There has been an increase in demand for business succession planning services as the baby boomer generation retires and ownership of business interest transitions. Many of the planning issues that are important to for-profit businesses also applies to not-for-profits (NFP) and trade associations. Leadership turnover creates stress on an organization, although with proper planning it can be reduced.
It is important to remember that succession of leadership happens due to a planned or unplanned event. This concept sets the stage for what the board needs to consider when discussing succession planning.
While there are many types of unplanned succession, i.e. unplanned succession or turnover of key management, a board must consider contingency plans that would allow the organization to continue business as usual. The organization needs to reduce its dependency on any one person as much as possible. No one leader, whether it is the executive director, a board member or the development director, can be larger than the organization itself. Below are topics to consider when developing a contingency plan:
To implement a succession plan, the first step is to perform a comprehensive assessment based on your specific circumstances. Just as many business owners are reaching retirement age, there are many executive directors and other NFP leaders that are as well. Other than the tax and financial planning around the transition of ownership, all of the planning steps in a business setting apply to NFP organizations. Defining the transition timeline for an NFP leader can be a very emotional process. Many NFP leaders have dedicated their lives to the mission and it may feel like an organization that they built. When developing a succession plan, the board should consider the following steps:
Remember that succession planning is not a static process. As the organization and people change, the planning process needs to be updated.
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