The number of charitable organizations has grown exponentially over the past two decades. Today, many of the baby boomers responsible for this nonprofit growth are transitioning into retirement. According to the Pew Research Center, 75 million boomers are expected to retire by 2030.1
This trend surpasses the Great Resignation as the biggest staffing crisis.
Three national studies in the past decade have revealed that up to 75% of all nonprofit executives planned to leave their positions during the next five to seven years. In addition, 10 to 15% of all nonprofits hire a new executive director each year.
The departure of an organization’s top executive presents many challenges and opportunities. Preparing for this transition properly must be a priority for nonprofits.
In some cases, directors stay well beyond their effectiveness, no longer able to provide leadership. But because these individuals had devoted so many years of service to the cause, they were allowed to remain in the position. The board felt an obligation to honor their past accomplishments and overlook their current underperformance.
Or in a different scenario, a dynamic leader left abruptly, leaving the organization with an uncertain future and no one in place to take the helm.
Nonprofit leaders—especially founders or those with extended longevity—become inextricably linked to an organization. The community and donors place trust and resources into the nonprofit, sometimes based on the credibility and success of that one person.
For those organizations, the idea of replacing the well-known leader with someone new can be a tenuous proposition—one that is often avoided.
Why Plan?
Most nonprofit organizations have a small staff, limiting their ability to replace an administrative position internally. In the leader’s absence, all of the agency’s stakeholders—board, staff, volunteers, donors, and community partners—are faced with an uncertain future.
So, it would seem a necessity to have a succession plan in place. Yet a study conducted by the Kansas City Fed discovered that 68% of nonprofit organizations do not have a leadership succession plan.2 When asked why they did not have a plan, some said succession planning was simply not a priority. Others believed their organization was too small to implement such a plan.
Develop a Strategy
There are three basic types of succession plans:
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