Your Development Director just gave notice. Or your COO is ready for the next level. Or you’re expanding programs and need someone to lead the charge.

Here’s the question that stops boards cold: Do we promote from within or hire externally?

Most boards default to one of two extremes. Either they automatically promote the most tenured internal candidate (even when they’re not ready), or they reflexively launch an external search (even when they have strong talent in-house).

Both approaches miss the point. The real question isn’t “which is better?” It’s “which is right for this role, this moment, and this organization?”

Let’s break down the framework that strategic nonprofit boards use to make this call.

Here’s what the research tells us about internal promotions vs. external hires in leadership roles:

Internal promotions typically:

• Cost 20-30% less than external searches
• Take 40% less time to fill
• Have higher first-year retention rates (internal hires stay an average of 3.5 years vs. 2.1 years for external hires in nonprofit leadership)
• Maintain institutional knowledge and donor relationships

External hires typically:

• Bring fresh perspectives and new networks
• Challenge “we’ve always done it this way” thinking
• Have proven track records in specific competencies
• Command 15-25% higher compensation packages

But here’s the thing: These averages don’t matter if you’re making the wrong choice for your situation.

A promoted Development Director who isn’t ready can cost you major donor relationships. An external ED who doesn’t understand your culture can set you back years. The stakes are too high to guess.

Growing your own leaders is the right call when these conditions align:

You have genuine high-potential talent. Not just someone who’s been there the longest or who wants it the most. Someone who has consistently exceeded expectations, demonstrated leadership capacity, and earned respect across the organization. If you’re not sure, you probably don’t have it.

The role requires deep institutional knowledge. Some positions depend on understanding your donor base, program history, community relationships, and organizational DNA. A Development Director who’s spent five years cultivating your major donors has built equity that can’t be replicated quickly.

Your organizational culture is a competitive advantage. If you’ve built something special – strong staff retention, collaborative decision-making, values-driven operations – promoting from within protects that culture. External hires are culture risks. Internal promotions are culture reinforcements.

You can provide the support they need to succeed. Promoting someone isn’t enough. Do you have executive coaching budgets? Professional development resources? Board members willing to mentor? A peer network they can tap? Without support infrastructure, you’re setting people up to struggle.

Time is not critical. Internal promotions typically need 6-12 months to fully grow into executive-level responsibilities. If you’re in crisis mode or need immediate transformation, that runway might be too long.

Bringing in outside leadership makes sense when:

You need capabilities you don’t have. Your organization is launching a planned-giving program, but no one on staff has that expertise. You’re scaling nationally, but your team only knows local operations. You’re professionalizing operations but lack nonprofit management experience. Skills gaps don’t fix themselves.

Your internal candidates aren’t ready (and being honest about it). Boards hate admitting this, but promoting someone who isn’t ready doesn’t help them or the organization. It damages their confidence, strains the team, and often results in them leaving within 18 months. That’s not a promotion – it’s a delayed termination.

You’re in a turnaround situation. Declining revenue, mission drift, staff exodus, board dysfunction – these problems often require an outside perspective and someone willing to make hard decisions without worrying about internal relationships.

Transformation is the mandate. If the board has decided the organization needs fundamental change – new program models, different fundraising approaches, strategic pivots – internal candidates often struggle to challenge the status quo they helped create.

Your compensation structure is limiting growth. Sometimes your high-potential internal candidate would need a 40% raise to reach market rate for the role they’d be promoted into. If your budget can’t support that, an external search where you set appropriate compensation from the start makes more financial sense.

When you’re facing this decision, work through these systematically:

1. “What does success look like in year one?”

Be specific. “Raise more money” isn’t an answer. “Secure three new six-figure gifts and increase retention among mid-level donors by 15%” is an answer.

If success requires deep relationship capital with existing stakeholders, that tilts toward internal. If success requires bringing new strategies or networks, that tilts toward external.

2. “Do we have someone who can do this job, or someone who might be able to?”

There’s a massive difference. “Can do this job” means they’ve already demonstrated 70-80% of the required competencies. “Might be able to” means you’re hoping they’ll figure it out.

Hope is not a strategy.

3. “What’s our risk tolerance?”

Every hire is a risk. But internal promotions and external hires carry different risks.

Internal promotion risks: Limited perspective, insufficient experience, skill gaps, staff resentment if they’re not ready.

External hire risks: Culture misfit, steep learning curve, relationship building from scratch, higher compensation expectations.

Which risks can your organization absorb right now?

4. “What message does this decision send?”

Promoting from within signals that hard work and loyalty are rewarded. It tells staff there’s a path forward.

Hiring externally signals that the bar is high and the board prioritizes capability over tenure. It tells staff that outside experience and fresh thinking are valued.

Both messages can be healthy. But make sure you’re sending the message you intend.

5. “Are we making this choice consciously or defaulting?”

The worst decisions happen when boards don’t realize they’re making a choice. They promote internally because it’s easier or feels nicer. They search externally because it’s what they’ve always done.

Either can be right. Neither should be automatic.

Here’s what strategic boards are increasingly doing: They don’t frame it as either/or.

Consider these options:

The interim promotion with external support. Promote your strong internal candidate on an interim basis while bringing in an executive coach and peer advisory group. Give them 6-12 months to prove they can do the job. If they thrive, make it permanent. If they struggle, you’ve learned something valuable and can search externally with clarity.

The expanded search that includes internal candidates. Run a legitimate external search, but encourage strong internal candidates to apply. If your internal person is truly the best candidate, they’ll rise to the top. If not, you’ve identified someone better, and your internal person has gotten valuable development from the interview process.

The complementary hire. Sometimes the answer is “both.” Promote your strong internal candidate to Associate Director or Chief of Staff, then hire an external Director who brings different capabilities. This gives your internal person executive-level experience while bringing in outside expertise.

These situations almost always require looking outside:

Multiple internal candidates are competing. If you have three people who want the role, promoting one will likely mean losing the other two. That’s not succession planning – that’s organizational disruption.

The person who wants it most isn’t the person who should get it. Aspiration doesn’t equal capability. If your strongest candidate isn’t interested in the role, promoting someone else because they’re eager is a mistake.

You’ve promoted from within for the last three leadership transitions. Even great organizations need outside perspectives periodically. If you haven’t brought in external leadership in 10+ years, you’ve likely developed blind spots.

Your board is divided on the internal candidate. If half the board has reservations, listen to them. Executive roles require strong board confidence. Lukewarm board support dooms leaders before they start.

Here’s the truth boards need to hear: The best organizations do both.

They invest in leadership development so they have strong internal candidates when opportunities arise. They’re not afraid to search externally when internal candidates aren’t ready or the situation demands outside expertise. And they make these choices strategically, not emotionally.

If you’re consistently promoting from within, you’re probably avoiding hard conversations about readiness and playing it safe.

If you’re always hiring externally, you’re probably not investing in your people and creating a culture where ambitious staff leave for growth opportunities elsewhere.

The goal isn’t to always promote internally or always search externally. The goal is to fill each leadership role with the person who gives your organization the best chance of achieving its mission.

Sometimes that’s the talented person who’s been with you for years. Sometimes it’s someone who brings capabilities and perspectives you don’t have. And sometimes you need to be honest that you’re not sure – which is exactly when working with executive search partners who understand these dynamics becomes essential.

Need help thinking through a critical leadership decision? The Batten Group works with nonprofit boards and executives to make strategic hiring and leadership development decisions. Our founder’s background as a nonprofit CEO means we understand both the operational and strategic implications of these choices. Let’s talk about your situation.

The Batten Group’s commitment to finding mission-driven leaders is not just a recruitment strategy—it’s a dedication to the long-term success of nonprofit organizations and their missions. The true art of executive search lies in identifying authentic passion, aligning it with the right expertise, and matching it to the unique purpose of each organization. By doing so, The Batten Group helps nonprofits thrive and drive meaningful, lasting change.

In the nonprofit world, values-driven leadership isn’t a luxury—it’s essential. And The Batten Group is at the forefront of making that essential leadership a reality.

We are a premier national executive search and consultancy firm with more than 75 years of collective experience in nonprofit, philanthropy, and executive recruitment. We specialize in placing transformational leaders in nonprofit, healthcare, higher education, and mission-based organizations across the country.

As experts in recruiting and talent acquisition, our mission is to connect exceptional individuals with purpose-driven organizations—helping our partners achieve their boldest strategic goals.

We believe the most impactful teams are built by welcoming varied perspectives, lived experiences, and leadership styles. That belief is at the core of every search we conduct. By fostering environments where people feel seen, supported, and empowered, we help build stronger, more resilient leadership for the future.

We’d love to learn more about your organization’s goals and how we can support your search for the next transformational leader. Visit thebattengroup.com to learn more, or click here to explore our proven hiring methodology.

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