President-elect Donald Trump’s upcoming inauguration — and his latest joke about considering a third term — are reminders that healthy institutions benefit from regular leadership transitions and limits on individual power. Term limits are smart not just in politics, but also for executive directors at nonprofits — though not necessarily for the same reasons.
The standard rationale behind term limits is familiar: People tend to hold onto power, and without external limitations, might do so indefinitely. A built-in endpoint serves as a check and balance, limiting someone’s accumulation of power, ensuring fresh leadership, preventing stagnation, and protecting an institution’s integrity.
But for nonprofits, term limits, or fixed terms, have broader benefits. Beyond safeguarding institutions, they can also ease the exhausting burden of a leadership change that’s often placed on an individual, shifting responsibility and accountability to the entire organization in a healthy way.
Term limits also offer a new approach to addressing the sector’s lack of diversity. The nonprofit workforce is predominantly made up of women and has a higher proportion of people of color than the country as a whole. But this diversity diminishes at the executive level.
When women and people of color do become leaders, a glass cliff replaces the glass ceiling. A gender pay gap persists at the leadership level, while nonprofit leaders of color experience alarmingly high levels of stress due to outsized expectations, fewer financial resources, and lack of support from boards. Under the circumstances, it’s hardly surprising that the number of people, particularly people of color, who want to lead nonprofits is declining.
I’m a former head of a small nonprofit who has also coached executive directors during changes in leadership and recently co-authored a report for the Cricket Island Foundation about its efforts to support such transitions. In researching the report, I learned that the responsibility for announcing their own departure almost always falls on the leaders themselves, which resonates with my firsthand observations.
Understandably, leaders are often uncomfortable with that responsibility and are loath to make more work for colleagues who will have to manage the change in leadership. They might also be reluctant to create the appearance of instability to funders and colleagues who did not anticipate their departure. Cost is a factor as well. According to a forthcoming report from the Nonprofit Sustainability Initiative, executive transition costs nonprofits $235,000 on average, a burden that falls disproportionately harder on small organizations.
The result of all this? Executive directors often delay announcing their departure, not because they’re hoarding power but because they don’t want to inflict the extra costs and work on their colleagues.
Leaders staying longer than they want can lead to burnout and secrecy around planning their eventual exit. It can also cause seemingly abrupt departures or prolonged tenures, both of which complicate transitions.
Our report recommends that funders normalize leadership changes by discussing them openly throughout the director’s tenure and sharing financial and advisory resources to simplify the process. But nonprofits can go a step further by introducing term limits in an executive director’s contract. These don’t need to be rigid. A term limit could have a built-in option for a renewal or extension. But they should provide clarity on a leader’s tenure from the start.
Borrowed From Higher Ed
While I don’t know of any nonprofits that have implemented such a system, the idea came to me from higher education. Department chairs often rotate while university presidents are hired for fixed terms, with the option to renew.
Here’s how it could work at a nonprofit: Imagine a four-year term where at the end of the third year, the executive director decides with the board whether to continue for another term or step down. This would reduce the onus on individuals to choose whether to stay or leave.
Leaving it up to executive directors to determine when to quit creates an illusion of autonomy, while establishing a tenure with a clear end date allows them to focus on their job without constantly worrying about timing their departure. And leaders of color concerned about the stress of the job might be more willing to step into a role with a specific time frame. They can give their all for a defined period, then get out before they burn out.
Term limits would also encourage organizations to invest in institutional knowledge, fostering a culture of preparedness. When staff expect transitions, they have greater incentive to document the policies and processes essential for maintaining organizational stability and continuity during a leader’s departure. They may also nominate themselves for senior positions if they know a role is opening up.
A major challenge with leadership changes is a lack of support from boards, often because the board members aren’t trained for or anticipating it. If board members knew that supporting a transition was an established part of the job, their expectations about their own role would change from the outset.
Nonprofits currently undergoing or anticipating a leadership change could bake term limits into a new executive director’s contract during the hiring process. And individuals who are considering executive director roles but are concerned about the stress of the position, could raise the possibility of a term limit during their interview.
Regardless of the approach, this will be new territory for any nonprofit that decides to give term limits a try, which may feel risky. Organizations might worry, for example, that the executive director will feel like they aren’t doing a good job or that they’re being pushed out. Seeing term limits as liberating will take a major paradigm shift, which requires multiple organizations participating together.
That’s why I encourage nonprofit associations and funders to support networks of like-minded organizations where several nonprofits could try term limits, and then discuss strategies and challenges openly so others can learn from them. This could follow the model of organizations such as the Trust-Based Philanthropy Project, which provides a community for funders who use trust-based philanthropy.
If a presidential administration is expected to transition regularly, a nonprofit can surely do the same. Executive directors have an incredibly hard job. Setting clear, fixed terms allows for rejuvenation and renewal both for the individual and the organization, bringing clarity, support, and fresh energy to the nonprofits that drive societal change.
