Succession Planning: A Critical Business Practice for Foundations and Philanthropic Families

As philanthropy leaders, we're all familiar with the importance of regular strategic planning, financial planning, and investment planning. These practices are essential for ensuring the long-term health and impact of our organizations. Without them, we risk financial instability, mission drift, and ineffective use of resources.

But there's another crucial planning process that often gets overlooked: succession planning. Many foundations and philanthropic families view succession planning as something to address only when a departure is imminent. However, this approach can leave organizations and families vulnerable and unprepared.

Some organizations believe they're prepared with a basic "hit by the bus" plan, outlining rudimentary steps to take if a leader suddenly departs, such as hiring a search firm or notifying key stakeholders. While this is a start, it falls woefully short of true succession planning. Effective foundation succession planning is not just about crisis management; it's a comprehensive approach that can drive significant organizational improvements, enhance leadership development, and ensure long-term stability and impact.

Here are six compelling reasons why succession planning should be a regular business practice for all foundations and philanthropic families, regardless of anticipated departures:

1. Preserving Institutional Knowledge and Relationships

Think about all the knowledge, connections, and relationships that exist within your organization. Now imagine if key leaders suddenly departed without transferring that invaluable information. Scary, right? Regular succession planning ensures that critical knowledge and relationships are documented and shared throughout the organization. This process identifies key information holders and creates systems for knowledge transfer.

By doing so, you protect your foundation's intellectual capital and maintain important external relationships, even as leadership changes occur. Without this practice, you risk losing years of accumulated wisdom and damaging vital partnerships that have been carefully cultivated over time.

2. Developing a Leadership Pipeline

Foundation succession planning isn't just about preparing for the top leadership roles; it's about cultivating talent at all levels of your organization, including your board. By regularly assessing your talent pool and identifying potential future leaders, you create a robust leadership pipeline for both staff and board positions.

For staff, this approach allows you to invest in professional development, provide stretch assignments, and mentor promising individuals. Not only does this boost employee engagement and retention, but it also ensures that you have a pool of qualified candidates ready to step into leadership roles when needed. On the board side, it involves identifying and preparing potential leaders, providing opportunities for increased responsibility, and ensuring a mix of tenures through term limits.

Consider the cautionary tale of a foundation whose board chair served for over 20 years without term limits. He had become the de facto decision-maker for most board matters and the other board members had grown accustomed to deferring to his judgment. When he suddenly fell ill and had to step down unexpectedly, there was no clear successor, and no one on the board felt prepared to step into the leadership role.

Neglecting this aspect of succession planning can lead to a leadership vacuum, forcing rushed hires or appointments of individuals who may not fully understand your organization's culture and mission. By prioritizing leadership development at all levels, you create a culture of growth and preparedness that will serve your foundation well in both expected and unexpected transitions.

3. Ensuring Mission Continuity and Organizational Stability

We've all seen what happens when an organization experiences a sudden, unplanned leadership change. It can be chaotic, to say the least. Regular foundation succession planning helps maintain organizational stability and mission continuity, even during times of transition. By clearly defining roles, responsibilities, and decision-making processes, you create a roadmap for smooth leadership transitions.

This practice also allows you to align your succession strategy with your long-term organizational goals and values. Without a solid succession plan in place, you risk periods of uncertainty and potential mission drift during leadership changes, which can undermine the confidence of your grantees and partners, and and reduce organizational effectiveness.

4. Adapting to Changing Philanthropic Landscapes

The world of philanthropy is constantly evolving, and your leadership strategy should evolve with it. Regular succession planning provides an opportunity to assess the skills and expertise needed to lead your organization into the future. It allows you to identify potential areas for growth in your current leadership team and develop strategies to address them. This forward-thinking approach ensures that your organization remains relevant and effective in a changing philanthropic landscape. By regularly evaluating and planning for future leadership needs, you can better position your foundation to tackle emerging challenges and seize new opportunities in the sector.

This principle applies not only to staff leadership but also to board members and trustees. Regular foundation succession planning for your board ensures that you have the right mix of skills, perspectives, and networks to guide your foundation effectively as the philanthropic landscape evolves. Without this, your board may become outdated or ill-equipped to provide the governance and strategic direction needed in a rapidly changing world.

5. Strengthening Board Governance and Effectiveness

Just as we plan for executive transitions, we must also plan for board transitions. Regular board succession planning is critical for maintaining strong governance and organizational effectiveness. This process involves assessing the current board's skills and demographics, identifying gaps, and developing strategies to recruit and onboard new trustees.

By regularly evaluating your board composition, you ensure that your foundation has the diverse perspectives and expertise needed to make informed decisions and provide effective oversight. This practice also allows you to plan for the gradual introduction of new board members, avoiding sudden, disruptive changes in board composition.

Moreover, board succession planning provides an opportunity to engage in important conversations about term limits, board size, and the balance between continuity and fresh perspectives. It can also help address sensitive issues, such as how to respectfully transition long-serving board members who may be less engaged or aligned with the foundation's evolving direction. Without regular board succession planning, foundations risk becoming stagnant, losing touch with the communities they serve, or lacking the necessary expertise to navigate complex philanthropic challenges. It can also lead to a crisis if multiple board members depart simultaneously without a pipeline of prepared successors.

6. Navigating Family Dynamics in Philanthropic Succession

For family foundations and ultra-high-net-worth families engaged in philanthropy, succession planning takes on an additional layer of complexity. It's not just about organizational leadership; it's about preserving a family legacy while adapting to new generations. Regular succession planning in this context provides a structured way to engage younger family members, align diverse perspectives, and navigate potentially sensitive family dynamics. It creates space for open dialogue about the family's philanthropic values and how they may evolve over time. Without intentional succession planning, family foundations risk conflict, disengagement of younger generations, or a disconnect between the foundation's work and the family's evolving priorities.

This point is particularly relevant for family foundation boards, where succession often involves transitioning leadership to the next generation. Regular succession planning can help family foundations strike a balance between honoring the founder's legacy and embracing new ideas from younger family members. It provides a framework for discussing how family values translate into philanthropic priorities across generations.

Succession planning shouldn't be a reactive measure triggered by an impending departure. Instead, it should be an ongoing, proactive process that's integral to your foundation's overall strategic planning. By making succession planning a regular business practice, you ensure the long-term health, stability, and impact of your organization.

Ready to take the next step in developing a robust succession plan for your foundation or philanthropic family? Join me for my upcoming free event, The Simplified Succession Plan Workshop. This interactive session, exclusively for foundation CEOs, trustees, donors, and family office leaders, will provide you with practical tools and strategies to create a succession plan that works for your unique situation. Don't leave your legacy to chance – invest in your foundation's future today!