Navigating Finance Succession Planning

In our social justice world, we are often focused on our mission in this ever-changing climate. And in finance and ops, we are focused on supporting those initiatives and ensuring strong controls and compliance – often in the face of attacks.

There’s a critical component in the finance department cycle that frequently doesn’t get the attention it deserves: succession planning. This aspect is pivotal for ensuring that your organization remains financially stable and effective, even as key personnel move on or retire. You can also think about the succession strategy to include short-term absences for things like illness, parental leave or sabbatical.

Why succession planning matters

Continuity of Operations: Many groups are operating with tight cash flow, limited operations staff and many moving pieces. A sudden departure of anyone on the finance team can disrupt operations and jeopardize organizational stability. Succession planning helps mitigate these risks by preparing for a seamless transition to keep operations running smoothly.

Preservation of Institutional Knowledge: Finance staff hold a wealth of institutional knowledge from understanding funding sources, regulatory compliance, managing vendor relationships and keeping up with timely reports. Succession planning ensures this critical knowledge is preserved and transferred effectively.

Strategic Leadership Development: Planning for succession can encourage the development of internal finance & ops talent. It allows organizations to identify and cultivate future leaders who are well-versed in the nonprofit’s financial practices and strategic goals.

Organizational Confidence: Staff, board, donors, members, coalition partners (and the list could go on!) involved with your organization will have greater confidence due to your commitment to stability and strategic planning. A well-prepared succession plan reassures everyone that the organization will continue to thrive and grow – and keep up your important work.

Steps to Develop an Effective Finance & Ops Succession Plan

Assess Current Financial Management: Start by evaluating all applicable current fiscal & operations management practices, including budgeting, reporting, compliance, bookkeeping, vendor management, payroll, audit, tax, charitable solicitation, credit cards, lobbying tracking, c3/c4 cost sharing. Understand who is doing what and how your current systems are working. You can also do this assessment in advance of election cycle upticks to make sure you have coverage for increased activity and your normal day-to-day work.

Document, document, document: We are big policy documentation fans at Fun with Financials. It’s a great way to make sure everything is understood within the organization and folks can use it as a handy reference to understand the processes of a key area, like payroll. This includes all organizational passwords, which you must keep in a secure password keeper (no Google docs!).

Think about Internal Talent: Invest in the professional development of your finance team. You can include training, mentoring, and opportunities for growth to prepare them for future leadership roles. This can also be for folks that are currently outside of your current finance & ops team. Make the growth & opportunities in all your teams known org-wide – maybe there’s a program intern that’s an ops nerd at heart.

Create a Knowledge Transfer Plan: Establish consistent ways to transfer institutional knowledge. This can include detailed reviews & updates of financial procedures, regular knowledge-sharing sessions, and ongoing mentoring between personnel.

Draft a Succession Plan: Develop a succession plan that outlines the process for filling key finance & ops roles in the event of a sudden departure or planned transition. Include interim management strategies, criteria for selecting replacements, and a timeline for the transition.

Communicate the Plan: Ensure that the succession plan is communicated clearly to all relevant folks at your organization, including the finance & ops team, board members, and senior leadership. Transparency helps build trust and keeps the organization aligned with common goals.

Monitor and Update the Plan: Regularly review and update the succession plan to reflect changes in the organization’s structure, finance & ops system updates, and staff. An annual review makes sure that the info is current and that shared understanding is with all relevant staff (including any new hires!).

Be Upfront About Challenges

Some staff may resist changes or feel threatened by the prospect of succession planning. Think about addressing these concerns by emphasizing the organizational benefits and keeping transparent. It may be useful to have a summary of the succession plan available to all staff.

It’s also helpful to have your lawyer involved in your succession planning document. There may be legal (federal, state or local) and union contract compliance items to keep in mind.

And finally – many of you, already crunched for time, may be thinking: another thing! We get it, we really, really do. One of the ways that we can get through big projects like succession planning is taking it little by little. Are Fridays slower in your office? A few hours every Friday will get it done. Just like anything – planning will help with the overwhelm, and get you to a strong succession planning process.