The Importance of Exit Agreements

I once knew a community organization with an aging leader. She was a force of nature but had mentored staff under her, so there was an excellent internal succession plan in place. In fact, the women who had been tapped to step in were a team that not only could replace her but also could significantly build upon her leadership. And, as additional preparation, a consultant had helped them to fine tune their skills. But at the point that they were ready to take over and their long-time leader was ready to leave, the board realized that she would be released into abject poverty.

The organization had no pension funds. For years, it had teetered on a financial precipice. While healthier now, it was, still, faced with the question of what to do at the point of departure. What was legal, and what was right?

What the organization did was keep the leader on part-time, as a grant writer—a direction the organization would not have chosen had an exit package been thought through in time.

I have been hearing a great deal, lately, about long-time leaders and their exits. That is why I was so very pleased to have NPQ publish “Exit Agreements for Nonprofit CEOs: A Guide for Boards and Executives”—a wonderfully crafted, groundbreaking article written by three experts on the topic.

In fact, I believe that all boards should read the article and discuss what they have in place for their leader’s eventual exit. Please take this article to every board that you work with—it is important!