On the Horizon for Nonprofits: Big Leadership Succession Challenges

February 29, 2016

Survey of Nonprofit Executives Reveals Lack of Succession Planning for Top Roles; Retention of Young Talent Also Emerges as Issue

(NEW YORK, NY-- Feb. 29, 2016) - Despite the bulge of Baby Boomers nearing retirement, nonprofits and their boards haven’t been proactive about succession planning for leaders and other top positions.

That’s an insight from the most recent Nonprofit Pulse, a national survey of nonprofit leaders and executives by accounting firm Marks Paneth. It includes the responses of 114 CEOs, executive directors, presidents, CFOs and board members of nonprofits with annual budgets between $10 million and $200 million.

Barely over half (53%) of nonprofit leaders say their organizations have succession plans for those in the CEO or similarly titled positions. Even fewer have succession plans for the CFO (36%) and development director (28%) jobs.

“It’s likely that the lack of succession plans – and the formidable task of finding qualified leaders – will prompt some nonprofit boards to seriously consider and pursue mergers with other nonprofits whose leadership and succession planning are more solid,” says Michael McNee, CPA, Partner-in-Charge of the Nonprofit and Government Group at Marks Paneth.

In fact, 39% of leaders say they expect moderate to significant merger activity in their sector of the nonprofit world over the next five years.

Beyond succession, retention is now a serious issue at nonprofits, especially when it comes to younger professionals. Two-thirds (66%) of nonprofit leaders say retaining top young talent is a challenge.

Nearly half of leaders – 49% – say the retention problem stems largely from the “inability to offer higher compensation.” Fifteen percent say recruitment by competing nonprofits is the top threat to retention, and another 15% say it’s competition from the private sector.

Says Mr. McNee, “In many for-profit industries, retention problems have to do with company culture, new competitors and more exciting opportunities elsewhere. For nonprofits, it’s generally money.”

To receive a copy of the Nonprofit Pulse and/or to speak with a leader from Marks Paneth’s Nonprofit and Government Group, please contact John McKenna of ICR LLC at 203.682.8252 or john.mckenna@icrinc.com.

About Marks Paneth

Marks Paneth LLP is an accounting firm with more than 600 people, including over 80 partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, trade remediation and valuation services as well as litigation and financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, hospitality, media, entertainment, nonprofit and government services clients.  The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle. The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services.

In addition, Marks Paneth’s membership in Morison KSi Ltd., a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth, whose origins date back to 1907, is the 35th largest accounting firm in the nation and the 9th largest in the mid-Atlantic region. In addition, readers of the New York Law Journal rank Marks Paneth as one of the area's top three forensic accounting firms for the fifth year in a row.

Marks Paneth is headquartered in New York City, with additional offices in Washington, DC, New Jersey, Long Island and Westchester. For more information, please visit markspaneth.com. 

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