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Giving Compass' Take:
• Research shows that nonprofit organizations benefit more when they plan out the process of founder successions rather than making rapid transitions.
• How can donors help facilitate this process smoothly for organizations?
• Learn about board succession planning here.
Nonprofits benefit when they carefully plan an extended role for founders who step down. The results of our research at the Bridgespan Group offered three valuable lessons.
First, far 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. Nearly half of the organizations where the founder did not stay said the transition would have gone better had the founder played a role.
Second, transitions that paired a founder in a continuing role with a successor from inside the organization proved to be the most successful of all transition models we examined, based on revenue growth through the transition, retention of the successor, and self-reported performance. Examples from organizations large and small show the power of this model. What’s more, the same lesson holds true for non-founder long-term CEOs when they step aside: When they play an extended role post-transition, their organizations do better.
Third, transition work is not easy; it requires preparation. The board needs to help the founder to define an appropriate role in support of the successor and the mission. It also must shepherd the process, anticipating bumps and developing processes to mitigate them. We identified several functions where founders were able to contribute after their tenure, feel satisfied, and deliver value to the organization. These included fundraising, ambassadorial visits, advocacy, and mentoring the successor.
Read the full article about making founder successions work by Jari Tuomala, Donald Yeh & Katie Smith Milway at Stanford Social Innovation Review.