Another report published by TSNE MissionWorks is Leadership New England. It looks at trends in nonprofit executives planning to retire, how most organizations don’t have succession plans in place, and provides guidance for how to prepare for the coming sea change.
As of the time of writing, 64% of executives plan to retire in the next 5 years, and 60% of organizations lack succession plans for when their executive does leave. To make things more challenging, only one-third of leaders believe they have staff in place who can take on the leadership positions that will be left open. In light of this, how can nonprofit organizations prepare for the eventual departure of their leaders?
A significant reason cited by leaders planning to retire is burn out. Some cited stress from wanting to spend more time with their families and many cited the need for more support staff. This could come in the form of current staff stepping up and taking on more internal leadership, or needing to hire additional staff. With staff taking care of the program and administrative work, the top leader can focus on the executive director work.
A related strain is the financial health of organizations. 49% of leaders reported having 3 months or less of cash reserves on hand, and fund development is a recurring pain point for leaders and board members; 51% of leaders and 54% of board members reported this as their most challenging issue.
Nonprofits need to focus more on succession and sustainability planning. Succession covers an individual leader retiring or leaving the organization. Sustainability goes beyond that and shores up the organization as a whole, builds a pipeline of leaders, trains and builds the capacity of staff to make the entire organization stronger. Offer leadership opportunities for staff and invest in development and training so they’re prepared to step into larger roles when they’re asked to. Have conversations about leadership transitions, the opportunities they create, and engage the wisdom of current leaders to build and support future leaders.
Another important shift for the sector is more willingness to invest in overhead. It’s easy to link low overhead rates with the efficiency and effectiveness of an organization but this is not always the case. Too much focus on cutting costs can leave an organization with too few resources to sustain their work long-term. Nonprofits themselves should prioritize staff development and training, leadership development, and compensating staff well enough so that low pay doesn’t drive people away. Collectively, we need to affirm that healthy infrastructure and investing in leadership strengthen our organizations and help us fulfill our missions more effectively. To support this shift, foundations and other funders need to be more willing to invest in these expenses, knowing that nonprofits with solid infrastructure will better meet the goals their funding pursues. Invest more in operating support, capacity building, and leadership development. Create networking opportunities for nonprofits and funders to engage with each other and drive the sector forward in a more powerful way.
There’s not a single, silver bullet to meet the leadership needs of the nonprofit sector. There are several trends that come together in the imminent transition of leaders, but tackling them head on, with a view not just towards this transition but towards sustainability in general, will bring us through the next few years and strengthen us for years to come.
To read more about TSNE MissionWorks’ findings, you can read the full Leadership New England report here. It includes several findings from nonprofit leaders and board members, highlights trends, and recommends shifts for the sector moving forward. TSNE also provides this Leadership Profile, where you can dig into survey data about leaders, organizations, upcoming transitions, and relationships between leaders and their boards.