Succession Planning: A Non-Profit’s Path to Survive and Thrive

Succession Planning according to Susan M. Heathfield is the process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. In this process, you ensure that you will never have a key role open for which another employee is not prepared. It sounds like an awesome solution yet in the last forty years of serving a client portfolio of which over 80% are not-for profit organizations, HWA Alliance of CPA Firms has been privy to the internal workings and structural layout of many non-profit organizations, and unfortunately, the idea of succession planning and the solution it could bring to this gaping problem has not been prioritized. The attitude of being too focused on “today” to think about the future, has been the telltale sign of many of these non-profit organizations.

According to BoardSource’s 2017 national study of nonprofit board leadership practices, 50 percent of CEOs or executive directors plan to leave their current roles within the next five years. Yet, as few as 27 percent of nonprofits surveyed had a written succession plan. This research suggests that nonprofits are poorly prepared for leadership transitions. In actuality, the transition of leadership in many non-profits would traumatize the organization as a whole.

When a board president or executive director leaves an organization, the vacuum left by this departure often causes chaos or even the nonprofit’s demise. A succession plan lets leaders empower the next generation to fill these vacancies and ensure the nonprofit thrive despite the departure of certain vital figures. This is why it’s imperative for non-profit organizations to pursue and implement a well-thought-out succession plan to ensure that all their hard work transfers into expert hands. Succession planning allows for new leaders to be groomed and empowered to replace departing leaders, safeguarding the organization’s growth, survival, and continued mission even as key figures exit.


The Benefits of Succession Planning

One of the most vital things an executive can do to get and maintain their organization in shape is to plan for its future without them. Nonprofits that are serious about their sustainability must be serious about succession planning to achieve seamless and deliberate leadership transitions and guarantee their organization is prepared for unforeseen departures and changes. Whether the shift results from an unplanned vacancy on the staff or board, or the expected departure of a long-tenured leader, having a strategy in place can help nonprofits weather the inevitable challenges of a significant shift. This “blueprint/roadmap” avoids potential pitfalls, provides a path forward during times of uncertainty and delivers directional continuity.


The Role of a CPA Firm in Succession Planning

CPA firms play a critical role in succession planning. A succession plan outlines specific steps for an organization to take in order to identify qualified candidates, internal and external, to take on leadership roles when people leave the organization. This type of risk management allows for a smooth transition of power in cases of both planned and unexpected vacancies. A proper succession plan ensures function as intended in the absence of key executive members. There are many roles required to achieve a successful succession plan, one of which is using the knowledge and skills of a CPA Firm.

Specifically, CPA Firms will: (

● Identify strengths and weaknesses early on to determine the best value for business

● Guide you throughout the process, making sure there are checks and balances

● Ensure financial statements are current and organized, leading to a smoother transition

● Compile pro forma statements based on specific assumptions and projections

● Review the most effective way to minimize the taxes on the transfer




In conclusion, it can be noted overall, proper succession planning and exit strategies are a necessity if an organization wants to continue to grow and thrive, especially in the absence of key executive members. Succession planning for a nonprofit can be time-consuming, but a good succession plan secures future income, provides a smooth transition for the team, and ensures that an organization’s mission is carried out.

The prospect of unforeseen events or oversights catching organizations off guard is highly probable but as discussed in the content above executives can circumvent this reality with good succession planning. Implementing good risk management in the framework and execution of succession planning will impact how an organization successfully maneuvers in dealing with the possibility that some future event could cause harm to the organization. In terms of business accounting, risk management is the process of assessing the risks involved with a company or firm’s business practices. The overall goal of this process is to minimize or eliminate these risks. It is without question that the nonprofit business model is challenging, posing significant risks such as financial asset loss, mismanagement of funds, and tax liabilities.

To ensure the stability and longevity of your nonprofit, you can turn to HWA Alliance of CPA Firms for a cost-effective risk management solution to your most unpleasant financial scenarios. We have the knowledge, expertise, and risk management solutions to help nonprofits identify and mitigate risks that significantly impact their organization.

We have earned a strong reputation for providing a full suite of risk management services to nonprofit organizations in a customized, risk-based manner, assisting our clients in meeting their financial goals and strengthening their accounting processes. Address organizational risks right away and benefit from immediate risk management solutions with us. We help organizations put risk and compliance fears at rest.

#HWA #HWAA #Succession #NonprofitSuccession