April 25, 2018
Report: Succession Planning Is about Sustainability Planning

March 24, 2017 — Sustainability planning—not just preparing for the "looming leadership transition" at Greater Boston nonprofits driven by expected retirements among Baby Boomers—is key to ensuring organizational vitality after a new leader comes on board, according to a report released today by The Boston Foundation.

"The lack of organizations with a succession plan or an emergency succession plan combined with the large percentage (46%) of leaders reporting frail, operationally, and financially challenged organizations suggests not only that organizations are unprepared for transitions, but that it is time to shift our focus to a more holistic organizational sustainability planning frame," according to The Boston Foundation (TBF).

The report, Opportunity in Change: Preparing Boston for Leader Transitions and New Models of Nonprofit Leadership, based on input from 108 Greater Boston nonprofit leaders and 33 Greater Boston nonprofit board members, follows up on a similar study, Leadership New England completed two years ago by Third Sector New England (TSNE), a Boston-based nonprofit that provides management resources to other nonprofits.

According to the new report, 45% of Greater Boston nonprofit leaders are 55 years of age or older, and 78% of area nonprofit leaders plan to step down within five years: 5% within a year, 31% within one to two years, and another 42% within three to five years.

However, the report notes, 72% of 10 Greater Boston nonprofit leaders and board members say their organizations do not have a succession plan. According to TBF's Giving Common database on nonprofits, only about 10% of nonprofits report having a succession plan.

The 2015 TSNE report found that nearly two-thirds of Massachusetts nonprofit executives planned to leave their jobs by 2020, and that 60% of those organizations did not have a succession plan.

In 2011, a national survey of 3,000 nonprofit leaders conducted by San Francisco-based CompassPoint Nonprofit Services and the Meyer Foundation in Washington, DC, found that two-thirds of nonprofit executive directors planned to leave their jobs by 2016. The 2011 report followed up on a similar study conducted in 2006 and yet another one in 2001, which reported that three out of four executives said they planned to leave their jobs within five years.

Hez Norton, TSNE director of partnerships and leadership initiatives, speaking to a gathering of 200 nonprofit leaders in connection with today's report, said a delay in Baby Boomer retirements over the past decade was likely due to the Great Recession which diminished retirement funds and the fact "that leaving is really hard."

He added that the leadership transition planning discussion "is often a taboo conversation" for many organizations: leaders avoid it for fear of signaling they want to leave prematurely; boards shy away from it because they don't want to mistakenly convey they want leaders to depart.

Focusing exclusively on succession planning, the report noted, may "result in unintended consequences such as encouraging boards and staff to focus exclusively on who the organization’s next leader will be, missing the chance to consider other options for leadership and/or organizational structure that could ready organizations to more effectively deliver on the organization’s mission and better ensure the organization’s sustainability into the future."

According to TBF, "Thinking outside the traditional leadership structures and management boxes can help organizations weather transitions well and be more sustainable," and may include flatter organizations, shared leadership models, and mergers or strategic alliances.

Moreover, according to the report, nonprofits need to pay attention to board transitions. Sixty-one percent of current Greater Boston area board members are 55 years of age or older, and 39% are 65 or over, similar to their peers across New England.

Nonprofit leaders participating in the study cited three key challenges affecting their organizations' ability to sustain themselves:
  • Fund development remains a chronic pain point for leaders and their boards. In Greater Boston, 59% of leaders and 46% of board members identified fund development as their most challenging issue.

  • Leaders reported operational challenges inherited from previous leaders when they took the helm at their organizations. Almost half of leaders in Greater Boston (45%) report inheriting organizations that were faltering, frail, dysfunctional or requiring a turnaround.

  • Nearly one quarter of Greater Boston leaders report being dissatisfied or very dissatisfied with their board’s performance, which is often cited as the top reason for a leader’s departure. Leaders report that they need more from their boards, including fundraising support, organizational strategy and vision, productive performance feedback and a focus on improving overall governance.

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