September 17, 2019

Dozens of Elevate clients experience executive transitions every year. To help our clients better understand how to engage funders throughout the process, we’ve partnered with Carlyn Madden, a search consultant and former grantmaker based in the Washington, DC region, on a three-part series to highlight the challenges and opportunities of executive transitions.

In this post, Carlyn will share tips and tricks for strengthening funder relationships throughout an executive transition. Coming up, we’ll get insights directly from a few funders from the Washington, DC region. To start from the beginning, read Part 1.

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PART 2:

A good executive transition is a well-planned executive transition.

Executive transitions are common in the nonprofit sector, with research suggesting that 60%-70% of nonprofit executives planned to leave their jobs within five years. Most nonprofits report feeling unprepared to undertake an executive transition. BoardSource’s 2017 Leading with Intent: A National Index of Nonprofit Board Practices indicates that just roughly one in four nonprofits have a succession plan in place. Unsurprisingly, a lack of preparedness can cause funder relationships to become unstable.

Before consulting, I spent close to a decade managing grant portfolios and programs. These experiences have provided me with a birds-eye perspective of all types of transitions – from transformational leaders that accelerated their impact to poor placements that drove them out of business; from honoring an incredible founder’s legacy to emergencies following a tragic death.

A well-planned, well-executed executive transition offers nonprofits the opportunity to reflect on the future: the vision, skills, and resources necessary for their next chapter. Funders like to support great leaders – and a thoughtfully planned process is a cornerstone of great leadership.

Below are five pieces of advice I’ve gleaned over the years for how best to sustain your relationships with funders during executive transitions.

1. Don’t let them be the last to know

As a major investor in your nonprofit, they deserve to hear the news from you, not the Washington Post.

After notifying the board about their imminent departure, an outgoing CEO should reach out to their funders. The board chair should lead outreach in cases of sudden departures. Be prepared to introduce a new point of contact for the transition; discuss the process (i.e., if an acting or interim director will be named and/or if a search firm will be hired); any necessary (and truthful) assurances that the programs they have funded will be maintained in the outgoing director’s absence; and the role, if any, the outgoing CEO will play for the organization following their departure.

2. Inquire about capacity building grants

With enough advance notice, some funders can support a grantee’s transition costs.

As a funder, I could recommend discretionary grants to support one-off projects or increase an award during the regular grant cycle. Could one of your funders help with transition costs, such as search consultant fees? It never hurts to ask, as it indicates that your nonprofit is serious about managing the transition. It is important to request the right amount at the right time, so speak to a few consultants in advance to understand project fees and speak to your program officer about the process before preparing a formal inquiry.

3. Consider an interim director

An experienced interim executive director gives funders assurance about your nonprofit’s stability.

Interims are typically seasoned nonprofit executives who oversee key management and programmatic functions during the transition, while also helping the board assess the skills necessary for its next leader. Their costs are in the same range of an executive director’s salary with an engagement ranging from 6 to 18 months. Consider inquiring with funders to connect you to grantees who could make a referral. In the DC region, the Interim Directors Network is a great resource.

4. Tap into knowledge and networks

Funders work with dozens—if not hundreds—of nonprofit executives. They might let you tap into their network of qualified candidates.

Many, but not all, funders have warm, open grantee relationships. Inquire if your search consultant could include your program officer in their stakeholder interviews. Pass along the job posting, along with a request to distribute it within their network. Funders are well connected, and many are happy to circulate information about your search. However, this should be the extent of the collaboration–your funder should not influence the board’s hire.

5. Introduce new leadership early

Your funders are excited for your next chapter and will look forward to meeting your new hire.

Make sure your outgoing CEO has left great notes about the status of the relationship in your donor database and have development staff brief the incoming CEO on any pertinent talking points. It will be helpful for the new CEO to read through past proposals and reports. When the board chair shares the official announcement and a personal introduction, it reinforces the board’s commitment to the process. Take the lead from the funder on next steps – setting up an in-person meeting to begin building the relationship if they make themselves available.

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But what if they won’t fund us during a transition?

Some funders pause grantmaking during executive transitions.

Some funders use what Vu Le, author of Nonprofit AF, calls a “wait and see” approach, withholding grants until new leadership is in place. While a frustrating practice, it becomes that much more important to steward funder relationships during the transition. Inquire about what updates they would appreciate, make sure they receive your newsletters, and make a personal introduction to a new, if just temporary, point of contact. Involving other staff decentralizes the cultivation process and reassures funders that your competent staff is operating as usual with little negative impact on your nonprofit’s performance.

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Stay tuned for the final post in this series, where we’ll get advice directly from funders about their views on managing relationships during executive transitions.

Preparing for your nonprofit’s next executive transition? Carlyn is offering Elevate clients a free phone consultation to help plan your next steps – from succession planning to promising recruitment practices. Learn more about her work at www.carlynmaddenconsulting.com.