Philanthropy's Role in Succession Planning: How Funders Can Assist Grantee Organizations in Preparing for Leadership Change

Philanthropy's Role in Succession Planning: How Funders Can Assist Grantee Organizations in Preparing for Leadership Change

Succession planning by nonprofit leaders is on the rise. While still an awkward and at times confusing topic for many leaders and organizations, more and more boards are stepping up and actively engaging the question of how to sustain effective leadership for planned and unplanned transitions. This article describes our experience, and associated learnings, in developing an innovative approach to promoting nonprofit succession planning. Initiated in 2005 by the United Methodist Health Ministry Fund in Kansas, this program worked with leaders of sixteen current and former grantee organizations and the fund itself. It not only provided services and resources to these groups, but also sought to build regional capacity to make succession planning support more broadly available.

Leaders Leaving: The Data

The case for paying attention to succession planning is compelling. The 2006 Daring to Lead study sponsored by the Eugene and Agnes E. Meyer Foundation and CompassPoint Nonprofit Services revealed that 75 percent of nonprofit executives plan to leave their positions in the next five years. It also found that only 29 percent of nonprofit organizations have developed any kind of succession plan. Perhaps most alarming is that the study's findings only confirm similar findings from previous studies by the Annie E. Casey Foundation and the Maryland Association of Nonprofit Organizations. Our experience with nonprofits in communities around the country during the last decade has reinforced this data. The combination of the aging of our nonprofit leadership cadre and the growing stress and challenges of nonprofit leadership are leading to a steady exodus of both long-term and recently hired executives.

Of course at some level, some leadership change is unavoidable, even natural. However, unplanned and poorly managed transitions can have very negative consequences and are a justifiable concern both for individual organizations and the sector as a whole. Fortunately, some foundations have begun to invest in innovative services and programs to assist nonprofits in making the most of leadership change. These groups have come to understand the variety of organizational opportunities transitions can yield.

The Annie E. Casey Foundation has been a leader in this arena. "In 2000, our senior leadership became alarmed about the planned departures of executives who were leaders in the major system reforms we supported," recalls Donna Stark, director of the Leadership Development Unit at Casey. "We surveyed our grantees and found that 85 percent of executives planned to leave in the next seven years. It was a wake-up call, and it resulted in a multiyear commitment to invest in helping our grantees and others plan for and manage leadership transitions effectively."

A Kansas Case Study

Building on these earlier investments by the Casey Foundation — as well as the W.K. Kellogg Foundation and local and regional foundations — the United Methodist Health Ministry Fund developed an innovative training and capacity building program to help prepare its grantees for leadership succession and transition. This is the story of that pilot effort, its lessons, and implications for funders and nonprofits.

Getting Started

The leadership of the United Methodist Health Minstry Fund first engaged the issue of succession planning at a session at the 2004 Council of Foundations conference in Toronto. Two top executives, both in their late 50s, attended the session because they had begun considering their own retirement and recognized a concern about the fund's future leadership. More importantly, they noted that a number of the fund's key grantee organizations also had long-term, baby-boom generation leaders approaching retirement. The CoF session reinforced their interest in the issue, while offering promising a number of transition strategies developed through the investments of the Casey Foundation and others.

Back at the fund, subsequent conversations led to a board commitment to set aside funding in 2005 for succession and transition planning assistance for its grantees. "Providing executive succession and transition planning services for many Kansas organizations working in health was a natural," recalls Jackie John, former chair of the fund's board. "We knew it would strengthen our relationships with many organizations and better ensure their ability to function when transition happens."

At the same time, the fund recognized that it didn't have the resources and expertise in Kansas to develop the program alone. Therefore, with board guidance, staff sought a partner to:

  • Build local capacity to support nonprofits with succession and transition services;
  • Offer a focused training experience to twenty or so grantee organizations with long-term leaders and potential interest in this topic; and
  • Take what the fund learned from this small group of nonprofits and offer it more broadly in Kansas.

The foundation turned to TransitionGuides, a leading national education and consulting company specializing in nonprofit succession and transition work, to design and implement the program. To make sure the program met the real and expressed needs of grantees, the fund also invited four seasoned local leaders and two management support executives to serve as advisors in designing the initiative.

Penney Schwab, executive director of United Methodist Mexican-American Ministries in southwest Kansas for twenty years and part of the planning group commented: "My board and I had already completed an emergency succession plan. The opportunity to be part of the planning group helped us develop a detailed plan for transition of leadership when I or other key staff retire. Succession planning is personal and can be messy. There is a lot at stake on this topic, so I was grateful for the opportunity to talk with peers and professionals in the field."

The planning group then met and created a one-year program with the following features:

Developing Local Consulting Capacity

Building long-term consulting capacity in Kansas was critical. To that end, the program invited two local organizations, the Self-Help Network in Wichita, Kansas, and Southwestern College in Winfield, Kansas, both of which currently offer consulting and education to nonprofits, to explore becoming succession planning and transition services providers. The fund also provided travel and tuition stipends for staff from the three organizations to attend a one-day introduction to Executive Transition Management consulting offered at the Alliance for Nonprofit Management's annual conference and sent them to a three-day consultant training on the topic offered by CompassPoint Nonprofit Services and TransitionGuides.

Greg Meissen, director of the Self-Help Network, participated in both offerings. "We serve small and midsize nonprofits, often with large volunteer programs," Meissen says. "We saw the impact of unplanned transitions and were excited about this opportunity. We were able to get some training for ourselves before the foundation began training its grantees. This helped us a lot in being a resource in the training, developing our own emergency succession plan, and planning for what services we might begin to offer."

Two years later, Self-Help Network is now offering the full range of emergency succession planning and related leader development services.

Scholarships to Next Steps Workshop

Research and our experience in the field have found that the transitions of long-term executives and founders are particularly thorny. Funders and other key stakeholders may over-identify the organization with a charismatic leader. Internally, the influence of a long-time executive can cast an unhelpful shadow on the new one. Founders and long-term leaders, therefore, often find it beneficial to learn more about leadership succession and transition and how it applies to them personally before launching planning with board and staff.

"A 2002 survey of our grantees reported a third were founders and over half long-term (over five years) executives," explains Patrick Corvington, senior program officer in the Casey Foundation's Leadership Development Unit. "In talking with these leaders about transition, we heard their ambivalence about how and when to leave." In response, Casey supported the design of a two-day workshop called "Next Steps." To date, more than 250 executives have attended.

With scholarship assistance from the fund, the executive directors of six fund grantees attended a Next Steps workshop. Initially, there was some ambivalence and several struggled at first when asked to state their personal missions at the workshop session. "First of all, I really wasn't going to participate and then I thought, 'I'll do this for me,' says Judy Frick, founding executive director of Communities In Schools of Wichita/Sedgwick Co., part of a national stay-in-school network. "But it was invaluable to be in the same room with fifteen other executives experiencing the same turmoil," adds Frick, who successfully transitioned from her position earlier this year.

Workshop and Coaching Support to Selected Grantees

While the fund has made grants to approximately 218 organizations over the last five years, it decided to approach succession planning as a separate program or initiative and offer it to a select group of current and former grantees where attention to succession planning and transition seemed most relevant. To that end, the fund selected twenty grantee organizations and invited the executive director, board chair, and, where desired, one other board member to an introductory, one and a half day workshop on the issue. The decision to invite specific grantees was a strategic one not without some risk and concern. The fund did not want to appear to be making any judgment or statement about the leadership of organizations that were not selected. Conversely, it didn't want to appear that it was targeting "problematic" leaders or organizations. It also wanted to ensure that participating grantees truly wanted this support. The tenor of the invitation, which focused on a general concern about baby boom transitions (including its own) in the broader field, was carefully crafted to create the right climate around the workshop and program as a whole.

Ultimately, the response from grantees was robust, influenced no doubt because of long-term relationships and trust between grantees and fund staff. A personal letter from the fund's president saying he and his board chair would be participating because the fund saw this as an important topic also helped.

Sixteen of the twenty organizations chosen and fifty-five leaders attended the initial workshop. The session's goal was to introduce participants to succession planning and executive transition management and to assist each organization to begin work on an emergency succession plan, which would be completed over the next sixty to ninety days. An emergency succession plan names candidates who can replace the current executive director (or other leader) on an interim basis, and sustain an organization through a transition crisis. It also clearly defines where the lines of authority will lie after a leader's unexpected departure. Perhaps just as importantly, creating an emergency succession plan can start a dialogue among board members and executive directors about the importance of managing leadership transitions proactively.

Except for a presentation on the concepts and practices involved, most of the learning time was spent in small, organizational groups and in peer discussions with leaders from two to three organizations. All eighteen participating organizations also spent forty-five minutes with one of the trainer/consultants dealing with their unique organization leadership situation. Overall, the response to the program was very positive, and at the conclusion of the workshop each participating organization agreed to complete its emergency succession plan, as well as attend a follow-up workshop and help introduce succession concepts to other Kansas nonprofit leaders. Following the initial meeting, TransitionGuides also provided three hours of coaching supported by the fund to assist the leadership teams in completing their plan and introducing the ideas to their respective boards.

Community Awareness Workshop

Four months later, the fund hosted a two-part follow-up workshop for the sixteen organizations and a one-day Awareness Workshop for forty-five other nonprofits. The follow-up session allowed initial teams to share lessons from completing the succession plan. These teams, and particularly their executives, then joined with the two local consulting groups to describe to the bigger group their experience of the training and their work on succession and transition planning.

De-Brief: Key Program Benefits

As the fund evaluated its experience with promoting succession planning, it has identified some key benefits from this approach:

  1. Improving the likelihood of successful transitions is really ensuring a funder's investment in its key partner organizations. The fund identified a cohort of organizations in which it had invested over long periods of time and which are engaged in work of strategic importance to the fund. Reducing their risk of significant problems in the event of either an emergency or planned leadership transition helps ensure the vitality of these strong partners over time.
  2. Planning for leadership transitions encourages a broader look at the organization, especially its leadership development processes. In the process of developing an emergency succession plan, many organizations experience a variety of related benefits. For example, they may experience increases in current organizational capacity from cross-training, improved board engagement, and developing a clearer analysis of current staff's strengths and challenges.
  3. Offering programs like these positions a foundation for stronger relationships with its key partners. The fund participated in the workshops as an organization doing its own emergency succession planning. This helped to mediate the "power divide" that often separates funders from grantees. Following the last workshop, the fund had several constructive conversations with organizational leaders about their future plans — conversations initiated by the grantees. The fund even developed a grant to support a leader with those plans.
  4. Developing your own succession and transition plans is another potential benefit for foundations. The fund did not have an emergency succession plan, but began to develop one through the workshop. With additional staff work and board approval, the fund now has a written plan, and it has recognized the need for more intentional cross-training among its small staff and the benefits of having at least two staff members with some level of relationship with its key partners.

A final important lesson for the fund was about the potential for a relatively small foundation to do a capacity building program like this. Using TransitionGuides throughout the planning, along with a Kansas advisory committee containing key grantee organizations, made the entire process manageable for the fund's small staff.

For more information

A Leadership Succession Workbook and CD is available through TransitionGuides at www.transitionguides.com.

The Annie E. Casey Foundation has produced a series of monographs on executive transition and succession planning available at www.aecf.org.

Lists of other articles and resources on succession planning and executive transition management can be found at www.transitionguides.com.

Case Example: Rose Molina and the Medical Services Bureau, Wichita, Kansas  

The Medical Service Bureau provides access to prescription medications, diabetic supplies, and prescription eyeglasses and makes referrals for low-cost eye exams to low-income persons living in Sedgwick County. The agency has seven employees and a budget of more than $500,000. Rosa Molina is its long-term, well-known, and well-respected executive director. Along with leaders from fifteen other nonprofits, she participated in both Kansas workshops. The process, which the agency could not have afforded without fund support, gave her the opportunity to discuss for the first time her future plans with a board member (who also attended the workshops with her), she says. She also developed an emergency succession plan through the process.

Rosa says she feels the information about succession and transitions has changed her approach to leadership. Instead of sharing her duties in a "bits and pieces approach" with other staff members, she has become more intentional in teaching her job to others in the office. From prior experience with another agency, she says, she has become acutely aware of the impact on the Medical Services Bureau if something happened to her. "If you believe in what you are doing and like your job," she says, "you don't want the agency to fail." This makes it much more important, in Molina's judgment, to write down critical agency information so your successor can have access to it.

Through the program, Rosa also attended a Next Steps workshop, which gave her a renewed awareness of the difference in leadership styles. "Next Steps, she says, "[helps] you get in touch with yourself and why you act the way you do in your office." She also says she enjoyed the rare opportunity to talk and reflect with other leaders about these kinds of issues.

From the whole succession and transition program experience, Molina says she "feels a sense of racing against time to make the agency more successful." To that end, she secured a capacity building grant for technology from the Sunflower Foundation, another Kansas health philanthropy. While the grant has helped build the sustainability of the agency, Molina notes that "many pieces are needed. Whoever takes over after me, I want them to have a successful succession. I don't want them to have to hunt for answers. All of this executive succession work and capacity building work has strengthened the organization."