Funding your succession: preparing for your transition
Inspired by the webinar, Funding the Succession Challenge, hosted by the Elders Council for Social Entrepreneurs.
As an employee of an organisation, you may not have to worry too deeply about your financial provision and the organisations’ security through transition periods. Most employers allow you to opt into a pension scheme, putting a small amount of your pay each month towards securing your future self a comfortable income. However for a social entrepreneur, it’s not always that simple.
A rarely discussed topic in the social innovation sector, the Elders Council for Social Entrepreneurs invited Rebecca Eastmond to give her insights on how to fund the succession challenge.
“As a social entrepreneur thinking about funding your eventual move away from your organisation, people don’t often think of themselves in the right way,” explains Rebecca Eastmond.
Rebecca Eastmond is the co-founder and CEO of Greenwood Place, providing strategic advice and in some cases even running charitable foundations both within the UK and internationally.
Having founded the JPMorgan Philanthropy Advisory, transitioning out of that role to start Greenwood Place, and also serving on the board of not one - but two grant-making foundations. She is an expert on the challenges that come with keeping a steady flow of funding for an organisation from all perspectives: The social entrepreneur, the funder, and the board member.
“You need to think about healthcare, pensions… the actual cost of running your team in a way that’s sustainable for any post-career transition.”
Preparing for your transition begins at an early stage.
Planning to prepare for your eventual transition away from your organisation should begin as early as possible. Whether that’s your retirement, you moving on to a new role, or even just the possibility that something may prevent you from working in the future.
You might be thinking; ‘But I run my organisation through funding! How do I convince funders that we need to think about my eventual transition?’
It’s a tricky question, and truthfully there are several answers. Naturally, it can be quite frightening to be a young social entrepreneur starting a new organisation - nobody wants to be seen by funders as a budget inflator.
You may also have a ‘passion before profit’ mindset which makes it harder to see the importance of securing a long term future for yourself that is sustainable and comfortable.
However from a funder’s perspective, investing in a smooth transition for an organisation’s founder can be a very wise decision. Especially considering the colossal impact it can have on an organisation’s day-to-day functioning.
Assume that funder’s won’t ask you about the real costs of running your business; pensions, how the cost of living crisis affects you, the cost of healthcare in your country. These are all incorporated into the ACTUAL costs of helping your team thrive from the moment you begin, to your eventual transition away from them.
It’s unlikely that a funder would object to those costs, but it’s worth remembering that when you do eventually leave, you should try to transition in a way that appeals to them.
“Being really clear and practical about your transition is difficult,” says Rebecca. “There is always a risk that something will go wrong, but ensuring a smooth transition will help funders be really supportive.”
This is where your Board can come in.
Incorporating the board into your transition.
When your final decision to leave has been made, and you want to help funders understand your transition, it’s worth remembering that communication is key. Rebecca asserts that “Having a board Chair who is able to support you in communicating your transition is a critical thing.”
Creating a communication plan alongside your board can set you up for success when you eventually tell donors and funders about your plans to transition. Decide exactly who you’ll tell, in what order, and when. Rebecca advises against informing people of your departure too early. “Be very clear about exactly what’s happening, and when, before you talk to anyone external about leaving.”
Decide when you’ll introduce funders to your replacement, highlighting why they’ve been chosen and how they intend to keep things running smoothly. If you’re taking on another, less public-facing role within your organisation, decide when to reveal this too.
There’s no such thing as being too prepared!
What happens next?
Now that you’ve informed all the right people, introduced your new CEO and officially announced your departure - here comes the hard part: stepping away.
Of course it’s going to be difficult to walk away from something that you have built from the ground upwards. However, it’s important to allow a bit of breathing space for the new CEO to figure out exactly how they like to do things.
Rebecca offers some words of advice: boundary setting is important.
“If you happen to be a very charismatic leader who is very well known in the public sphere, it already won’t be easy for the incoming CEO to replace you. It’s a good idea for a former CEO to disappear for a while and let the new person take centre stage.”
The experience of transitioning can be a bit like a bereavement. It’s hard to leave something, and leave it properly, especially if you’ve been doing it for 10+ years. It’s all about releasing your power.
Some CEO’s are able to keep in contact with their replacements, which can be valuable for both parties. For the new CEO, having somewhere to direct their questions and gain feedback can help to ensure a smooth transfer. And for you, the departing founder and CEO, continuing to be in the loop a little bit with the organisation may reaffirm your choice of replacement.
However, for others, it is simply best to turn away and not look back. If you’ve retired - take some time for yourself, lean into your hobbies and other enjoyable pastimes to keep your mind away from the organisation. Or if you’ve moved to a new role elsewhere - throw yourself into your new line of work.
Either way, it’s a good idea to communicate your plan to the new CEO and any other relevant parties so that nobody is blindsided by whatever you choose to do.
Takeaways.
Depending on where you are in your career as a social entrepreneur, there are many things to take away from this article and Rebecca’s advice as a whole.
If you’re an early or mid career entrepreneur in the first few years of starting up your organisation - think about incorporating the actual costs of looking after yourself and your team into your funding bids.
Once you are set on leaving your CEO role - incorporate the board and anyone who funds your organisation into the decision. Create a communication strategy that details exactly who you will tell, and when, in order to ensure that everyone is on the same page and is familiar with your replacement. Ensure you control the narrative.
And when it comes to stepping away for good - be on the same page with your replacement in terms of exactly how involved you will be in the future of the organisation. Be open to them about being able to offer help. Or be clear that you will be needing time to yourself. But either way, set firm boundaries and allow them to step into their new spotlight with ease.
Author: Melyka "Benn" Bennett.
Editor: Chris Underhill & Katelynne Kirk