Facing the future: What happens when a nonprofit leader steps down?

Thirty years is a long time to devote to any pursuit, and Karen Cragnolin, the oft-honored founding mother of RiverLink, can attest to that. During that time, she says she held every job in the organization and was planning to finally move on this year when, during surgery, she suffered an aneurysm that robbed her of much of her mobility. But the board was ready with a succession plan, and after about a six-month search, Garrett Artz came on board Sept. 1 as the new executive director.

Across the state, however, thousands of nonprofit boards of directors are facing CEO transitions as burnout takes its toll and aging baby boomers retire. According to “Countdown to the Inevitable,” a new report from the North Carolina Center for Nonprofits, almost one-third of respondents to the organization’s survey of nonprofit CEOs said they’re planning to leave their job in the next two years, and most of those have already notified their boards. Nearly 60 percent said they’d be leaving within four years. And while a clear majority cited retirement or simply said, “It’s time to go,” about a third attributed their exit to such stressors as inadequate board support or compensation, or the burden of continual fundraising.

(It should be noted that statistically, the report has only limited significance, since its findings are based on an anonymous, voluntary survey of the center’s membership.)

How many local nonprofits fall into this category is hard to say, due in part to the veil of secrecy that typically surrounds the nonprofit board/executive relationship: The public usually finds out that a CEO is leaving only long after the board is informed and has begun behind-the-scenes preparations. Trisha Lester, the N.C. Center’s acting president, says she doesn’t have separate results for the mountain region, but “we see it happening in so many places in North Carolina that I really think it’s pretty true to form in all communities.”

The end of an era

Of the 640 CEOs who responded, 79 percent were founders or co-founders of their respective organizations, many of which have been in existence for decades. That longevity may be a contributing factor to their plans for departing in the not-too-distant future.

Chris Cavanaugh, who serves on the board of Asheville Area Habitat for Humanity, played a major role in navigating the succession when Lew Kraus told his board in the spring of 2015 that he was ready to retire.

“Anytime you have an executive director who was basically there at the beginning and served in that position for over 30 years, you’re going to have big shoes to fill,” says Cavanaugh. “As a [search] committee, you recognize that you can’t find another Lew Kraus: There’s only one. At the same time, you recognize that you don’t want to go overboard in trying to find someone who’s the opposite of Lew. He has certainly been an iconic person, both within Habitat International and within the community, and you want to find a worthy successor.”

RiverLink board member Dick Hall, who helped orchestrate that organization’s transition, says his board adopted a similar strategy. The board looked for someone with environmental experience and strong management, organizational and fundraising skills, but not necessarily someone exactly like Cragnolin.

These two leaders’ retirements have a lot in common. Several decades ago, both of them, essentially working out of their homes, founded what would become well-established, widely respected local nonprofits. Both wore many hats and built on challenges as well as successes. When they finally did feel ready to retire, they gave their boards plenty of notice. And each board developed a transition plan that suited the organization’s needs.

Cragnolin says RiverLink had developed a succession scheme two years before her departure, as part of the group’s most detailed strategic plan ever. “I didn’t have a specific date in mind,” she says, “but I was getting older, and we knew we needed a plan.” Cragnolin also began documenting and organizing the know-how needed to run the organization, creating a package of standard procedures and instructions.

Once she’d announced that she would retire as soon as a new director could be found, Cragnolin helped put together a job description and solicit applications, notes Hall, but she wasn’t part of the final selection process. The board felt it needed to be wholly responsible for the decision, and it wasn’t practical for Cragnolin to participate. “She worked with us, but it was almost at arm’s length because of what she was going through medically at the time,” he explains.

After online interactions narrowed the search to a handful of candidates, board members brought in two for final interviews. Artz, who’d previously worked locally at Pisgah Legal Services and founded Connect Enka, was the final choice.

While she was recovering in the hospital, Cragnolin held meetings with staff. And when she formally ended her employment, she and Artz met several times to pass the proverbial baton. “That really helped,” he says. “It was an honor to meet her and, under the circumstances, learn a little bit more about what my job would really entail.”

Cragnolin continues to serve as a consultant for RiverLink on matters such as real estate transactions and management. Artz, meanwhile, is working with a transition team developed by the board.

Kraus, too, spent time with his successor, Andy Barnett, as Habitat transitioned. Cavanaugh says that while the organization had ample time to make the new hire, board members felt some urgency because “we really wanted to get someone in place who could spend a little bit of time with Lew before he departed permanently.” Kraus wasn’t available for comment due to a death in the family.

Like an ostrich

“Many people don’t understand that to do it well, planning for succession takes time,” says Lester. “It’s not just a matter of a CEO tells her board that she’s planning to leave in a year, the community prepares, the board puts together a job description and voila! All of a sudden, you have a new CEO in place. It doesn’t happen like that.”

If the board decides to use an executive search firm, just choosing the right one can take time. The organization may also need to build up financial reserves to help it weather the changeover. “There are a lot of building blocks,” says Lester, “that need to have been put in place in order to undergo a healthy transition.”

Additionally, the board must get clear about what it wants from a new leader. It’s rare, she says, that an organization will need the same things from a successor that the founder brought to the table.

Meanwhile, for departing CEOs, letting go of the position emotionally and truly feeling ready for a change can be challenging. Common reasons for stepping down include reaching retirement age, believing they’ve accomplished what they could, or simply feeling burned out. But, she cautions, “Life isn’t always so nice and neat.”

One outgoing CEO quoted in the report said: “My board is like an ostrich when it comes to executive succession. I’ve tried to raise the subject since I was hired, providing checklists and information, but the board seems to think I will be here forever.”

Holding the line

An alarmingly high percentage of the nonprofits surveyed said they had no emergency backup plan to cover an executive director’s absence, and over 71 percent don’t have a board-approved succession plan in place.

On the flip side, however, roughly half the CEOs who responded said there was someone in-house who’d be a good candidate to fill the vacancy, and almost three-quarters said there was at least one staffer they would trust to make important decisions without them.

Patrick Fitzsimmons, executive director of Mountain BizWorks, says his organization doesn’t have a solid plan in place for his eventual departure. “It’s something that gets talked about a lot among nonprofits,” he says, “but I think most of us don’t really have it — in any kind of serious fashion, anyway.” Fitzsimmons himself had previously retired from the local Red Cross affiliate; the BizWorks board brought him in after it had to assume a management role while searching for a new CEO.

“Luckily we have built a very strong team here at BizWorks,” he says, “so if I take off for a week, it’s not a problem. … We have folks in program director positions here who are very capable of managing things in my absence.”

Still, even planned transitions can be exhausting, says Lester. There’s a lot of pressure to get it right, to avoid having to go through the whole process again in short order. At such times, she notes, an interim director — perhaps another staffer or someone from outside whom the board trusts — can buy time for stepping back and reflecting. This is particularly useful, she says, when an executive leaves suddenly.

When Green Opportunities CEO George Jones decided in September to pursue other options after just 14 months on the job, he gave less than a month’s notice, and the organization had to take fairly quick action. “It was blind-siding but not that blind-siding because, in a lot of ways, we were prepared a little bit,” says Dewana Little, co-chair of the organization’s board.

Fortunately, she recalls, some board members had already begun looking into succession planning, so “it wasn’t necessarily panic mode.” In addition, it wasn’t the first such transition they’d faced, so they had at least a general idea of what steps were necessary.

Board members, says Little, had already identified a potential interim director, but wanting to be inclusive, they asked the staff who they would like to have. The unanimous choice was J Hackett, the director of student development. The board then went into closed session, and a few days later, he was at the helm. “It was kind of cool that we were all on the same page,” notes Little.

Once the permanent position is posted, Hackett can submit an application, and the Leadership Transition Committee — two board members, two staff, two community members and a GO student — will take his interim performance into consideration.

Stepping back

“Daring to Lead,” a national study published in 2011, painted a similar picture: 67 percent of the nonprofit CEOs who responded said they planned to depart by 2016. Lester says her organization’s report, which focuses on North Carolina, could be treated as an opportunity for board members to step back and take a big-picture look at their support role. The report’s findings on stressors for nonprofit CEOs, she notes, could help boards identify the pressure points that might lead to burnout. The bottom line, though, is that the need for a transition will come eventually, and boards must be ready.

“We want to prepare all organizations for this change,” says Lester. “The transitions are inevitable. … It’s just a matter of when, not if.”

Meanwhile, even organizations that have a plan in place may benefit from some of the ideas in the report. In Green Opportunities’ case, says Hackett, “The data helped us think about what questions to ask and what kind of things we need to do at the agency, just to plan for the inevitable.” And it’s not just about people quitting or retiring, stresses Little: Anything from an illness to a car accident can trigger the need for a succession plan.

“It’s never easy to have a big transition,” notes Cragnolin, who says RiverLink’s preparations made for a fairly smooth shift, “but I think it can be a bonding process for staff and board to go through and collaborate on.” Regardless of an organization’s size, she concludes, “Having a succession plan for their leadership is critical.”