Before proceeding with a CEO transition, there are two critical questions that you and your board should ask about your organization. These questions are almost never raised because our default mode is focused on maintaining business as usual. In business-as-usual mode, we approach leadership succession as just another problem to solve. In this mode, we see the CEO job opening as simply another vacancy to fill. We don’t recognize that this transition is an important punctuation point for the organization, a moment when we should take a step back and ask, should we fill this vacancy? Should we rethink what we’re doing here? Is there a better path forward? Is there a better way to achieve our mission work?
So here are two courageous questions you and your board should ask and answer at this pivotal moment:
- Should the organization continue? Has your organization fulfilled its purpose? Would going forward, in some sense, just be marking time? Or, is the organization too narrowly focused to ensure its sustainability in the long run? Is its impact too limited? Does it have just one or two programs whose clients or constituency would be better served if those programs were under another agency with more comprehensive services? Should you consider “gifting” your programs to another nonprofit and shutting your organization down gracefully? Is it time to recognize that things have changed and a different scale or approach is needed? Sometimes declaring victory and putting things to rest can be the most ennobling act of all. There are many guides available for closing a nonprofit. (See “Resources” below for a list.) You should also consider approaching your community foundation or one of your institutional donors about a potential “wind-down” grant.
- Should the organization continue in its current form? In other words, is remaining a standalone organization the best way to accomplish your mission? Would your mission, your clients, your constituents – everyone involved – be better served by merging with or otherwise joining forces with another organization? One of the biggest barriers to nonprofit mergers is the consolidation of leadership roles after the merger and figuring out what to do with two CEOs. Your departure could provide the opening for a serious discussion about a merger, acquisition, or another form of consolidation. The primary objective of executive succession preparation isn’t organizational sustainability per se; rather, it’s the sustainability and continuity of the organization’s mission work. A merger or consolidation could be the best way to not only sustain that mission impact, but also to possibly advance it to a level far exceeding what your organization could achieve on its own.
If you’re the departing CEO and you’re tempted to reject the merger idea because you worry that it will erase your legacy, let’s look at that. Your leadership legacy is much larger than just an organization. First, in large part, your legacy is written in the community that you served through your organization’s mission work, whether that’s through great performances delivered, lives saved, suffering relieved, communities built, or positive futures assured. Organizations may come and go, but that record of impact can’t be erased. Second, part of your lasting legacy could very well be paving the way for better services, greater impact, and more durable programs by joining your organization to another.
A merger/consolidation could actually
build on your legacy.
A merger/consolidation could actually build on your legacy, resulting in an increased scale that enables your organization to better meet the social challenge you’ve been trying to tackle. It could mean a stronger continuum of services with fewer holes for your clients to fall through. It might result in an expanded geographic footprint. It could also mean increased resources and a better ability to fundraise. A smart merger or consolidation can have these benefits and more. However, none of these outcomes are possible unless you’re first willing to ask the question.
One of the striking characteristics of the nonprofit sector is its diversity of organizations. While diversity is a virtue in most cases, in this instance it often comes at the expense of scale. One of the great challenges of the social services field, in particular, is tackling social problems at a meaningful level, at a scale that has real impact. Too often we put our organization’s siloed interests ahead of making an impact, ahead of the clients. This is the moment to consider consolidating resources and efforts to meet social problems on their own level or to provide a better continuum of services for your clients.
There may never be a better time
to ask these questions.
Winding down an organization and merging it with another are both complicated and challenging projects. Asking these two questions could be one of the boldest, most courageous acts of your career. I encourage you to put these questions before your board and ensure that they give them full, thoughtful consideration. Don’t let your board reject them because they perceive that the easier way out is to simply jump onto the track of hiring a successor. There may never be a better, more opportune time to engage with these questions than this moment when they’re facing a CEO transition.
Here are just a few of the many references and guides about closing a nonprofit:
- Bruder, Lee. (2009). “Nonprofit Dissolution: What to Do When Closing the Doors.” Nonprofit Quarterly.
- Masaoka, Jan. (2009). “Closing Down the Right Way.” Board Cafe.
- Nonprofit Risk Management Center. (2009). “Winding Down: A Risk Management Checklist.”
- For others, see the listing on the Foundation Center’s Grant Space on dissolving a nonprofit.
Here are some guides on nonprofit mergers, strategic restructuring, and turnarounds:
- Glick, J. (2010). Nonprofit Turnaround: A Guide for Non-Profit Leaders, Consultants and Funders.
- La Piana, D., & Harrington, R. (2000). The Nonprofit Mergers Workbook. Part I, The Leader’s Guide to Considering, Negotiating, and Executing a Merger.
- La Piana, D., & La Piana Associates. (2004). The Nonprofit Mergers Workbook. Part II, Unifying the Organization After a Merger.
- Mclaughlin, T. A. (2010). Nonprofit Mergers and Alliances (Second Edition).