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Succession planning is the No. 1 organizational concern of US nonprofits, but they are failing to develop their most promising pool of talent: homegrown leaders.
In more than a decade of research on nonprofit leadership, we at The Bridgespan Group have observed little change in the No. 1 organizational concern expressed by boards and CEOs: succession planning. In survey after survey of nonprofit leaders succession planning comes out on top.
In fact, it is mentioned twice as often as the next concern.  Our most recent research provides a clue as to why. Only 30 percent of C-suite roles in the nonprofit sector were filled by internal promotion in the past two years—about half the rate of for-profits.  Even more concerning, this low promotion rate did not vary by the size of the organization: larger organizations, which should have more opportunities to promote internal talent, are not doing so.
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Despite the many articles and numerous discussions about the need for organizations to develop their human capital, too many nonprofit CEOs and their boards continue to miss the answer to succession planning sitting right under their noses—the homegrown leader. Our new study surfaced what we call a leadership development deficit. The sector's C-suite leaders, frustrated at the lack of opportunities and mentoring, are not staying around long enough to move up. Even CEOs are exiting because their boards aren't supporting them and helping them to grow. This syndrome is coming at a significant financial and productivity cost to organizations, undermining their effectiveness and hampering their ability to address social and economic inequities. "In the for-profit sector, I saw organizations saying 'a known is better than an unknown' and work to promote from within," says Amy Smith, chief strategy officer and president of Action Networks, at Points of Light.
I see nonprofit organizations looking outside first for talent instead of exploring the expertise they already have in house." This syndrome won't change unless boards, management teams, and funders change their ways.