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Keep your nonprofit afloat with a leadership succession plan

February 16, 2020 by Ernst Wintter & Associates LLP

If your top executive were to step down tomorrow, would your not-for-profit company be able to make a smooth leadership transition or would there be an overall lack of direction? According to the nonprofit BoardSource, only 27% of nonprofits have written succession plans. Unfortunately, without a succession plan these companies face an uncertain future: challenges could include fundraising difficulties, program disruption, and an inability to continue operating. 

Fortunately, creating a succession plan isn’t as difficult as you might think. The first step is understanding your organization and its financial needs. Here at Ernst Wintter and Associates, we offer nonprofit audit services that offer the financial perspective you need during the process of creating a succession plan. But there are several other points for you and your board to keep in mind as you establish a succession plan.

Consider your future needs

In most situations, companies have time to plan key-employee replacements. When they do, a successor can be chosen and then trained into the job. Consider developing your existing employees who can be promoted into management-level positions as the need arises. Promoting from within provides several benefits: a seasoned employee knows the organization, its work, and its employees well before taking over. D     emonstrated career advancement within the company also improves morale.

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However, promoting from within can be difficult, especially if a company has a small staff without many leadership capabilities. After all, developing leadership takes  time and effort away from your nonprofit’s program. Occasionally, there’s also the chance you’ll need a director with specific skills you lack elsewhere in the organization, such as nonprofit audits or corporate governance. Therefore, you might still need to hire an outsider. 

You’ll also want to consider that as your nonprofit constituencies or regulatory environments change, your leadership might need to be somewhat different. Also, personalities and corporate culture sometimes need to be adjusted to fit changing realities. Succession planning provides a great opportunity ensure that you make the right changes in leadership, and do so successfully to avoid culture clashes. 

Prepare for the unexpected

Finally, keep in mind that successions can sometimes come suddenly. If a key employee becomes ill or dies, it can be tough for the rest of the organization. Make sure that you have good policies for communicating with donors, clients and the press during such a crisis. Also, you need to have procedures in place for choosing temporary leadership during the sudden executive search. 

Be financially secure to weather the storm.

No matter your succession plan, successful implementation requires a healthy organization. One of the essentials of organizational health is the retention of a nonprofit auditor, because so much is at stake if you can’t articulate your corporate financial position. Think about it this way: If a nonprofit company’s finances are in a mess, it is less attractive for potential executive candidates because they don’t know what they’re getting into. A firm financial foundation, along with well-run programs with dedicated staff can help you weather the storm of transitions much more easily.

Contact us to discuss our quality nonprofit audit services and your company’s financial needs during successions today. 

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