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Creating and Running a Nonprofit CEO Search Committee

By Mark Oppenheim

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January 15th we are holding a free live Nonprofit Board Clinic on How to Run a Nonprofit CEO Search (click here to register), and there are opportunities for individual Strategy Alignment counseling (click here for details).

Our search consultants are routinely asked by nonprofit boards and their exiting chief executives about setting up a nonprofit CEO Search Committee. Below we’ll thoroughly discuss the Search Committee and its role, and at the end of this piece there are links to other useful articles on recruiting nonprofit leaders.

The CEO Search Committee and Its Responsibilities

The Search Committee is a committee of a nonprofit governance board tasked with running a CEO search and recommending a single CEO finalist to the full board for approval. The board votes to confirm the recommended candidate, agreements are developed and signed, announcements are made, the search is completed and there is an on-boarding process. CEO searches are often undertaken with the support of a search consultant.

A Search Committee is formed because selecting a new CEO first requires deep analysis and understanding of the needs of the organization over the next 5 years, and then a similarly deep analysis of each candidate in terms that are most relevant to your nonprofit.

The Search Committee ensures that the CEO candidate pool includes truly accomplished leaders. The candidate pool shouldn’t just consist of the most easily surfaced, charismatic, ready-to-work candidates, or those best at manipulating artificial intelligence, applicant tracking and recruiting platforms (skills that don’t correlate to management heft). The Search Committee ensures that outreach to sources and candidates is extensive, and that person-to-person intel is collected from observers on the work and claimed accomplishments of candidates. The Search Committee preserves candidate confidentiality, and makes sure that the search consultant remains focused on what is best for the organization.

Prior to the full board’s vote to confirm the new CEO’s appointment, Committee Members explain to fellow board members how the process was undertaken, the kinds of candidates that were considered, and they support and justify the recommendation of the full Search Committee. Serving on a CEO Search Committee is an awesome responsibility not to be taken lightly, and board members joining a Search Committee obligate themselves to be ambassadors and advocates for both the process and its collective outcome.

After the search, Committee Members will often be tasked with on-boarding activities and supporting the new CEO through their first year in the role. This includes introducing the new CEO to important constituents of the nonprofit, and otherwise supporting the new CEO’s transition to being fully accepted by the nonprofit’s board, staff, funders and partners. Members of the Search Committee will often later serve on the board committee that annually evaluates CEO performance.

The Search Committee Chair plays a central coordinating and facilitating role, particularly when working with a search consultant. The Search Committee Chair may be the Board Chair or some other board member. The advantages and disadvantages of having a Board Chair also serve as the Search Committee Chair depends on the nonprofit in question, dynamics within the governance board, and the availability of the Board Chair to perform Search Committee Chair duties.

Search Committee Membership

A CEO Search Committee must be equipped to properly evaluate candidates in terms that map to the challenges that your nonprofit will likely confront over the next years. A Search Committee will typically have 4 – 7 members. A larger Search Committee makes scheduling unwieldy and extends the search process… which in extreme cases can lose candidates.

Balance is important in a Search Committee. The Committee should include members with deep institutional knowledge. Functional knowledge should be represented by members with significant professional experience in finance, fundraising, earned income generation, program areas (your nonprofit’s core offerings), marketing, human resources and operations. Assuring community representation is very important, including those served by the nonprofit and your network of community supporters, partners and funders. If there are factions within the board then the Search Committee should have members that represent each of those interests. The balance will never be perfect.

While Search Committees don’t need to have every competency and experience of your next CEO, Committee Members must have sufficient expertise to assess candidates as managers, leaders and strategists. Certain candidates can spin wonderful tales, and Search Committee Members, along with your search consultant, must be able to get beyond smoke and mirrors disguised as expertise and accomplishment. The future of your nonprofit depends on this.

Search Committee Membership is Affected by Challenges that the Next CEO is Likely to Face

A CEO search is a learning process that engages experts, sometimes regionally and sometimes nationally and internationally. These experts will nominate candidates and some will become candidates themselves. They will bring to the table their own perspectives, experiences and knowledge. The Search Committee must have Members with the technical expertise required to delve into, evaluate and sometimes challenge what these other experts have to say about their approaches, workflows, claimed accomplishments and sector best practices.

Organizing information on your nonprofit and its challenges requires days, not weeks or months, and is integrated into search orientation at the beginning of the search. Your search consultant can guide you. Topics include:

  • Fundraising: Is your contributed revenue likely to be predictable and at required levels? Who are your current major individual and institutional donors, who could be approached in the future, and how should your various solicitation approaches evolve?
  • Earned Income: What are your earned revenue trends from ticket sales, fees, rentals, tuition, programs, fee-for-service grants and other services, merchandise, intellectual property sales, etc. What competencies are required to maximize yields from such sources?
  • Finances: How is your financial infrastructure and do you have any financial challenges? How confident are you in your financial forecasts? What are your reserves in relation to your expenses, and how is your cashflow? Are you in full compliance with terms set by funders and oversight organizations?
  • Programs, Performances, Exhibitions, Services: Are you providing the best value to your constituents? Who is left out and is expansion possible? Are there embedded assumptions guiding services that need to be updated? What are other similar providers and competitors doing in their orgs and markets? Do you have the best approaches and reputation in your field?
  • Constituents and Market: Are your customers, clients, patrons, visitors, partners, constituents and other community members all delighted with your work and organization, or are improvements required? Are you on a growing, steady, or shrinking? What are the market trends? Are people fully aware of the value you add to your community?
  • Operations: Will you have significant investments in systems, facilities, capital and other improvements? Are there areas that require improvement because systems and workflows are outdated? Are your overhead costs in balance.
  • People: Is your staff scaled properly? Are people optimally productive and competitively compensated? Do you have a process for evaluating performance and adjusting staff and overhead based on that evaluation? Are there key people you can’t afford to lose?

There is a separate task that all CEOs have that we will call “managing risk”. We highlight it here because most nonprofits are not equipped to proactively assess and manage overarching risks to their financial, operational and programmatic stability, yet risk management is a huge, cross-cutting topic in times of change. You can see it in news reporting on flooded summer camps, abrupt terminations of arts leaders, nonprofits that abruptly close due to financial issues, property purchased by orgs just before values tank, underinsured facilities that burn to the ground in wild fires, criminal gang that stealing confidential information or funds by manipulating mission critical systems.

Part of a Search Committee’s job is to ask how candidates have handled the unthinkable, because such events do happen and proper advanced planning by a CEO is required to mitigate adverse impacts. Could changes in governmental policies, donor funding priorities, or audience/visitor/user tastes and needs have a dramatic impact on your nonprofit’s financial strength and offerings? Are you exposed to legal risk of a lawsuit, or the risk of attack from ransomware gangs? Are your structures in a fire or flood zone? How reliant are you on just a few donors or one earned income source or contract? It is important to understand how your candidates have previously responded to unforeseen circumstances.
Points above are generic – the list is by no means exhaustive and the particular details of your nonprofit are central. Bottom line: a Search Committee must have members technically equipped to evaluate candidates according to your nonprofit’s specific leadership requirements during times of change.

In a CEO search, the staff and exiting CEO each have a central role to play.

Staff and the exiting CEO play an advisory role during the search. Listening to and applying their input must be authentic – people can generally tell if it isn’t and these professionals have experience and insights on your nonprofit that neither the board nor a search consultant will have.

We suggest involving the staff and exiting chief executive at the very beginning of the search during orientation and search setup, then again at the very end during the finalist phase of the search. Between these events there will be a necessary gap in communicating with both staff and the exiting CEO. There are important reasons for this gap. Keeping in-process information only to the Search Committee preserves the confidentiality of candidates who are not selected, and preserves the confidentiality of individual Search Committee Members as they deliberate. It also reduces chatter and politicking, and the risk of back door activity that can come with legal exposure for the organization.

During the orientation and search setup phase, there should be substantial input from the staff and exiting CEO on the full extent of the nonprofit’s operations, programs, finances, clients & constituents, partners and coming challenges. We ask all sorts of questions of these knowledgeable professionals. Are there others in the nonprofit’s network that should be included in the orientation process? Are there obvious candidates for the role? What should the organization’s priorities be for the next CEO and team, and what kinds of challenges are on the horizon? Are there particular dynamics within the organization’s board or staff that the CEO must be equipped to manage? Confidential answers to such questions are invaluable in shaping the position description (what is written and posted), and sourcing scripts (information not posted but that guides discussions with candidates). The information also helps to shape candidate evaluation and source lists that consist of targets for outreach.

In the finalist phase, there will be separate interactions between finalists and senior staff, and finalists and the exiting chief executive. A new CEO will want a sense of the team. Interaction with the team is also an important opportunity for senior staff to demonstrate their knowledge and accomplishments. The interaction with the exiting CEO is equally important and can be extremely productive for all sides.

At the end of interactions, there is a debrief of all those participating (staff, the exiting CEO, board members who are interested in meeting finalists, and CEO finalists themselves) with feedback to the Search Committee. This adds to the font of information that the Committee will use as they select one candidate to nominate to the full board.

A final thought on how two typical kinds of searches affect Search Committees

Sometimes the purpose of a CEO search is to find a person to continue operating much as the last CEO did, and to engage candidates that are fairly easy to locate (and might already be known). Your next CEO won’t be expected to expand or change the organization much, there will be no financial challenge to manage, programs will not be substantially upgraded, and new community constituents will not receive a range of new services. Finding new sources of revenue and funding is unlikely to be required, service partnerships are unlikely to change, and there will only be small and evolutionary adjustments to the organization’s infrastructure. The next CEO will administer a steady-state organization, and will not drive, reshape, refresh or reset the organization and its offerings.

There is nothing wrong with wanting to continue serving those already served by supplying the same kinds of services into the future. For an organization like this that is functioning under steady-state conditions, you can execute the CEO search by looking at leaders in your region that hold similar roles at similar organizations serving similar constituents, and then test for fit. The Search Committee can be shaped accordingly and you might not need a search consultant. There is a risk that a candidate hired in this way will be untested when circumstances change for your nonprofit, but not all nonprofits need to consider this.

A search can also be an exploration of the nonprofit’s potential, of change and optimization, of how best to serve the nonprofit’s constituents and advance its mission. Such searches are marked by ambition. Can we improve and expand the organization’s services, programs, infrastructure and financial strength? Are there new constituents to serve? Has time made some of our legacy programs and approaches less relevant? Are competitors gaining more positive attention than we are, and are they expanding services more rapidly?

Searches marked by ambition are explorations of the future. For such a search, the Search Committee will be engaging and evaluating out-of-the-box thinkers, innovators and entrepreneurs. Candidates will be differently talented and accomplished. There may be candidates from outside of your community, region and country. There may be candidates from business, government and other nonprofit sectors. You will be trying to engage future superstars. Conducting such a search requires more technical rigor from a Search Committee, from individual Committee Members, and from your search consultant. In contrast, searches for organizations in a steady state will focus more on deep local knowledge and a common sense assessment of candidates.

Serving on a Search Committee is very important work, and a quality Search Committee plays a central role in having a sustainable, financially strong, mission-driven nonprofit. Your nonprofit’s Search Committee and search process should be shaped based on a clear-eyed understanding of your nonprofit’s challenges and objectives, and provide for a rigorous assessment of candidates tailored to your nonprofit’s future needs in a leader.

Other useful guides for boards conducting leadership searches, include:

 

mOp-Ed, Recruiting
mOp-Ed