Nonprofits at risk by not planning

By Todd Cohen

Too many nonprofits pay too little attention to planning, and even less to the critical job of developing leaders and plans for replacing them when they leave.

Reasons abound for why planning is missing in action throughout much of the charitable marketplace.

Nonprofits are quick to explain they are financially stressed and operationally strained; their staffs are overworked and underpaid; demands for their services are rising; the job of raising money is all-consuming and seemingly endless; and their boards are asleep at the wheel.

All those explanations are accurate, but they still do not excuse the failure to think ahead.

By ignoring the need to plan, and focusing only on immediate problems, nonprofits put their survival at serious risk when instead they could be looking for ways to manage that risk while also thinking about ways to grow and thrive.

Leadership development and succession planning for senior leader positions represent nonprofits’ single biggest organizational weakness, according to a recent Bridgespan Group survey of over 150 nonprofit leadership teams.

“Strong leadership is a critical component of any organization’s success, but the need in the nonprofit sector is particularly acute,” says Kirk Kramer, a Bridgespan partner who leads the consulting firm’s leadership work.

Bridgespan says research supports the perception that leadership development and succession planning are nonprofits’ most vulnerable organizational soft spot.

Nonprofits promote from within at a far lower rate than for-profits, Bridgespan says, picking 30 percent to 40 percent of senior leaders through internal promotion, compared to 60 percent to 65 percent of senior leaders promoted internally at for-profits.

That failure to promote from within is “particularly troubling given the intensified demand for leaders that many nonprofits are (or soon will be) facing,” Bridgespan says.

By 2016, the nonprofit sector will need over 500,000 new senior managers “as the sector continues to expand as baby-boom leaders retire,” Bridgespan says, citing estimates in its analysis, “The Nonprofit Sector’s Leadership Deficit.”

A key reason that developing future leaders may be so tough, Bridgespan says, is that nonprofits “tend to frame the issue very narrowly as ‘succession planning,’” a term it says suggests a search to replace an executive director.

“That search may be frantic or it may be well planned and executed,” Bridgespan says. “But in any case, it is an intermittent, isolated activity.”

In comparison, the most successful succession planning “is not a periodic event triggered by an executive’s departure,” it says. “Instead, it is a proactive and systematic investment in building a pipeline of leaders within an organization, so that when transitions are necessary, leaders at all levels are ready to act.”

Preliminary findings in a long-term Bridgespan research project to better understand the investment nonprofits should make in succession planning suggest that good leadership development and succession planning “should resemble a set of six linked processes that build on an organization’s underlying human-resource foundation,” the consulting firm says.

Those processes apply to any nonprofit, although the time, effort and resources needed to pursue each one thoroughly will vary based on an organization’s mission, individual characteristic, needs and size, Bridgespan says.

The processes include engaging senior leaders; understanding future needs; developing future leaders; hiring leaders externally, as needed; measuring and improving practices; and building a culture that supports development.

Failing to address the looming crisis in nonprofit leadership simply will make that crisis a self-fulfilling prophecy.