A Study of Interim Leadership in Nonprofits

Sep 10, 2018 | Management and Leadership, Philanthropy Journal, Resources

An interim leader can prove to be an essential advocate beyond managing the financial and moral stability and health of a nonprofit during an executive leadership transition.

Special to the Philanthropy Journal

By Jeffrey Wilcox, CEO 

Executive leadership transitions in nonprofits are rare, as they can prove to be financially and sometimes morally costly to the organization.

However, inevitable leadership transitions do occur, and when this happens, nonprofits — even when armed with the best succession plan — are faced with a double-edged sword: to rush through the leadership search and settle for a replacement who may not be the best fit for their company, or take time to find and select the right executive leader and face an undetermined leadership void.

In such situations, opting to use an interim leader is ideal.

What Is an Interim Leader?

Interim leaders differ from traditional leaders in several aspects, the most evident being that they are temporary leaders. As such, their approaches and projects as leaders are transition-focused. They act as agents of organizational change and evaluate closely the functionality and viability of the organization to build sustainability and success for the permanent leader.   

In a recent study conducted by Third Sector Company that interviewed over 300 American and Canadian nonprofits on the West Coast, nonprofits in transition looked to interim leaders for these top four most pressing needs, skills, and competencies:

  1. Managing the sudden leadership void. Interim leaders must enact termination management to alleviate the repercussions of a sudden leadership void. This can involve navigating wrongful termination litigation and mitigating distrust in the nonprofit’s employees and volunteers.
  2. Collecting and assembling necessary data. The ability to quickly identify and assemble the necessary data to conduct organizational assessment and report on performance in key areas is crucial. On average, interim leaders can execute this in 90 days.
  3. Identifying crisis projects in the organization. Interim leaders must identify and address the larger “symptomatic” need(s) of the nonprofit, such as special events fundraising, contract and audit management, and significantly paralyzed cash flow.
  4. Rectifying organizational communication. Executive leadership transitions can significantly alter communication, and interim leaders must help reestablish clarity and transparency, such as hindering clique and self-organized power structure dynamics.

The Different Types of Interim Leaders

No two transitions in nonprofits are the same. Depending on the type of leadership transition (i.e., leave of absence, merger, or new replacement), interim leaders must adapt their approach in their role to meet the needs and address the repercussions of that transition.

In nonprofits, seven different “faces” of interim executive management exist:

  1. The executive transition interim is the most common type of interim executive management. They provide organizational leadership and onsite capacity-building services during the void after a leadership vacancy. Usually a successor is not known.
  2. The leave of absence interim provides temporary human resource solutions for a defined length of time for a professional who plans to return to their leadership role. These absences include maternity leave, short- or long-term disability, and sabbatical.
  3. The new executive position interim is for nonprofits electing their first-time paid executive leader from a previously all-volunteer workforce. This interim leader focuses on establishing and testing the new infrastructure and its capacity.
  4. The organizational dissolution interim steps in when an organization decides to permanently discontinue and plans for a successor are not necessary. This type of interim leader specializes in appropriately and legally sunsetting the nonprofit.  
  5. The merger & acquisition interim aids in navigating the legal and sometimes political processes of forming a new organization and/or radically modifying the nonprofit’s structure.
  6. The court-appointed interim is assigned when a nonprofit organization has filed for bankruptcy. This interim executive leader works for the court or third-party company and not the board.
  7. The chief operating interim is elected in larger nonprofit organizations when new leadership infrastructure is being developed. This allows the current senior leadership positions to be fixed until new positions can be clearly defined and demonstrated.

Benefits of an Interim Leader

Interim leaders offer more nuanced and varied benefits beyond the need to provide time and stability in a leadership void. Interim leaders are crucial third-party evaluators to the workings and sustainability of nonprofits.

The key benefits of hiring an interim leader are:

  1. Fresh pair of eyes. Onboarding a third-party interim leader offers the exclusive opportunity to view the nonprofit with a fresh pair of eyes. Nonprofits in transition don’t want to just transition as painlessly as possible —  they want to evolve from it and iron out any old and stubborn wrinkles in their functionality. An interim leader can offer new focus and new drive to identify precisely an organization’s weaknesses and strengths.
  2. Agents of change. As categorized earlier, interim leaders are agents of change. They bring and offer fresh and new ideas and perspectives. A strong interim leader can actively and successfully curate growth opportunities within and for the nonprofit itself, such as bettering how a nonprofit serves its community.
  3. Defining leadership expectations and needs. Not only do interim leaders offer a fresh pair of eyes, they offer a fresh pair of ears to what is needed and expected for the nonprofit’s new executive leader. They can also help define what the new executive leader needs to best succeed and to navigate the top five leadership challenges of social sector leaders.

An interim leader can prove to be an essential advocate beyond managing the financial and moral stability and health of a nonprofit during an executive leadership transition. Using the services of executive interim placement organizations, such as Third Sector Company, can provide crucial, third-party, data-based insight to organizations and their prospective employees to ensure they find and benefit from the perfect match.

Third Sector Company was founded in 2002 with a single mission: To foster a continuity of leadership for the nonprofit sectors of the United States and Canada. Now serving four regions of the Western United States and Canada and having helped over 500 nonprofits, Third Sector Company specializes in interim executive placement, succession planning, and board development strategies to further evolve its founding principles in unique and impactful ways.

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