Should You Hire a Turnaround Executive Director or Sunset the Organization?

Turnaround Executive Directors are brought in for various reasons, the most common of which are to fix an ongoing cash deficit, revitalize ailing programs, or pivot the organization towards a new mission.

​But, when you are faced with making decisions about how to turn the organization around, you need to first ask if you even should. 

Hands starting to rip a piece of paper that has the word “turnaround” on it.

One of the hardest decisions that a board can make is deciding what the future of the organization will look like if there’s a problem that’s big enough to consider sunsetting the organization instead. If one of the questions on the table is whether you can continue to deliver on your mission, it’s important to evaluate whether investing more is actually going to fix the underlying problem.
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The ultimate question is really, “Is the organization worth saving?”

​Answering this question will depend on what your organization’s circumstances are and what the underlying cause is that created its current situation. For instance, recent financial struggles due to increasing program costs can likely be overcome, but chronic financial difficulties due to a lack of funding may be insurmountable. Determining whether the issue that your organization is facing is something that it can come back from or whether it is time to close your doors indefinitely is difficult to determine. If you are in this position, ask these questions:

Is your mission still relevant?
It’s important to remember that closing isn’t necessarily a bad thing. It may be that your mission is no longer relevant and that’s something worth celebrating! When an organization identifies a need in their community and they’re able to remove this need through hard work, eventually the nonprofit will no longer need to exist – the mission has simply run its course and been accomplished!

In other instances, an organization’s mission may become outdated or irrelevant because it has failed to keep up with the times and the needs of its community. Whether an organization can come back from this will depend on how far off its mission is from the existing nonprofit landscape around them. In some cases, they may be able to salvage the organization by modernizing. In other cases, however, it will make more sense for other nonprofits to take over, doing the work yours once did. In this scenario, your organization may be able to merge with an existing organization to offer people and other resources to further their mission or it may be best to exit the space altogether.

Does the organization need a new something or a new everything?
Is the organization’s lack of impact due to one problem, or many? If your nonprofit just needs a new direction or the revitalization of a key program, it can likely be led out of the situation by an experienced nonprofit leader. But if it needs a complete overhaul because there are so many organizational issues, that may be too deep of a hole to come back from. Instead, it might be time to sunset the organization and let other nonprofits in the same space to do the work in your place. The void created by your organization leaving may provide a new nonprofit with the opportunity it needs to take off.

What caused this?
Sometimes the problem facing an organization is glaring, but the root cause is harder to understand. Try to get to the bottom of why the organization is in the position it’s in so you can better understand what’s needed to fix it. Without digging down into it, any solution you try is likely just going to be a band aid, not a real remedy. Don’t roll the same issues over to the next leader to make it their problem. Plan to address what needs to be fixed financially or operationally right now.

In some cases, the underlying problem is not actually due to what the organization does or how it does it, but who is doing it. Staff problems especially at a senior-level can spell disaster for an organization – poisoning its culture and thwarting its efforts. But, if the main issue at hand is broken relationships or lost trust, the right leadership team can likely overcome these problems if everyone is committed to moving forward. 

If that cannot be done, consider sunsetting the organization instead of starting down the potentially long path to recovery to salvage whatever is left and pass that along to whichever organizations comes after yours.

Is the board committed to the turnaround?
What does the board want to do? If they’re not committed to a turnaround, it doesn’t stand much of a chance of succeeding! If you decide to try to fix the organization, do so because the mission is worth it, and everyone is committed to doing it together. Foster the kind of difficult, but healthy conversations that encourage honesty and transparency to drive real change. There's no point in making a half-hearted effort – it’s just a waste of time and money. In banking, it is called “throwing good money after bad.”

When you are at a crossroads and your board needs advice on how to proceed, we can help! Our team of experienced nonprofit advisors can help you determine what the future of your organization should look like. Our board advisory services help provide strategic direction for organizations that need guidance with whatever comes next. Contact us today to find out more!