Special to the Philanthropy Journal
By Barbara Rady Kazdan and Lynn S. Price
This is the fourth and last installment in a multi-part series from Barbara Rady Kazdan and Lynn S. Price on the issues nonprofits face in transitioning leadership. You can read the first three installments here: Part I | Part II | Part III.
The authors enlisted a small cohort of Ashoka Fellows to examine their leadership transitions and share their learnings as a resource for the field. They aimed to inform the field by collecting and probing the insights and experiences – personal and professional – of path-setting nonprofit founders.
Nonprofit founders report feeling short-changed compared to their for-profit counterparts’ leadership transitions: “When you leave a business you created, you have something to show for it, you sold a company, went public, received the proverbial golden parachute….” Not so for the social entrepreneurs in our cohort: “I found myself with no income or lifeline to the world I was leaving.”
Could the social sector address the need for a “soft landing” for founders, allowing them to decompress from one “all in” experience before embracing another? In the business world, exit packages offer continued benefits, administrative support and compensation for a defined period. In the nonprofit sector these benefits are rare. One founder observed that, “because there’s no exit strategy, many of us stay too long, even though we know that a new skill set is needed once the organization becomes a large, multi-site enterprise.”
Social entrepreneurs initiate, build support for and scale a new approach to an entrenched social problem. When their organization has matured they want a new “seat-of-the-pants” start-up challenge. But where will they go with no bridge to their next endeavor?
After the transition, some organizations asked their founders for pro bono help – to mentor the new leader, accept speaking invitations, serve on the board, and more. One of our participants said, “I spoke at global conferences for them, because those audiences identified me with the issue.” Another told us, “I served on the board and as an adviser to my hand-picked successor.” The organization prospered, but she recalls, “I had no income, no office, no standing in my professional network. People asked me if I’d found a new job; I’d never considered it a job.”
As they had grown their organizations, our participants valued the experience of colleagues who had worked through the challenges they were facing. “When we decided to train other non-profits in our methods we had no idea what to charge. I contacted colleagues who’d ‘been there, done that.” Participants told us, “when conferences brought Ashoka Fellows together, we didn’t want to hear presentations and attend workshops. We just wanted to learn from and with each other.”
Post-transition, social entrepreneurs need, and have much to offer, their peers. Recognizing that these change agents’ contributions transcend one idea or organization, Ashoka Fellows are elected for a lifetime; after they pass the baton they enjoy continued access to a global network. Often the seeds of a new venture emerge from these connections. Founders would benefit from ongoing connection to networks like these.
Supporting Social Innovation
Most nonprofits skid along with uncertain, often inadequate funding. In his survival guide for graduate school, Ronald Azuma comments that, “…it can be difficult to stay alive on such funding. Most contracts and grants are…not aimed toward paying for full-time staff.” Nonprofits work in much the same way. One founder in our study concluded, “You can’t solve hard problems with soft money.” She recalled explaining to the building manager that the rent was late because she never knew which, if any, grant proposals would be approved. “You mean you come in here every day and hope the roulette wheel lands on your number? Incredible!” This chronic uncertainty, swinging from plenty to penury, exacerbates leadership transitions.
Post-transition, financial problems plagued and sometimes toppled organizations. The participants in our cohort tried, with little success, to transfer their relationships with donors to their successors. Why? Because investors bet the jockey, not the horse. The social entrepreneur is the person they’re backing, the one with a passion to apply a new solution to a chronic social problem.
Seasoned social entrepreneurs acquire a taste for courting deep-pocket donors and influential allies. “My champion, a prominent business leader, opened doors for us by calling together corporate CEOs to engage their support. He’d tell me, ‘I’ll set the charge, you lay out the plan.’ It was intimidating at first, but it gave me a comfort level in those circles.”
When one of our participants left, a donor reneged on a multi-year funding commitment. Another told us: “Although two anchor donors served on the board and helped select my successor, they stopped funding us when I announced the transition. I left after our best fundraising year; the next year was the worst.”
Non-profits rely on unrestricted funds for administrative and fundraising expenses but most grants are earmarked for specific projects and outcomes; if a shortfall occurs, those funds can’t be repurposed to cover overhead. One founder’s operating grant ended when the foundation shifted priorities. “If they’d told us sooner we could have found other funding,” she observed. “Instead the bottom dropped out.
The social entrepreneur’s charisma and commitment to systems change inspires board members’ initial and continued loyalty. Post-transition, veteran board members often resigned, compounding the organization’s loss of institutional memory. Some successors, eager to establish their leadership, cut ties with our participants, shutting them out of conversations about how to proceed. Observing this pattern, Professor Elizabeth Schmidt advised in a 2017 article on Nonprofit Quarterly, “Silencing the person with the original vision is counterproductive.”
Founders in our cohort made these suggestions:
“There should be a formal way for the one who’s leaving to share their philosophy with the person who’s taking over.”
“It’s important to give yourself some space and give the new leader and staff chance to establish their new roles.”
The nonprofit sector is the third-largest segment of the U.S. workforce, comprising over 10% of the nation’s workforce according to a 2016 report from the Bureau of Labor Statistics. With combined assets of nearly $3 trillion, it’s the seventh-largest economy in the world. Policymakers could acknowledge the sector’s significance by creating dedicated revenue streams for organizations addressing issues of public concern, like climate change or homelessness. With adequate, reliable funding, after passing the baton, transformative leaders could become paid advisers, speakers, consultants, or staff – doing what they excel at and enjoy, while preserving key relationships and institutional memory. Members of this unique talent pool should be supported during their transitions so they can continue to contribute their ideas and experience to civil society.
Changing public policy can effect significant social change. One participant advises, “Work closely with your elected representatives. My congressman’s staff helped me insert a clause in federal legislation that made community-based organizations like ours eligible for the funding.”
What is needed to smooth the departures of social change agents, preserve their learnings and encourage their continued engagement in the field?
These recommendations emerged from our project:
- Increased investment in entities, existing and new, that foster community among social entrepreneurs. Access to those who’ve “been there, done that” would not only help founders share strategies but also help them prepare for transition and offer a bridge to new opportunities.
- Exit packages negotiated at the organization’s inception – when optimism is high and relationships strong – to give individuals who’ve been “all in” to their organizations the means to regroup before their next endeavor. The prospect of this support could help attract and retained talented social innovators.
- Collaborative funding by donors to provide social entrepreneurs the staying power to solve entrenched social problems.
Compassion is a non-profit hallmark, but most of our participants received harsh, uncharitable treatment. Why? It always came back to the psychology of poverty. With adequate, reliable resources non-profits could invest in early, dispassionate succession planning.
The social entrepreneurs who participated in this examination of leadership transitions shared their experiences and learnings because it’s in their nature to seek better ways to achieve social change. We should treat these innovators as renewable resources so when they move on they can move forward. Since funding insecurity undermined many of their efforts, society would benefit if policymakers created dedicated streams of stable funding for potentially high-impact but high-risk social ventures. What would it take for public, private and nonprofit entities to be full partners in bold initiatives tackling pressing social issues?
Author David Bornstein observes in his book How to Change the World, “social entrepreneurship is a process – involving a long-term commitment and continual set- backs.” Policymakers, institutional funders and venture philanthropists need to tailor their giving strategies to that reality. Imagine the return on investment to be gained by sustaining the contributions of visionary, strategic social entrepreneurs, since we rely on the third sector to protect individual rights, give voice to the marginalized, and create a vibrant, inclusive and participatory society.
With 30 years’ non-profit experience, Barbara Rady Kazdan launched Achieving Change Together to advance and connect leading social entrepreneurs. The founder of two innovative nonprofits, as Director, Ashoka U.S., she built and guided a nationwide network of 120 change leaders. She is a contributing author to Contagious Optimism.
Lynn Price is the founder of Camp To Belong International. She is a social entrepreneur and Ashoka Fellow with more than 25 years experience keynoting conferences and guiding scaling efforts of several social causes. She is the author of Real Belonging, Give Siblings Their Right to Reunite® and Vision For A Change, A Social Entrepreneur’s Insights From the Heart.