Who’ll Fill Their Shoes?

November 12, 2014       Marty Daks      

Neil Nicoll joined a lengthy list of CEOs who are exiting large, influential charities when he announced this past June that at year’s end he would end his nearly decade-long tenure as president and CEO of the YMCA of the USA.

The exodus includes chief executives from organizations that are regulars on the The NonProfit Times Top 100: American Cancer Society, Leukemia and Lymphoma Society, AmeriCares, Big Brothers Big Sisters, Bill Hillary and Chelsea Clinton Foundation and Catholic Charities USA. Almost one of every four charities that appeared in this year’s NPT Top 100 — a study of the largest nonprofits in the nation, published annually in the November edition of The NonProfit Times — has a new executive in place within the past two years or has announced a coming transition.

It’s not quite a flood, but some experts do see a trend. During the first seven months of 2014, 118 CEOs in the government-nonprofit sectors left their organizations, up from 98 in the same seven-month period during 2013, according to statistics compiled by Chicago-based search firm Challenger, Gray & Christmas. The firm does not detail the breakdown between government and general nonprofit. Observers offer a number of reasons for the rise, from demographic changes to the improving economy — and have some advice for nonprofits dealing with a departure.

“I am stepping down because YMCA of the USA is embarking upon an ambitious and exciting four-year strategic plan that will require committed leadership over that time, and at 68, I realize that I can’t make this commitment,” said Nicoll, who will remain with the organization as president emeritus. He also wants to “spend more time with my family and explore other ways to be of service, including volunteering.”

Demographics play a part in some cases. “The CEOs I know who are stepping down are all Baby Boomers. The sector is going through a generational shift as the Boomers age out,” Nicoll said.

Some are moving on to new challenges. This past summer, for example, Fr. Larry Snyder announced he would step down as president of Catholic Charities USA at the end of January 2015, after nearly a decade in the top spot. He will become vice president for mission at the University of St. Thomas in Saint Paul, Minn.

Observers see a variety of drivers spurring recent CEO turnover. “Part of it is simply retirement, especially when you’ve got an older person who has been in a position for 10 years or more,” said Dr. Dara Richardson-Heron, who since 2012 has been CEO of the YWCA of the USA in Washington, D.C. “For some, an improving economy presented them with more favorable opportunities. And, in some cases there’s a need for a CEO with different skill sets. Today’s nonprofits need leaders who are nimble and are willing to change often and quickly,” she said. “The person at the helm has to be able to formulate a strategic plan, but must also be willing and able to adapt it as needed,” she added.

The departure of a CEO is a perennial challenge for nonprofits, according to Preeta Nayak, a partner in the San Francisco office of The Bridgespan Group, a nonprofit advisor and resource for mission-driven organizations and philanthropists. “While transitions are always challenging, the degree to which the out-boarding of the old CEO and the on-boarding of the new go smoothly will depend on the processes and procedures in place, as well as the engagement of the board and the staff,” she said.

A Bridgespan Group survey of more than 150 nonprofit leadership teams found that leadership development and succession planning for senior management positions “is the single greatest organizational weakness nonprofits face.”

Authors of a Bridgespan study released in 2006 that is currently being updated predicted the need for 640,000 nonprofit executives between the report’s issuance and 2016. That is 2.4 times more than employed in 2006. The authors predicted that 80,000 new leaders would likely be needed in 2016 alone. The study was titled The Nonprofit Sector’s Leadership Deficit.

Any time that there’s a change at the top, “it’s most important to communicate around the change,” said A. Wayne Luke, the Atlanta-based managing partner, not-for-profit practice at Witt/Kieffer, an executive recruiting firm. “If there’s a vacuum, it will be filled negatively.”

Instead, the board should communicate the positive changes that are anticipated by the move. “Donors invest primarily in programs, outcomes and impact, not just the leader,” he added. “But organizations need to assure donors that experienced, appropriate and capable leadership remains in position and will continue in a seamless fashion.”

Many of the leaders who have left, or plan to leave soon, have enjoyed tenures of at least a decade at their organizations. A failure to plan for succession can deal a heavy blow to an organization, said Anne Wal­lestad, president and CEO of BoardSource, a Washington, D.C.-based nonprofit that offers consulting services, training courses, and other services to nonprofits. “An abrupt exit, particularly if the CEO holds all the fundraising relationships, can be critical,” she said.

Depending on the situation, an outgoing CEO might try to assist an incoming executive with donor introductions and other activities, said Wallestad. But she also suggests “sharing fundraising and other significant responsibilities with the board of directors and other senior staff, so one person doesn’t hold the only key to all relationships.”

Some nonprofits, such as Teach For America, address this and other issues with a “co-executive” leadership position. In 2013, the New York City-based organization, which works in partnership with communities to expand educational opportunity for children facing the challenges of poverty, appointed Matthew Kramer and Elisa Villanueva Beard as co-CEOs. Teach For America did not re­spond to inquires regarding the structure. In a blog post announcing the changes last year, Founder and Chairman Wendy Kopp said Beard will “lead the work of the regions and play a significant role in building public understanding and support of the organization,” while Kramer will lead the nonprofit’s central teams and drive planning.

“That kind of model is still unique,” said Wallestad. “It can work, but everyone must be clear and on board about individual and collective responsibilities. Regardless of the executive structure, though, the board of directors and the executive team must have clarity about the organization’s goals, responsibilities, and reporting lines. If everyone works together, then there is no ‘wrong way,’” she said.

Added The Y’s Nicoll: “It is all a function of the strength of the organization that the CEO has built. With a strong board, senior staff team and plan, and positive, open relationships with stakeholders and funders, the departure of the CEO should be a natural transition to the future. If an organization does not have these things in place, then it is at higher risk of drift and loss of relationships.” E

Martin Daks is a freelance business writer based in Bethlehem Twp., Pa., and a regular contributor to The NonProfit Times.