The change that accompanies a founder transition can present significant opportunity when well-managed and embraced. (Photo by iStock/marchmeena29)
The unknowns that come with having someone new at the helm of an organization can generate anxiety and complexity during any leadership transition. Staff members wonder whether the new leader will change strategy, tactics, or the organizational chart. Board members ask themselves and one another what stewardship and governance might feel like with a new leader. Funders re-examine their commitment, and how much the organization’s mission and model—versus the founder’s thought leadership, social network, and/or social capital—drives their investment energy.
Founder transitions can seem particularly risky. Founders typically bring a high level of raw energy to their work, as well as distinct, personal resources like people, money, and community access. All of this draws in supporters and energizes the organization. And because founders helped place every brick in the building, they know its weak and strong spots, and often have an intuition about the organization or its work that helps guide effective decision making.
Yet, though successors may often lack these advantages, they can bring enormously powerful change—change that likely can’t happen without a succession. Transitions allow organizations to recalibrate their work through the lens of a new leader’s skills and networks. New leaders often re-examine and bring a new eye to the mission, model, and impact, as well as to who does what, where, and how. They bring different experiences and competencies that can strengthen organizational systems and programs, and often lead the organization toward new or different areas of potential and innovation. They also bring needed energy in cases where founders have burned out.
Everyone involved in a founder transition should be willing to explore and engage with the change, and the opportunities it might present. Funders, the board, and the founder all play important roles in setting up the organization for success, both internally and externally.
How Funders Can Help Organizations Transition
At Emerson Collective—a social change organization focused on issues such as education, immigration, the environment, and health equity—we often think of leadership transitions as a chance to build a new and greater beta. Though there is increased potential for risk, there is also increased potential for opportunity and impact, and we carefully examine both when deciding if and how to support an organization through a transition.
We seek to fund transitions in a way that provides room for the new leader to figure things out and make changes, while allowing us the flexibility to better understand the direction of their work as it unfolds. If a multi-year grant is in process—and the large majority of our grants are multi-year—we simply let it continue, and work with the leader to embrace or make changes to milestones as needed. If a grant is up for renewal, we will typically make a one-year grant so that we can get to know the new leader better in the year to come and see how the organization shifts under their leadership. If we already know the organization or leader is moving in a direction that’s not a fit for us, we often make an exit grant. We have a robust exit grant program that offers a year of funding at some percentage of the amount provided in previous years of multi-year grants. This provides time for the organization to prepare and plan for the change in funding, versus immediately creating a budgeting gap for the new leader.
In all instances, we ensure that the new leader is fully aware of the capacity-building supports we provide, especially around fundraising and governance training. At times we offer additional, individualized supports to aid the transition, including coaches for new leaders. Coaching gives new leaders a space to process ideas and challenges, grow skills, and prioritize and vent, with support from a skilled guide who knows the sector and has the best intentions for the leader in mind, but who has no funding or governance role.
Funders should also remember that time is a great gift. In the new leader’s early days and weeks, the best place for them to put energy is not in taking calls from funders but in understanding the work, and getting to know the team, the board, and the people the organization serves. This helps everyone in the organization’s orbit, including funders; leaders can have much more substantive check-ins with funders once they’ve had time to ground and immerse themselves.
How Founders and Boards Can Steward Success Internally
I have seen transitions work remarkably well: The new leader arrives and finds their bearings; builds relationships; honors and improves the work; and moves forward with wisdom, surety, and good effect. I have also seen them flounder: The hiring team doesn’t make the new leader sufficiently aware of the challenges of the role during the job search, and the new leader struggles; the founder gets anxious, and pushes back on the transition or the new leader; team members don’t lean into the transition with enough trust or flexibility; board members forget the commitment they made to the mission, and don’t adequately engage with the new leader or changes required; and funders fail to provide enough lead time for the new leader to build the work and the network to support it.
A lot of these misses result from some combination of insufficient planning, communication, or candor. Planning requires that organizations build and use timelines that include multiple workstreams and stakeholders. Timelines should also include communication points to keep people apprised of progress and feeling optimistic and like they are a part of the change. Candor from all parties is so important. Founders and boards need to ask, embrace, and address how people feel and what they need, even if it means not everyone chooses to stay with the organization over time.
It’s also helpful if the organization is in a place of strength when the founder leaves—financially, operationally, and in terms of impact. This creates confidence and allows everyone to enter into a time of transition with more energy and patience. There are other benefits too: Organizations typically attract a broader, more-diverse, and more-competitive pool of candidates if it’s clear that it has resources to support a transition. A halo of success will also help funders, partners, and staff to feel like they have more bandwidth to navigate the changes to come.
The founder’s attitude toward the transition and the new leader is another important factor for success. Involving a founder directly in the search for their replacement can complicate or diminish the search process, as the outgoing founder may significantly affect or bias the thinking of the staff and board. However, the board can identify strong candidates while encouraging the support of the founder by engaging a search firm. Search firms help manage the hiring process and communications in measurable, thoughtful, and equitable ways, especially with regards to how the organization sources candidates and how it takes different perspectives into account during the hiring process. It’s tempting to simply replace a leader as quickly as possible, rather than ask: Given the assets we have and the needs in front of us, how can we create the most impact, and who is the best person to lead the way? An outside eye can see a wider range of possibilities and ensure that the process takes all stakeholders into account. (If there is an internal candidate in the mix, clarity around process is even more important.) A dispassionate facilitator can also tap into the founder’s wisdom about the organization, mission, and team, while sorting through the leader’s personal history with the organization and unintended bias.
Finally, during the hiring process and in the new leader’s early days, it’s helpful to assign a board member to be the outgoing founder's sounding board and to provide them with support (such as severance, a coach, or useful introductions) calibrated to the length of time they spent in the role and their desired next steps. This can provide stability and support to the outgoing founder during what is likely a deeply personal and emotional experience, which in turn makes it easier for them to develop a strong, productive, and trusting relationship with the new leader that’s replacing them.
How Founders and Boards Can Steward Success With Funders
Taking all of the internal steps above helps funders feel more confident about the transition. In fact, showing that the outgoing leader and board are setting up the organization for success is one of the best ways to encourage funders to continue their support. That said, the importance of communicating with funders throughout the process can’t be understated. Founder transitions often seem to come as a surprise, even when it’s clear the founder is ready for something new or ready to retire. Effective communication includes sharing the news early, providing updates on the search and when the team identifies the next leader, and sharing how the transition is going.
Organizations should prioritize reaching out to larger funders, long-time supporters, and thought leaders in the field. And when deciding who will break the news, in what format, and on what timeline, It’s important to understand why and how each funder came to the organization and stayed with it. For example, sometimes it’s best if a specific person the funder has a long and trusting relationship with delivers the news, or it may be best to deliver the news in tandem with specific information about how the work will evolve given a funder’s particular interest. Finally, if there is more to the founder’s decision to leave than they feel it’s time to take on something new or retire, it’s best to say so upfront, as it will just come out later!
Founder transitions represent an important and transformative milestone in the lifecycle of an organization. Funders have a special role to play in this cycle by supporting leadership transitions with patient grants, as well as clarity around longer-term interests and focus. Along the way, thoughtful transition steps and avenues for clear communication can help everyone better understand the possibilities of a new leader as they take their place on the team, and then lead the evolution of important work.
Support SSIR’s coverage of cross-sector solutions to global challenges.
Help us further the reach of innovative ideas. Donate today.
Read more stories by Anne Marie Burgoyne.