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Heads Up!

[August 28, 2013]  It seems that a new season of Head-of-School turn-over is upon independent schools: after several quiet years (post-Great Recession), more Heads of School are retiring.  In turn, this is leading to a rippling of job changes throughout independent schools across the country.

All of this activity – Heads retiring, Heads leaving schools, Heads starting at new schools – serves as a reminder of the importance for schools (and their Boards) to handle these transitions effectively (i.e., “dot the i’s and cross the t’s”).  With this in mind, we offer the following thoughts to help guide schools through the transition process, from departure through the search and to hiring a replacement.

  • The departure of a long-standing Head of School affects each school community in unique ways.  It is, therefore, important that independent schools take stock of the departing Head’s achievements and conduct a self-reflective and thorough assessment of the school’s needs as it embarks on the search for a new Head of School.
  • The school should establish a timeline for its search process.  For example, consider whether it makes sense for a new Head to overlap with the departing Head:  will that ease or complicate the transition?
  • Next, the school’s Board should convene a search committee, which should engage a professional search firm to assist the school in identifying suitable candidates.  Carefully negotiate the search firm’s contract to fully protect the school’s interests.  A critical part of the search process will be working with the search firm to create the best possible profile of the school.  What are the school’s short, medium and long range goals for enrollment, fundraising, and capital projects? What about the school’s culture is unique? An accurate profile of the school will help to ensure that candidates for the school’s most important job actually understand the school’s strengths and challenges, and where the potential Head can envision making a positive impact.
  • The interviewing of potential candidates provides an important opportunity to assess personality, interpersonal skills and fit.  Therefore, Board members should be well prepared (perhaps formally trained) to ask the right questions, avoid inappropriate questions, and assess candidates’ responses.
  • Once a candidate is selected, we recommend executing a short (one or two page) “term sheet” prior to drafting a contract.  Once both sides agree on key terms and numbers, the remaining contract terms will usually fall more easily into place.
  • We recommend conducting a “safe harbor” analysis (under Internal Revenue Service (IRS) regulations) to ensure that the school offers what the IRS would consider to be reasonable compensation.  By reviewing compensation arrangements for the initial contract, the school will avoid the potential of having to decrease compensation upon contract renewal, if the original package was too “rich” as compared to the compensation paid by similar organizations.
  • Finally, some independent schools provide a modest financial package to a departing Head of School, sometimes as a thank you or a bridge to retirement, or perhaps to help smooth the transition to the next Head of School.  However, unless specifically required by the departing Head’s contract, such additional payment is typically discretionary.  Regardless, we recommend offering any such parting compensation only in exchange for a release of potential claims.

It may have been many years since your school made the transition from one Head to the next.  Given the apparently high number of transitions that seem to be underway, this could be a busy 12-24 months for schools looking for their next Head of School, while the best candidates will likely have many options.  Therefore, schools are well-advised to do some careful planning, and engage experienced professionals who can offer thoughtful guidance, to navigate this transition as smoothly as possible.

Is Your Fundraising Raffle Legal?

For many independent schools and other non-profit organizations and charitable causes, raffles are a common and fun way to raise funds.  However, in most states, raffles are considered a form of gambling or gaming and, as such, are subject to state regulation.

Each non-profit organization should determine whether a raffle is permitted in its state and, if so, whether state-specific legal requirements apply.  Failure to do so could trigger an investigation by the state Attorney General (or other legal authorities) and expose the organization to a burdensome audit.  Read more