February 19, 2018; Philanthropy News Digest
A recent report issued by Bridgespan in the Stanford Social Innovation Review reinforces the reversal of some outmoded conventional wisdom about nonprofit founders.
Popular thinking characterizes nonprofit founders as troubled souls with no capacity to control themselves in the scrum of an organizational transition. Most of us have known for some time that this somewhat archaic idea is growing even more so as our concepts of leadership change to a model that’s more shared, but the report provides additional definition to the forms being used to maintain founder involvement past a transition.
The notion of a new ethos of leadership is more fully explored in Jeanne Bell’s recent article “Leadership Ethos: How What We Believe Can Inform Leadership Practices.” The sector has spent many years looking at founders askance, and Elizabeth Schmidt addressed this mental model in her excellent article, “Rediagnosing Founders Syndrome.”
Almost ten years ago, as a matter of fact, NPQ published “A Table for Two: Founders and Successors in the Same Shop?” This article, drawn from a study done by Management Assistance Group, looked at a number of cases where nonprofits retained the involvement of founders as new leadership was brought forward. It laid out explicitly the conditions under which such arrangements seemed to work best. Even at that time, Mark Leach, one of the report’s authors, referenced previous work in this area both in nonprofits and for-profits.
Until the recent publication of Jan Masaoka’s The Departing: Exiting Nonprofit Leaders as Resources for Social Change, only a few would suggest that keeping a founding executive on in a substantive role is worth the risk. In 2004, Deborah Linnell courageously asked whether all “executive directors really have to ‘completely’ leave an organization” for an incoming leader to flourish and offered a successful example where the executive stayed on. Masaoka advances the conversation greatly by identifying various options for founders who remain at an organization in a modified role such as a project director, fundraiser, or board member.
The for-profit sector has time-tested ways of keeping founding leaders constructively involved in key aspects of the organization’s work (such as the “of counsel” role for ex–senior partners in law firms). These for-profit sector examples and MAG’s successful experimentation prompted us to identify other nonprofit organizations that had successfully transitioned into new leadership while retaining the founder on staff. MAG’s study is based on six such organizations.
At that time, Leach laid out some “themes for success.”
He also suggested tactics that founders ought to avoid for at least a year, which included participation in strategy setting in groups rather than with the new executive.
The Bridgespan Group’s more recent study reinforces all of this, finding that executive transitions that continue the relationship with the founder actually may bring the best results, and that many nonprofits actually already maintain those relationships in some way.
Key learnings from the study:
- More nonprofits develop a continuing role for the founder (45 percent) than cut the cord (31 percent). Situations in which the founder stayed showed that the founder made positive contributions.
- The most successful model of transition paired the founder in a continuing role with a successor from within the organization. The factors that speak to success include revenue growth for the organization, retention of the successor, and self-reported stories. This model was relevant to both large and small organizations, as well as for long-term CEOs who were not founders.
- Successful transitions require preparation. The board plays a key role in redefining the best role for the departing founder. Some of the key roles, as highlighted by the study, for the departing founder include advocacy, fundraising, and mentoring.
This last finding is virtually identical to the findings of the MAG study nine years ago.
There are four questions to consider when determining what the founder’s new role can be:
- Does the founder have the interest and the ability to stay involved?
- Does the board see “clear value” from continuing the relationship?
- Is the founder ready to step aside and fill a different role and support the successor?
- Is the successor interested in working with the founder?
The research identified five specific recommendations when defining how to extend the founder’s role:
- Limit the founder’s new role to specific areas of interest.
- Engage the founder and successor in regular coaching to help navigate the operational and emotional aspects of the transition.
- Develop a process to help manage potential conflicts.
- Shepherd the loyalties of funders, the board, and staff in a logical order.
- Create initial separation to allow the successor to settle in and establish new leadership
All of that said, we go back to a caution from Leach in his 2009 article:
We conclude this article with a few words of advice to boards: (1) no board should consider such an arrangement as the result of feeling coerced or held over a barrel by a founder; (2) organizations should consider this kind of a transition only when its board concludes that the benefits greatly outweigh the costs; and (3) overdependence on a founder is not a good practice, nor is it a reason to attempt this type of leadership transition.
—Jeanne Allen and Ruth McCambridge