7 Tips to Retain Your Nonprofit Executive Director or CEO

Pre-Covid, nonprofit executive director tenures averaged six years. However, there have been a tremendous number of departures since Covid. See Chronicle of Philanthropy.

There are certainly positives to getting new leadership. He or she can bring new energy. Cross-fertilization of ideas from another nonprofit is often beneficial. For longtime staff, change in leadership can be frightening but also great in some ways. It can be like moving to another organization without quitting and finding a new job.

But it takes time for the new Executive Director to become effective. I have a mentor (over 30 years as a successful nonprofit CEO at one nonprofit) who tells me that CEO longevity is critical to organizational success. He says it depends on the size and situation of the nonprofit, but overall:

• 1st year is learning your way around.
• 2nd year is forming important relationships.
• 3rd year is becoming effective.

Of course, learning and relationship-building happen concurrently. If the Executive Director or CEO is engaged in fundraising, the time needed for relationship-building is even more important.

For most nonprofits, if the new Executive Director leaves within the first three to five years, it can be expensive and wasteful to the organization. So, retention of a good Executive Director is vital.

Here are seven ways to retain nonprofit leadership:

1. Hire passion for the mission. Before you retain, make sure you hire someone who is really invested in the mission. The cause itself will help retain him or her.
2. Have an employment agreement. Consider having an employment contract instead of an employment at will. This will define an employment term (ex., 4 years) and provide structure for keeping the CEO.
3. Create a Board Transition Committee. Make sure your Board is supportive of the new Executive Director. Consider forming a Board Transition Committee of 2-3 strong board members. Another name for this committee could be the CEO Success Committee. This committee provides key support for the new nonprofit CEO in his or her first six months to a year in the position. The committee uses its relationships to introduce the new Executive Director to the community. It meets monthly with the CEO to align Board and CEO expectations. It supports the CEO as he or she meets the position’s challenges. If the nonprofit has significant dysfunction, these challenges can be difficult. They may involve unruly staff, programs, finances, or board governance issues. The committee is there to help. Read more about Transition Committees in one of our previous blogs, “Set a New Nonprofit CEO Up for Success with a Transition Committee.”
4. Provide excellent benefits. Offer a strong package to the Executive Director in Health Insurance, retirement, and PTO. Perhaps tie them to the length of employment. Great benefits can help keep leadership in place.
5. Tune in to the CEO’s personal challenges. Help him or her meet them. This could be a child with special needs or some situation that requires flexibility.
6. Provide bonuses tied to the length of service. Provide some sort of bonus structure that rewards staying in place. For example, perhaps 10% of compensation is payable at the end of two years.
7. Encourage Sabbaticals. Once the CEO has tenure, you need to deal with burnout. The stress of running today’s nonprofit is real. Consider giving a long-tenured successful CEO one to six months off to recharge as part of a sabbatical. It could be a chance to do serious professional development or travel. This may be expensive, but it is more efficient than replacing a valuable leader.

Certainly, Post-Covid is a new world for nonprofits. However, longevity in the CEO position remains essential. The exact number of years needed for a successful tenure can depend on a nonprofit’s situation and the type of leader needed at any given point in time. Read more in our previous blog, “What Kind of Executive Director Does Your Nonprofit Need? You Might Be Surprised.”

Either way, the Board cannot get away with just hiring a good Executive Director. That is a job half done. It must actively support the CEO in order to keep her or him. If you do find your nonprofit in a situation where it needs to replace its short-term or long-term leader, contact us today to learn more about our executive search services.

by William J. Moran, J.D., M.S., Ed.
President, The Moran Company
“We Find Great Nonprofit Executives”

© 2023 The Moran Company