind of leader.

A defined succession plan should include:

• Reflection from the outgoing executive: what were their personal and professional challenges in the role? What went particularly well?

• If the departing executive was a founder or if they will remain directly involved for any other reason, that involvement should have defined parameters. For example, maybe they will be a resource or facilitate contact with their own network but won’t be involved in decision-making.

• An updated job description for the role. This should include the top three to five strategic objectives for the role, core competencies, required experience, and preferred leadership style.

• A communication plan that covers all stakeholders, both internal and external.

• A professional development plan. It’s imperative if you’d like to hire internally. You need to identify the key development areas required and who should be trained in those areas. This is an ideal time to identify leadership development opportunities for staff and board members so that the organization can maintain a “deep bench.”

• An plan to provide support to newly placed team members. They might need coaching, mentorship, and help with defining goals.

• An onboarding plan. It usually covers at least the first 90 days in the role and defines some clear goals from the board. It should include orientation and a structured feedback process.

Many nonprofit boards opt to form an executive hiring committee to oversee succession planning and the procedures around hiring a new executive. Sometimes it is also beneficial to engage a transitional coach to help facilitate a successful transition. Doing so is especially helpful if the changes become complex or challenging. Whatever the case, successful transitions come from planning and a commitment to managing them well.

Conclusion

For your nonprofit, succession planning is critical to ensure that your mission keeps moving forward. Whether it is a sudden, emergency departure or a planned departure with a longer lead time, you need to be able to move ahead while maintaining the trust of your key stakeholders.

Somewhere, someone is winning the lottery or finding out they need to take an extended leave of absence. Someone else is preparing for retirement or a new job offer. If that someone happens to be your executive director or another senior role, you need a plan to keep their role in the organization functional. Your succession plan, in partnership with a strategic plan, will provide a blueprint for continuing forward momentum for your nonprofit during a time of transition.