Wake County

NC’s nonprofits need succession plans

When Marjorie Menestres announced in January 2015 that she was stepping down as executive director of SAFEchild, Wake County’s child abuse prevention organization, the nonprofit’s employees and supporters had every reason to be nervous.

As SAFEchild’s founding executive, she had led the organization for 22 years and become synonymous with its success in serving thousands of families. Over the next six months, however, as SAFEchild prepared to enter a new era of leadership, everything went exactly according to plan.

A search committee charged with finding the nonprofit’s next leader looked carefully at outside and internal candidates. When Menestres retired on June 30 of that year, her successor Cristin DeRonja, a longtime SAFEchild employee, took over the next day.

It was a textbook example of how to pass the reins at a nonprofit – and, according to a new study from the North Carolina Center for Nonprofits, all too rare.

The center recently released “Countdown to the Inevitable: North Carolina Nonprofit CEOs in Transition” as part of a statewide effort to help nonprofits prepare for executive leadership transitions. The report is based on confidential surveys of more than 600 nonprofit CEOs and executive directors across the state.

Its findings are troubling.

Nearly one-third of nonprofit CEOs expect to leave their positions in the next two years, and more than half will leave in four years. But nearly three-quarters of nonprofits have not created a board-approved succession plan for their top leadership role. Meanwhile, half of survey respondents reported there is no one on their staff or board who would be a solid candidate to step into the top role if the CEO left today. Just 3 percent of boards have identified who will become the next CEO.

As one survey respondent put it, “My board is like an ostrich when it comes to executive succession. I’ve tried to raise the subject since I was hired, providing checklists and information, but the board seems to think I will be here forever.”

This lack of readiness has far-reaching implications for our communities, where nonprofits offer a crucial social safety net from the veterans’ advocacy provided by Charlotte Bridge Home to the support for at-risk students spearheaded by Communities in Schools of North Carolina to the work of numerous organizations focused on food insecurity, health care and legal services. The 2015 State of the Sector Report by the Nonprofit Finance Fund found that 78 percent of our state’s nonprofits experienced an increase in demand in the previous year. But 60 percent of them said they were unable to meet those needs. The task becomes even more difficult without steady leadership.

“People do not want to do this work because it’s hard,” SAFEchild’s DeRonja says of succession planning.

But DeRonja saw it done well at SAFEchild and points to several keys for making it work, starting with engaged board leadership. A CEO transition, she says, should be viewed as a three-year process, with an upfront focus on preparing for the current CEO’s departure well before it is announced, followed by a rigorous search for the next CEO, and, finally, a well-designed onboarding plan that ensures the new leader’s first year goes smoothly.

The effectiveness of that three-year process hinges on a second critical step – the development in advance of a formal succession plan, preferably created with help from an outside consultant. Nonprofits frequently skip this step because they do not want to spend scarce operating funds on administration. SAFEchild raised special funds to hire a consultant who could guide conversations with staff, volunteers, donors and other stakeholders on what the organization needed from its next leader.

It wasn’t an accident that DeRonja emerged as the top choice, which points to a third key to executive transition success – leadership pipeline development. DeRonja had joined SAFEchild a dozen years before as a student intern while pursuing a master’s degree at N.C. State. Over the years, she was groomed through numerous leadership roles, giving her the scope and knowledge to move seamlessly into the top spot when the time came.

For organizations that get those steps right, there’s one more: Don’t stop at the top. “Always plan for deep bench strength on your staff to anticipate transitions at all levels, even middle managers,” a survey respondent noted. “This is critical for small, lean nonprofits.” It’s critical, too, for the many North Carolinians who turn to nonprofits every day when there’s nowhere else to go.

Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin is deputy chief of staff at the nonprofit Center for Creative Leadership. They can be reached at authors@bullcityforward.org and followed on Twitter through @cgergen.