Before forging ahead with a CEO transition and hiring a successor, there are two courageous questions that the board should ask about their nonprofit: should our organization continue? And a related question: should it continue in its current form?
These questions are seldom asked because we’re usually operating in business-as-usual mode. Our work is a continuum of opportunities and challenges. And leadership succession is just another problem to solve. Thus, we don’t recognize succession for what it is — a critical punctuation point for the organization.
In a business-as-usual mode, we see the CEO opening as another vacancy to fill. In this mode, we rarely step back and ask, should we fill this vacancy? Or should we take this moment to rethink what we’re doing? Is there a better way to achieve our mission work?
Let’s take a closer look at those courageous questions.
1. Should our organization continue?
Has your organization fulfilled its purpose? Would going forward, in some sense, just be marking time?
Is the organization in a constant struggle for survival? Are you putting more effort into chasing money than you’re putting into programs? Are your conversations about money drowning out conversations about impact? Has your mission become “to survive?”
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.
See the “Resources” section below for a list of guides for closing a nonprofit. You should also consider approaching your community foundation or one of your institutional donors about a potential “wind-down” grant.
2. Should our organization continue in its current form?
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 most significant barriers to nonprofit mergers and consolidations is the question: “What will we do with two CEOs after the merger?” Your executive’s departure can provide the opening for a serious discussion about a merger or acquisition.
The primary objective of prep work for executive succession isn’t organizational continuity per se; rather, it’s the continuity of your organization’s mission work. A merger or consolidation could be the best way not only to sustain that mission work but possibly advance its impact to a level far exceeding what your organization could achieve on its own.
There may never be a better time
to ask these questions.
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, 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, resulting in an increased scale that enables the merged organization to meet better the social challenge you’ve been trying to tackle alone. 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.
One of the striking characteristics of the nonprofit sector is its diversity of organizations. While variety is a virtue in most cases, in the nonprofit sector, it often comes at the expense of scale. One of the great challenges, particularly in the social service field, is tackling social problems at a meaningful level — at a scale that has a real impact. Too many times, our organizations’ siloed interests take priority — ahead of making an impact and ahead of the clients’ interests. This is the moment to consider consolidating resources and efforts to meet social problems on their level or to provide a better continuum of services for your clients.
A merger/consolidation could actually
build on your legacy.
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. Asking these questions could be one of the boldest, most courageous acts of your career as an executive or your tenure as a board member. Put them on the table for your board to consider and ensure they give them full, thoughtful consideration. Don’t let them reject them because they perceive that the easier way out is to jump into the search for a successor. Or they view shutting down or a merger as defeat. It’s not. It’s a victory – a potential victory for your clients and community, and, certainly, a victory over complacency.
- Bach, Claudia. (2009). “Graceful Exit: Thoughts on End-of-Life Issues for Arts Organizations.” Grantmakers in the Arts (blog).
- Bruder, Lee. (2009). “Nonprofit Dissolution: What to Do When Closing the Doors.”Nonprofit Quarterly.
- Chan, Emily. (2008). “Dissolution.” Nonprofit Law Blog.
- Foster, William, Alex Cortez, and Katie Smith Milway. (2009). “Nonprofit Mergers and Acquisitions: More Than a Tool for Tough Times.” The Bridgespan Group.
- Glick, Jan. (2010). Nonprofit Turnaround: A Guide for Non-Profit Leaders, Consultants, and Funders. Seattle, WA: Jan Glick & Associates.
- Green, Jessica. (2013). “Creating a Comprehensive Plan to Dissolve a Nonprofit Organization.” The University of San Diego.
- Haider, Donald, Katherine Cooper, and Reyhaneh Maktoufi. (2016). Mergers as a Strategy for Success. Chicago, Illinois: The Metropolitan Chicago Nonprofit Merger Research Project.
- Haider, Donald. (2017). “Nonprofit Mergers That Work.” Stanford Social Innovation Review,
- IRS Publication 4779, “Facts about Terminating or Merging Your Exempt Organization.”
- La Piana, David, and La Piana Associates. (2004). The Nonprofit Mergers Workbook. Part II, Unifying the Organization after a Merger. Saint Paul, Minn.: Amherst H. Wilder Foundation.
- La Piana, David. (2000). The Nonprofit Mergers Workbook: The Leader’s Guide to Considering, Negotiating, and Executing a Merger. St. Paul, Minn.: Amherst H. Wilder Foundation.
- Masaoka, Jan. (2009). “Closing Down the Right Way.” Board Cafe.
- McLaughlin, Thomas A. (2010). Nonprofit Mergers and Alliances. John Wiley & Sons.
- Mirchandani, Bhakti. (2018). “How to Save a Nonprofit: The Care Steps Required in Mergers and Acquisitions.” Nonprofit Quarterly.
- Nonprofit Risk Management Center. (2009). “Winding Down: A Risk Management Checklist.”
- The National Council of Nonprofits has a great resource page on “Mergers, collaborations, and strategic alliances.”
Links mentioned in the YouTube video:
- The Board’s Six Transition Tasks video
- The Seven Types of CEO Transitions video
- Email Don with your questions or book a free, one-on-one call.