Fundamentals of Nonprofit Management

A six-part series on the timeless principles of leading, sustaining, and expanding a nonprofit organization.

Many nonprofit executive directors, and indeed many other leaders as well, first consider the notion of their professional mortality when they reach their late fifties or sixties. All too often, they react with denial, and with an urge to rear back and tighten their grip on power. At about the same time, other responsible parties within an organization will begin to consider when and how to replace a top leader who is nearing the end of his or her prime. The result is a primal human conflict that looms as one of the most difficult challenges that a nonprofit organization will face. In the end, however, the need to plan for the future of an organization must win out.

Intentional succession planning is imperative not only in organizations with an executive director who is heading toward retirement age, but in every kind of organization. That’s particularly true in cases where a dynamic and visionary founding leader remains at the helm. The need for a “founder transition”—a transfer of power to a more professionalized second generation of leadership—often comes far earlier than the moment when a founder is inclined to embrace it. The failure to manage such a transition successfully is what kills most entrepreneurial ventures, be they social or commercial. In any context, founder transitions are fraught with potential challenges, and those challenges pivot around highly emotional life-and-death issues that are at least as much personal as they are institutional.

(Illustration by Mikel Jaso) 

Succession planning, in fact, is one of the most frequently requested topics of discussion at the annual retreat for recipients of the Henry R. Kravis Prize in Leadership that we facilitate. Even the remarkable people and organizations that have won this prize struggle with handling leadership transitions. In part, that is because many Kravis Prize organizations have founders who are still active.

The dominant personality traits of those who build great social organizations include a visionary approach to society and an ability to see through constraints—the constraints of time, in particular. Many nonprofit leaders talk about the future of their organization in the present tense, as if their vision for that future had already come to pass. And with those traits comes a deep reluctance to see one’s mortality as something to plan for.

Nonprofit leaders can delay or neglect succession planning, but succession itself is unavoidable. Here, then, are three principles that typify nonprofits that are not only effective but also enduring.

Get Real

Stakeholders in an organization should find out if their founder or executive director has a realistic sense of when and how succession should occur. Kravis Prize recipient Sir Fazle Hasan Abed, founder of BRAC, is one visionary leader who was able to develop realistic expectations in this area. BRAC, founded in 1972, is the largest nonprofit in the world. It reaches more than 100 million people per year in Bangladesh and across the world through anti-poverty, health care, and education programs. Abed served as executive director of BRAC until 2000, but he started identifying potential successors as early as 1990. Since 2000, BRAC has had three executive directors, and BRAC International (which oversees programs in 11 countries outside Bangladesh) has had three directors as well. Abed now serves as chair of the organization. “I have tried to ensure succession at BRAC without thinking about myself,” he says. “I wanted to address succession from the inside by gradually taking steps backwards and seeing how things worked out. I believe an organization can have more than one leader; in fact, leadership roles should be well dispersed throughout an organization.”

The oldest Kravis Prize recipient organization, Helen Keller International (HKI), established a track record of smooth leadership transition as far back as 1920. Its founder, George Kessler, was a New York wine merchant who began to develop what would become HKI after he survived the sinking of the Lusitania by a German U-boat in 1915. While he was recovering from that event in London, he resolved to devote his remaining years to helping soldiers who had been blinded in combat. He and his wife began to organize a fund for that purpose, and they asked Helen Keller, the deaf and blind woman who had become an advocate for the disadvantaged, for her support. She enthusiastically agreed, and the Permanent Blind Relief War Fund for Soldiers & Sailors of the Allies was incorporated in 1919. (The organization later changed its name to Helen Keller International, and its mission evolved to encompass the prevention and treatment of blindness and malnutrition in other populations.) The next year, Kessler died. What kept the organization from undergoing a succession crisis is the fact that early on Kessler had brought in “centers of influence” to help him pursue its mission. In addition to involving Keller, he had enlisted support from another center of influence—the Wall Street lawyer William Nelson Cromwell. In 1920, Cromwell succeeded Kessler as president. “Cromwell was already highly involved in the organization when Kessler died. Consequently, the succession happened very naturally and very smoothly,” notes Kathy Spahn, the current president and CEO of HKI. To this day, Cromwell’s law firm, Sullivan and Cromwell, remains a force that provides leadership continuity to HKI: Attorneys from the firm have served on the board of the organization for nearly 100 years.

Start Early

You cannot begin succession planning too early. Even a time horizon of 10 years or more isn’t too long when it comes to setting a leadership transition in motion. At Landesa, leaders identified Tim Hanstad as the future replacement for founder and chief executive Roy Prosterman in 1992—but Hanstad didn’t officially become president and CEO until 2005. During the intervening 13 years, Hanstad served as executive director, and in that capacity he honed his skills and developed his credibility among various Landesa stakeholders. “We had done so much succession planning for so long that by the time Tim took over, the transition was incredibly smooth,” says Prosterman. The Landesa approach, we believe, sets the best-practice standard in this area.

After stepping down from his executive position, Prosterman took a seat on the Landesa board. Crucially, however, he had the wisdom to declare that he would never become the board chair. We generally believe that the former founder who has served as chief executive or executive director should not become the board chair, and should consider stepping away from the board altogether. An effective board must have a safe environment in which to think critically, to reconsider what was done in the past, to challenge sacred cows. Yet most founders, consciously or not, will want to protect their legacy.

That said, we recognize that there are exceptions to every rule. Fazle Abed, as we noted, stepped down as executive director of BRAC but continues to serves as chairman of that organization, and by all accounts that arrangement appears to be working. “BRAC has benefited from the long-term commitment and continuity of its leadership,” says Susan Davis, founding president and CEO of BRACUSA. To emphasize that point, Davis notes that the founding chair of BRAC remains on the BRAC board and that the board elected a former BRAC deputy executive director to serve as its vice chair.

Deliberate, advance succession planning is important not only for the founder or executive director role, but also for other key positions on the senior management team of an organization. Focusing only on the founder “does an organization a disservice,” Abed argues. “BRAC now conducts succession planning at every level. We learned that we must pay attention to the pipeline.” Abed cites an occasion when that lesson was brought home for him: “We were taken by surprise when a critical member of the senior management team passed away unexpectedly in 2010. He had been my right-hand person since 1976. Fortunately, we had some bench strength. But we learned firsthand the importance of succession planning.”

Use Your Board

Board members must understand that one of their primary responsibilities involves hiring, evaluating, and (when necessary) replacing the chief executive of their organization. The task of replacement becomes especially difficult when there is a founder at the helm and when board members’ respect for that founder compromises their ability to act with resolve. Long friendships can be put at risk, tight-knit boards can unravel, and organizations can lose their focus—all because a board is unwilling or unable to ensure a strong transition to the next generation of leadership.

The board—usually through its chair—must initiate a conversation about succession in situations that involve a founder or long-standing executive director. In doing so, board members should understand that they are entering very complex psychological territory. Expect resistance: passive resistance, active resistance, and every other kind of resistance. At this point, a board leader’s responsibility to the organization may conflict with his or her personal regard for the founder or executive director. Not infrequently, an effective succession process will harm that personal relationship.

Yet a contentious relationship between a founding leader and a nonprofit board is by no means inevitable. Kravis Prize recipient Johann Koss, founder and CEO of Right to Play, has worked productively with the board of his organization to develop a formalized succession planning process. Every year, as part of his performance review, the board collaborates with Koss to update a talent management plan that covers contingencies (an “if I get hit by a bus” emergency, for instance) as well as provisions for long-term succession. “The planning is beneficial to the organization in many ways,” Koss says. “Having conversations with my board on succession planning helps me assess talent within the organization on a regular basis. It also forces me to think proactively about how I can coach and develop my direct reports so that they have the skill set necessary for promotion.”