Never Waste a Good Crisis: Why, When & How to Hire an Interim Executive Director

Your executive director (ED) is “retiring,” “moving on,” or “spending more time with family.” But what if, behind the scenes, things haven’t been so rosy? Maybe budgets have been missed, key staff members have resigned, or funders have quietly backed away. Perhaps you’re just starting to hear the whisper campaign that something isn’t quite right.

Consider this real-life scenario: On my first day as an interim executive director, by 11 am, the CFO informed me that we couldn’t make payroll, the organization was $1.5 million in debt (unbeknownst to the board), and we faced a $2 million lawsuit. She then handed me her resignation.

This isn’t an isolated story. Often, a leadership transition is just the tip of the iceberg, concealing deficits, debt, lawsuits, mass resignations, staff revolts, community upheaval, and funder desertions.

Yes, It Could Happen to You

You may think this could never happen at your organization, but leadership crises are more common than you realize.

EDs leave for many reasons, but a common one is getting out before the house of cards collapses. Similarly, even the best boards can falter in oversight, unintentionally allowing an ED to operate unchecked.

Nonprofits experience an average turnover rate of 20 percent per year. If your ED has been in place for a few years, statistically, a change is coming.

Some transitions require a caretaker to sign checks and keep things running. But when an ED is forced out, when your organization is in the news for all the wrong reasons, or when the board is desperate for answers, you may need a professional interim ED.

How to Know if You Need an Interim?

Here are some warning signs that your organization may need outside help:

• Senior leaders are resigning
• Your ED has missed budget projections for two or more years
• You’re not getting straight answers from leadership
• The footnotes in your audit are piling up
• Your ED struggles to provide basic financial reports
• Multiple crises are occurring simultaneously with no resolution
• The board is exhausted

Your first instinct may be to convince a board member to step in. Don’t do it! They likely lack the skills, bandwidth, temperament, and objectivity for this very difficult job.

What to Look for in an Interim

When hiring an interim, consider:

• Subject-matter expertise is optional. Many interim EDs are issue-agnostic. Their expertise lies in people, systems, and organizations.
• Temperament is as important as skill set. They must remain calm in crises.
• Emotional intelligence (EQ) matters as much as IQ. Managing people and crises requires both.
• Look for a track record of success. However, it’s important to recognize that not every organization can be saved.
• Check their membership in an interim association. Groups like the Bay Area Interim Executive Director network near San Francisco or the Interim Executive Network in Washington, DC, curate and screen their members, so you know you’ll be getting someone experienced.
• Transparency is key. Don’t sugarcoat your problems. Experienced interims have seen it all before and need the raw truth to help effectively.

The interim ED, in turn, will offer some sobering realities:

• No one is coming to save you. With “blood in the water,” competing nonprofits may see your struggles as an opportunity to acquire your funding. Donors are risk-averse and may run to the door. Expect to be kicked when down.
• It will get worse before it gets better. You’ll uncover more financial issues, lose more staff, and may even face lawsuits. Expect to hit bottom in 4 to 6 months.
• The board must stay engaged. The interim needs board support, but the board also needs to step back into governance mode.

The Good News

Remember that previous real-life scenario? While the road was extremely bumpy (difficulties making payroll, more staff resignations, additional lawsuits), that nonprofit ended up $500K in the black 18 months later.

We revamped the program model, updated accounting systems, improved contracting, and restructured debt. There was reluctance for sure, but the crisis required new SOPs, and now, they’re the better for it.

Every crisis presents an opportunity for transformation. Organizations in transition are often more open to change. While the process is difficult, in 18 to 24 months, you’ll emerge stronger. Many problems can be solved with basic but sound management techniques — being kind to people, spending wisely, improving margins, and following best practices.

So, What Are You Getting?

A professional crisis manager: Interim EDs are adept at problem-solving under pressure, managing staff morale, and uncovering financial realities.

An unbiased, fresh perspective: Organizations develop ingrained habits, sometimes to their detriment. Interim EDs bring an outside viewpoint to identify inefficiencies and break unproductive cycles.

A bridge to your next leader: Hiring a permanent ED is a major decision, often requiring 4 to 6 months. An interim ED ensures you don’t rush into a poor hiring choice. Interims are also well-positioned to support the recruitment and onboarding of the next ED. Having spent months inside the organization, they will know what the new leader will need to succeed.

Stability and continuity: Leadership transitions, particularly sudden ones, can destabilize staff, funders, and partners. An interim ED reassures stakeholders and maintains momentum.

“Think of an interim ED like a doctor,” says Sacramento-based interim ED Cristine Kelly. “They assess the situation quickly, address urgent needs, and then create the path to health.”

What You’re Not Getting

A miracle worker: Interims can’t fix dysfunctional board cultures, insolvency, or bad market conditions.

A long-term solution: An interim is, by definition, a temporary solution. Most interim EDs won’t take the full-time role, so they’re not tempted to curry favor with the board and staff. They need to maintain objectivity.

A mission expert: Interim EDs specialize in organizational management, not necessarily in your specific cause.

A deep fundraiser: While they can help stabilize donor relationships, they won’t stick around long enough to form deep development ties.

Potential Drawbacks

While interim EDs bring expertise, there are challenges:

Double duty: The board must conduct two searches — one for the interim and one for the permanent ED (though an interim search should only last a few weeks). Similarly, staff must get acclimated to two leaders.

Resistance to change: Staff and board members may push back against necessary reforms. Those who have grown tired of the destabilization of change may resign.

Financial cost: While interim EDs can be cost-effective, they are still a financial investment. For cash-strapped nonprofits, the additional expense may strain budgets.

Risk of dependency: Some boards delay hiring a permanent ED, growing too comfortable with the interim leader.

Unique Situations Requiring Specialized Interim EDs

Some transitions require specific expertise.

Mergers and acquisitions: Hire someone who has done this before, someone skilled in the legalities of this process, as well as negotiating differences between the two organizations.

Disillusionment (bankruptcy): Like mergers and acquisitions, this is a complicated process with pitfalls that could place legal liability on individual board members and officers. If you think you might dissolve, hire someone who has done it successfully. You will still need outside legal counsel.

Sabbatical: If your ED is starting to burn out, it might be time to give them a sabbatical. An interim ED can step in and not only keep the trains running on time, but provide the insight, fresh perspective, and operational excellence to help the organization improve.

Other unique situations include following a founder, the death of ED, or a PR crisis. For each situation, discuss a candidate’s background and explore their thinking.

Interim Leadership as a Catalyst for Change

Leadership transitions can destabilize an organization — or be a springboard for renewal. Interim executive directors aren’t just placeholders; they are strategic assets who help ensure stability, drive reform, and prepare organizations for their next chapter.

As leadership transition expert Beth Schecter, MPH, MBA puts it, “Every crisis represents an opportunity for renewal and transformation. The key is having the right experienced transitional leadership in place to guide the organization toward a stronger and more sustainable future.”

For nonprofits facing uncertainty, hiring an interim executive director isn’t just a stopgap measure — it’s an investment in long-term resilience and success.

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• How to Stop Managing Your Nonprofit and Start Leading
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