Our success is in our succession

Boards in the not-for-profit sector face a distinct set of challenges: balancing ambition with finite resources, governing organisations driven by passion as well as profit, and responding to rising expectations from funders, regulators and communities.

These themes were front and centre in this week’s IoD webinar Purpose before profit: Navigating the unique challenges of not-for-profit boards with directors Fay Sowerby and Hone McGregor. What struck me most is how much of our success ultimately rests on succession – who we bring into the boardroom, how we prepare them and how we ensure our organisations stay relevant in a shifting landscape.

The latest EY/IoD Directors’ Fees Survey shows the most common way to find new board members remains referrals from current directors, with 57.9% of respondents citing this pathway. In not-for-profits, where roles are often voluntary and budgets are tight, reliance on “shoulder-tapping” is even more pronounced.

While networks offer efficiency and trust, they can also entrench sameness and overlook emerging talent. To move beyond this, boards need to be purposeful in recruitment – refreshing their skills matrix, advertising more widely and seeking candidates with future-focused skills, sectoral expertise, cultural competency and lived experience. Too often, directors feel that getting their first role is the hardest step, reinforcing the importance of deliberate recruitment and open pathways.

Recruitment, however, is only one piece of the puzzle. Succession planning should be a continuous conversation in the boardroom, not a reactive process when a vacancy arises. Boards that integrate succession into annual evaluations and strategy discussions are better placed to anticipate gaps, plan for renewal and ensure continuity of leadership.

As McGregor noted on the webinar, “Our success is in our succession”. That means not only asking who will lead tomorrow’s board, but also whether the organisation itself is positioned for tomorrow’s challenges. Future-focused boards ask tough questions. Is our purpose still clear and compelling? Are we still adding distinctive value? Could collaboration, merger or even winding down be the more responsible option?

These questions will also be central to the upcoming IoD Leadership Conference, where a breakout session will explore the spectrum of collaboration – from partnerships and shared services through to full mergers.

In a sector constrained by resources and facing mounting societal challenges, duplication can dilute impact while collaboration can amplify it. For directors, this requires a shift in mindset: thinking ecosystem, not ego.

Succession therefore needs to be seen not only as board renewal, but as organisational renewal. Sometimes the most courageous decision is to partner, merge or even hand the kaupapa to another organisation better positioned to carry it forward.

This wider lens on succession is also reflected in regulatory shifts. Under the Charities Act 2005, boards must review their structure every three years – a compliance requirement that offers a valuable opportunity to ask whether their organisation is still best placed to deliver its mission.

Likewise, the re-registration process for incorporated societies requires thousands of organisations to reconsider their purpose, rules and governance arrangements. While some see this as a burden, it can be a chance to pause, refresh and ensure the organisation is fit for the future. For boards willing to embrace it, these requirements align perfectly with succession thinking – renewal not only of directors but of the entity itself.

For directors, this requires humility, courage and a willingness to see succession in broader terms: not just who will lead us next, but what form our organisation should take to best deliver impact in the future.

That may mean embedding structured induction and affordable training for new directors, using mentoring and sponsorship to open opportunities and ensuring financial barriers do not exclude emerging talent.

It also means being deliberate in recruitment, making succession a standing agenda item, supporting induction and development, and actively exploring collaboration or convergence where it strengthens purpose and maximises community impact.

At every step, boards should measure what matters by moving beyond financial metrics to assess outcomes and collective impact.

Governance in the not-for-profit sector is demanding, often under-resourced and deeply rewarding. Directors who thrive are those who combine passion with pragmatism, humility with ambition and stewardship with courage.

Recruitment and succession are not just about filling seats but about ensuring boards remain diverse, future-ready and aligned to purpose.

In a sector where profit must align with purpose, the real question is not just who will lead us next, but whether we are still the right vehicle to deliver the impact our communities need. In the end, our success truly is in our succession.

As part of the webinar, the Institute of Directors also launched Te Ara Tāwhaki, a new mentoring programme designed to support directors in the not-for-profit sector. The programme connects emerging and experienced directors to share knowledge, strengthen governance capability and build the pipeline of future leaders. You can read more here.