The conventional wisdom in the nonprofit world is that when nonprofit founders step down, they should walk out the door and no longer be actively engaged.
“Founders and successors are oil and water,” goes the rationale. “They just don’t mix.”
But a recent Bridgespan study found instead that under the right conditions, transitions that extend a founder’s role are surprisingly common and can yield the best results. In fact, nearly half of all founders who step down continue to bring their knowledge, relationships, and passion to bear for the organizations they started. And the least likely to succeed? Cases where the board ousts a founder.
We based our study on analysis of informational tax returns of 2,000 organizations (which included 106 founder transitions), survey responses of more than 500 nonprofit leaders and board members, and interviews with founders, successors, and board chairs at 31 organizations. Here are some key findings:
- More nonprofit boards work out a continuing role for founders (45 percent) than pursue an amicable clean break (31 percent). Moreover, among organizations where founders stayed, most reported that founders made positive contributions, and 75 percent thought the benefits of a continuing founder role justified the complexity. Significantly, nearly half the organizations where the founder did not stay said the transition would have gone better had the founder played a role.
- Transitions pairing a founder with a successor selected from within the organization proved to be the most successful of all transition approaches. This was measured on revenue growth through the transition, retention of the successor, and self-reported performance.
- Transitions require preparation. The board needs to help the founder define her role in support of the successor and the mission. It also must shepherd the process. Founders can deliver much value, especially in fundraising, advocacy, and mentoring the successor. Other benefits: Staff loyalty remains high; the new leader gains from the founder’s unique knowledge, and, most importantly, beneficiaries keep being served.
This tactic, however, works only when the founder has the capability and desire to stay engaged and the board perceives clear value from the founder staying involved. It’s also critical that the successor wants to work with the founder and that the founder is willing to play a different role and to help the successor thrive. Also essential: Both founder and successor must sublimate their egos.
Replacing the ‘Pioneer’
Consider Communities in Schools founder Bill Milliken, a visionary who pioneered the organization’s approach to coordinating social services at schools to identify and support students in danger of dropping out. After almost 25 years, the organization’s severe growing pains convinced the board and Milliken that the nonprofit needed a “settler” to follow their “pioneer.”
Because Milliken remained committed to the mission and to fundraising for it, the board persuaded him (with some outside counseling and a couple of false starts) to move to a board role and stay involved in fundraising and advocacy. Doing so cleared the way for his executive vice president of field operations, Dan Cardinali, to take the reins, restructure the organization, and refresh its strategy.
It worked, Milliken said, because “Dan could keep his ego [in check] and help me keep [mine] from getting out of place.” He added that their talents complemented each other: With Milliken anchoring the heart and soul of the movement, Cardinali became the data-driven mind that created a winning strategy in a crowded youth-development market.
“By partnering with Bill and leveraging his moral authority to validate the organizational change strategy, we had an amazing opportunity to drive change,” says Cardinali, who is now the head of Independent Sector.
Indeed, a board will want to assess the founder’s and successor’s ability to work together. With internal successors, the relationship is typically well established.
Succession: What Works
Nonprofits that have dealt with transitions mentioned a set of common practices to manage leadership transitions: Invest early in developing internal successors, establish frequent interaction between the successor and board chair, and encourage active participation by the board.
Those practices are important, but our research uncovered other important recommendations for situations where the founder has a role after the transition. Although our data shows that transitions with an internal successor and a role for the founder tend to be the most successful, the practices apply to any organization that seeks to extend the founder’s stay.
Among them:
Limit the founder’s new role to specific areas of high interest and capability. Some organizations define well-focused assignments with timetables and clear deliverables, such as starting a new program. Others tap the founder’s capabilities, such as fundraising or serving as an ambassador to affiliates.
Engage the founder and successor in regular coaching to help navigate the operational and emotional aspects of transition. The journey from founder to a redefined supporting role can be fraught with tricky decisions and separation anxiety. Research has shown that a coach can increase the chances for transition success.
Anticipate conflict and agree to a process to mitigate it. Leadership transitions are inherently complex, even more so when a nonprofit’s founder stays on. As part of transition planning, the board chair need to work with the founder and successor to establish a conflict-resolution process.
Spread out the transition process. Founders often develop intense loyalty among staff and board members, many of whom are personal friends. What’s more, financial supporters often identify more closely with the founder than with the organization. It’s critical to shepherd these loyalties to new leadership. With an extended transition, organizations have the benefit of spreading out transitions over time.
Staff and board interaction are usually the first transition step; next, transitions with foundations and other big donors as the founder introduces the successor to key supporters, a step that adds credibility to the incoming leader.
Create initial separation to allow the successor to settle in. A successor needs time to establish herself, a period that may include staff restructuring or strategy changes. Although the successor may consult with the founder, it is important for the founder to maintain a low profile during the early months of transition to avoid confusion about who is in charge.
All these recommendations underscore the underlying principle that the board must take an active role in succession planning. Some of this work can be anticipated. Founder transitions peak at two points: the 10-year mark and after 25 years.
But even before hitting these milestones, boards should talk annually about CEO-succession planning. Such routine discussions among the entire executive team render the probing less personal and fraught, while continually focusing the board on the organization’s leadership needs.
Jari Tuomala is a partner in the Bridgespan Group’s New York office, where Donald Yeh is a manager.
