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Nonprofit Board & CEO Retirement Policies

It is pretty much the practice of nonprofits to establish board term limits. Most common among these practices is the 2-3 year term and 1 year off rule recognizing that for large organizations, 3-3 year terms takes into account the learning curve that may be needed to create effective boards. Admittedly, there are quite a number of nonprofit boards that I have encountered that do not implement their term limits for all kinds of lame reasons: we don't want to lose our invaluable member (what, once they aren't a board member they will never talk to the organization again?) and, it's too hard to find qualified and capable members (how well have you looked?). But pretty much it is understood that terms and term limits. when practiced, produces better outcomes for the board and organization.

But what about execs? I have been and will continue to maintain that the "habit" of many nonprofits to not establish a "term limit" on the exec can produce its own negative results. A recent Conference Board report illustrates what for-profits are doing around this issue. And one statement is particularly noteworthy to me:

With longevity, the CEO can cultivate closer ties with directors, which may hinder the independence of board oversight and weaken the objectivity of the performance evaluation process. When adequately used, policies on CEO retirement based on age or term limits may offer an additional safeguard to existing governance practices and serve as an integral component of CEO succession planning.

I think the lessons from this report apply equally to nonprofits and nonprofit boards should consider the question of ceo term limits which can in the end, compliment and be a sound part of succession planning. Note, I'm not needing to see all nonprofit execs retire, I'm just, saying that staying forever is not in the long range best interest of the nonprofit.

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