Trusteeship Podcast Episode 51: Crafting Robust Succession Plans for Foundation Continuity and Growth

Introduction:
Welcome to the Trusteeship Podcast From AGB, the Association of Governing Boards of Universities and Colleges. We cover everything higher education leaders need to know about the challenges facing our nation’s colleges and universities. More important, we provide the facts and insight you need to solve those challenges and to be the storytellers and advocates higher education needs. Today, we’re talking about crafting leadership succession plans for foundations, for a foundation’s own CEO for its host institution’s president, and for a foundation’s board. In this podcast, originally presented as a webinar, AGB Consulting’s Natalie Boehm speaks with AGB Senior Consultant, Jane DiFolco Parker, and AGB’s Executive Director of Philanthropic Governance, David Bass, about the vital role of succession planning in ensuring continuity and growth for foundations.

Natalie Boehm:
Thank you everyone for joining us today. My name is Natalie Boehm. I’m with AGB Consulting. I’d like to briefly introduce our speakers. We have David Bass, who is the executive director of philanthropic governance with AGB and Jane DiFolco Parker, who is a senior consultant with AGB and the former vice president for development and president of Auburn University Foundation and Auburn Real Estate Foundation. We’re going to cover three different types of succession planning here: foundation CEO succession planning, institution president succession planning, and then board leadership succession planning. To kick us off, Jane, I’ll pose the first question to you. In conversations with our foundation boards and staff leaders recently, succession planning is one of their top concerns. It’s something we’re certainly hearing a lot about at AGB Consulting. So could you just talk a little bit about why succession planning is so critical?

Jane DiFolco Parker:
Thanks, Natalie. The work of foundations in higher education is so important to this really important sector of society. I’ve always said that higher education is one of the most important institutions in a civil society. And so ensuring continuity of the board initiatives that we’re undertaking and in the relationships that we build with so many of our constituents, be they alumni, donors, friends, corporate partners, foundations, we have to make sure that there are no lapses in momentum in our relationships and in our initiatives that can occur when there’s a change. Whether it’s a planned or an unplanned change, we need to make sure that the important work of the foundation continues almost uninterrupted. And so succession planning is a way that we’re able to sustain that momentum and to make sure that we continue to advance the mission of the institutions that we serve.

Natalie Boehm:
Thank you so much. David, do you have anything you’d like to add?

David Bass:
Just to jump off Jane’s point and your point about how prevalent this is as a concern in the sector, at AGB’s Institute for Foundation, Chief Executives, and Board Chairs, we have about 14, 15 teams for an intensive three-day workshop to help forge close alliances between the chair and the CEO and develop a strategy for their shared work. We start that program with a conversation just closed door for the board chairs. And at our last institute, I sat down with the board chairs and we spent an hour and 20 minutes talking about succession planning. I did not know that was what we were going to talk about. That was what rose to the surface, and I think a lot of this concern was driven by the fact that three members of that group had extensive experience on corporate boards and they said the first thing we do is a corporate board is charge our CEOs with having a ready-go succession plan.

And going around the room, not a single member, which included some very sophisticated foundations, had a ready-go succession plan, and that was a real source of anxiety for CEOs, especially in a period where there are such a cute competition for advancement talent, and in a period where we are seeing shorter tenures and more unpredictable transitions in the institution’s administration.

Jane DiFolco Parker:
And to your point, David, about unpredictable transitions, given the political environment in which we live and work these days, when higher education is in some ways under attack, I think that that’s only going to increase. And from my perspective, that makes succession planning even more important because there may be a higher likelihood that there will be more unplanned leadership transitions.

Natalie Boehm:
So leading off what you’re both saying, I think could we delve a little bit further into the institution’s CEO succession planning? One of our colleagues here says, “When you’ve seen one foundation, you’ve seen one foundation.” We know that staffing structures vary widely. So how does that inform CEO succession planning? And what does that really look like in practice?

David Bass:
I think the short answer is it makes it really difficult. There is no one model for CEO succession planning. It’s going to vary enormously in terms of the structure of the relationship between the institution and the foundation and the scale of the operation. Succession planning looks very different in an organization with 300 staff, obviously, than it does in an organization with three staff, and our foundation sector encompasses that full spectrum. Another thing that I think really complicates the process are the infinite gradations between a wholly operationally autonomous and independent foundation at one extreme and a foundation that operates effectively as a component of the institution at the other extreme. In our survey of board governance practice and composition, we found about 40% of foundation chief executives report to and are paid by the foundation. So they report to the foundation board chair, and they are fully compensated by the foundation.

And I would say our sample there skews towards larger foundations in the 100 to $500 million endowment range. At the other end, about 17 to 20% of the CEOs are paid by the institution and report to the institution without a really reporting relationship to the foundation board. All the others, 43%, have some sort of dual reporting relationship where they may be compensated by both the institution and the foundation. They may report to both the president or chancellor and the foundation board. So that makes it a lot more challenging because a lot of the foundation boards simply do not have the authority to hire successors and to make determinations about succession within a staff structure. The other thing I think it’s worth bearing in mind is that foundations always have to operate in very close collaborative alignment with their partners. Even if you are a relatively autonomous foundation operationally and financially, you hire your own staff, the hiring is done by the board. That board needs to work in close collaboration with the institution president or chancellor.

Regardless of the operational and formal reporting structures, decisions around succession need to be made collaboratively with the institution leadership to assure that there’s good alignment, good chemistry, good collaboration, because that’s what’s really going to enable the foundation to fulfill its mission more than anything.

Natalie Boehm:

Jane, is there anything you want to add?

Jane DiFolco Parker:
Well, David, your point about alignment is critically important. These foundations exist only to advance the mission of the host institution. If there were no host institution, there would be no foundation. So regardless of the structure, as you point out, there has to be close collaboration, a constructive partnership between the institution and the foundation, and there has to be a role for both, in my opinion, in the succession plan and in the appointment of the foundation CEO, because that person, regardless of whether he or she works in a completely autonomous foundation or in the hybrid role, as I describe it, he or she has to be able to partner effectively with the institution president and with the foundation board, so that alignment is critically important. And then just to go on to the actual succession planning, what succession planning looks like in practice, thinking about the future CEO of the foundation is critically important, and that gets to all the things David just talked about.

But there are other ways too that a foundation CEO can help to ensure that a foundation continues to be successful in its work, in support of the institution, and that is by making sure that you are positioning the foundation for success in the future. We never want the organization to collapse when we leave. If that happens, then we have been a failure. And so we want to make sure that we have put in place a structure that is effective, that we have practices, policies, procedures that enable the organization to continue functioning well in a transition, recognizing that when a new CEO comes in, he or she may want to make changes, but having a healthy structure in place and good guardrails within which the foundation can operate ensures that the foundation will continue to be successful on behalf of the institution when there’s a planned or an unplanned leadership change in the foundation.

Natalie Boehm:
Thank you both. Recently, I’ve had a few conversations around MOUs between institutions and their foundations. How critical is that to succession planning just in terms of really establishing that relationship and both parties ensuring their understanding of that relationship as you move forward in building a succession plan?

Jane DiFolco Parker:
I think the MOU is vitally important to every aspect of the relationship between the foundation and the institution, and that includes the role of the CEO and how that works with the institution and with the foundation. There are always unknowns in the work we do. Higher education institutions are highly complicated organisms, but to the degree that we can codify, through the MOU, how that relationship is going to work and who is responsible for what and who is responsible to whom, it helps to mitigate the likelihood that down the road, there will be significant problems in the relationship between the foundation and the institution.

David Bass:
Natalie, I’d weigh in too AGB has just published a new book on memoranda of understanding. Find that on our website. But I would also add that the MOU, while it codifies and documents of shared understanding of how the relationship will work and be structured, it’s also valuable in and of itself as a succession planning tool in that it should, if it is well-crafted and current and reflects the investment of both institution and foundation leadership, is a great way to orient new presidents, to orient new foundation CEOs, to orient new board members. So succession across the boards about the partnership, it provides them with a roadmap.

Natalie Boehm:

What do foundation boards need to know as they queue up for presidential transitions? While they’re not responsible for the oversight of the institution’s president, how can they work with the other leadership? How can they work with foundation leadership? What is their role there?

Jane DiFolco Parker:
I think hearkening back to what David said a few minutes ago about this notion of alignment between the foundation and the institution, not withstanding leadership transitions that will occur, it’s so important that on an ongoing basis, the foundation board, in particular the leadership of the foundation board and the foundation CEO, develop ongoing constructive partnerships with the governing board of the institution, with the president of the institution, with the members of the president’s leadership team in the institution so that the foundation board is well attuned to what’s going on in the institution, that there is credibility on the part of the governing board in the work of the foundation board, that the foundation board is a trusted partner with the governing board of the institution. So when a leadership, a planned leadership transition is occurring, the foundation board knows what the priorities are for the new leader for the institution.

We want to make sure that the foundation board has a seat at the table, preferably on the search committee, has the opportunity to weigh in on the candidates for the presidency. And if we’ve done a good job of building those strong partnerships, just in the normal course of things, it will be almost organic that the foundation will have a role in helping to identify the next leader of the institution. We really have our finger on the pulse of what our external constituents care about, our alumni, our donors, our friends, partners, and so forth. And so we have a pretty good idea what they might be thinking about the future president, and their perceptions of the new president and how well he or she will be received is going to be really important. So I think that’s another way in which the foundation board can play a really important role in helping to make sure that a good decision is made about the next leader of the institution.

David Bass:
Natalie, I’d also jump off something that Jane talked about, which is foundations themselves can be an important source of continuity. In many cases, you have board members on foundation boards who have served through multiple presidential administrations. In many cases, they have known the institution for decades. You probably have leadership staff in the foundation who have served through multiple administrations. So especially in the case of an unplanned succession in the institution’s presidency or chancellorship, it’s really the foundation board who can sustain the relationships that Jane was talking about with external constituents, donors, friends, stakeholders, alumni, political leaders, whatnot, during a period when there are going to be a lot of questions about what’s going on with the institution, what’s the direction? I hear over and over again, from foundation board members and chief executives, that when something’s going on at the institution that’s raising concerns or creating anxiety, they’re the ones who get the phone calls. And so they can provide some continuity and familiarity and a steady hand on the tiller when there’s choppier seas in the president’s office.

Jane DiFolco Parker:
I think you’re exactly right, David. In fact, in some ways, I think the role of the foundation board and foundation leadership can be even more important in an unplanned presidential transition. Not every unplanned transition is actually a crisis, but it does create at least a sense of uncertainty and angst about what’s going on at the institution. And good board members, whether they are governing board members or foundation board members, a good board member is going to stand with the institution in a time of crisis. And that is a time when we can reassure people that this institution is going to be here long after we all are gone. It’s going to be fine. We need to continue to support it, to stand up for the important work that it’s doing, and just to remind people that it’s much bigger than one person. In an unplanned transition, I think the foundation can play a vitally important role in sort of calming the waters and providing that reassurance that our institution is in good shape and we’re going to continue to do the important work that we’ve been doing for decades and decades or longer.

David Bass:
One final point I’d say is in a planned transition too, that is such a great opportunity, to sit down with the leadership team in the office of the president and think about how the foundation board can best acclimatize, socialize a new incoming president. The foundation board probably represents influence leaders across the region, state, and potentially nationally, all the relationships that could be critical to the success of a new administration, president. Working with the campus leadership to develop a strategy to leverage those relationships among foundation board members and make sure that the president is out there meeting the stakeholder groups and influence leaders they need to know can be a tremendously powerful way to help ensure the success of a foundation as a fundraising leader, as an alumni leader, and as a community leader.

Natalie Boehm:
Thank you both. So with just a few minutes left, we’ll touch on our final topic here of board leadership succession planning. So boards really are responsible not just for continuing to conduct board business, but really now, it’s a push to think strategically, which entails planning ahead for board leadership. So how do boards plan for their own leadership successions?

David Bass:
I think one of the most important things boards need to ask themselves is who’s really responsible for succession planning within the board? I often think the most important committee on any foundation board is the governance committee. If you don’t get the governance right, if you don’t get the right people in the right roles focused on the right questions and work, nothing else is going to hang together effectively. So having an empowered, engaged governance committee with clear charges, I think making sure you know what the different jobs within the board actually are, job descriptions for the committees, job descriptions for board service itself, job descriptions for the leadership, I think doing some regular assessment so that you know what capacities, shortcomings, challenges within the board, composition and culture there are, having a strategically informed composition matrix that breaks down the full spectrum of characteristics, lived experiences, capacities that you need within your board, that will help mitigate the challenge of sitting down in May and saying, “Who do you know? Who do you know?” and getting folks that people play golf with.

Finally, having some strategic vision. When you’re thinking about leadership succession plans, it shouldn’t be who’s going to be the best board chair next year, but who’s going to be the type of leadership that we need five years or 10 years down the road potentially? Final piece that I would say is regular assessment work, that can help you get a handle on the board members that are most engaged, the board members who are performing at the highest level and contributing the most to the board, that have the best chemistry and capacity to create the needed culture in the board, and giving board members the chance to share their interests, a one-on-one once a year between a chair and each member of the board. What’s working for you? What’s not working? What would you like to do? Is this a busy time for you, or do you think this is a time you could step up? All those kinds of conversations or are critical and can be encompassed in a range of assessment type work.

Jane DiFolco Parker:
David, I really like what you said about the matrix, as you’re thinking down the road about potential board members and potential board leadership. Just sort of on the ground, what we did was to create a pipeline report that essentially we kept updating with all of us, including the board members and other key volunteer leaders, identifying potential future board members so that we always had a very robust pool of potential foundation board members from which to identify new members to the board. Then within the board itself on an annual basis, we were very intentional about committee assignments, for one thing, because we always wanted to capitalize on the skills and expertise that our foundation directors bring to bear. And so every fall, we would sit down and have a strategy meeting about committee composition, and then also about committee leadership, chair and vice chair positions on the various committees based, of course, on skills and expertise, based on demonstrated leadership. Who are the people who appear to be energized and willing and able to take on a leadership role?

And that really helped us to sort of cycle through the life of the foundation, people who eventually could rise to the position of vice chair or chair of the board. And all the while, wanting to make sure that we’re providing a fulfilling board engagement experience for all of our foundation directors. These are people who have many demands on their time. They could devote their time to any number of organizations that are important to them. They choose to serve with us. And we want foundation board seats to be a destination, an opportunity for people. So it’s important to work hard at creating very enriching engagement opportunities for existing board members. And through doing that, you can help identify those people who move up through the board into leadership positions and just strengthen the board overall. And David, you mentioned conversations with individual board members. We also did that just to, in part, to ascertain what their interests are. What committees would they be interested in serving on? Where did they think they could have the most positive impact on the work that we were doing?

Of course, it isn’t possible to do what everybody would like to do, but it really informed the decisions that we made about key leadership roles in the foundation. And overall, that really just helps to strengthen the work of the board.

Natalie Boehm:
Thank you both. Are there any closing thoughts or remarks that you want to share with everyone before we close out today?

David Bass:
I will encourage people to join us at the January Foundation Leadership Forum in Washington D.C. January 29th through 31st, Jane and several of our other colleagues and leaders will be conducting an extended workshop on succession planning that is part of the forum program. We’ll also be talking about memoranda of understanding and a lot of the other issues touched on here. So hope to see some of you in Washington in January.

Jane DiFolco Parker:
And just a closing remark, we don’t want the work of our boards just to occur by happenstance. We want to be very intentional and very strategic, and one of the most crucial areas for a strategic approach is in succession planning. And with all the demands on our time and attention, it’s hard to focus on this sometimes, but it’s so, so important. And it’s a great investment of our time and energy to make sure that we’re positioning our boards to do really consequential work on behalf of our institutions.

Natalie Boehm:
Yes. Well, thank you both for your time and expertise today, and thank you to all of you for joining us. We really appreciate your time as well and all the work that you’re doing for your institutions and your communities. And like David said, we hope that we’ll see you in January at the Foundation Leadership Forum. If you do have any questions, please feel free to follow up with Consulting, at consulting@agb.org, and I can certainly connect you with David and/or Jane. So thank you all again. I hope you have a good day.