ORGANISATIONAL SUCCESSION IN POLISH FOUNDATIONS — FORMAL STATUTORY SOLUTIONS

The demographic and managerial circumstances allow one to expect that Polish organisations, both business and nonprofit, will be facing organisational succession in the near future. The independent Polish state will be witnessing these processes for the first time since over 200 years. The presented paper addresses a research gap referring to succession in Polish nonprofit organisations. The design of the study was based on the theory and experience gained from family business literature and research. The aim of the study was to describe and analyse formal succession solutions included in the statutes of Polish foundations and to put the results into perspective, building on a theoretical family business background. The study was based on a qualitative analysis of documents from ten purposefully selected foundations operating in Poland. The study indicates that the documents of the analyzed foundations contained no formal solutions regarding succession. Other records referring to power transfer concerned emergency situations. The findings were correlated with the demographic and managerial circumstances facing the foundations. Possible directions for future research were indicated.


Introduction
Thirty-two years ago, Poland faced the collapse of socialism, and the third Republic of Poland was established.After 1989, a group of leaders initiated the rebirth of the Polish nonprofit sector1 .In those years, they re-established the whole environment, including institutions and networks, providing support in legislative processes and drawing up the missing laws.Over the last 33 years, organisational leadership is gradually being taken over by the next generation of nonprofit leaders.Polish nonprofit sector is facing the first signs of organizational succession.This confrontation may become a large-scale process in the next few years.The analysis of the literature has shown that the issue of succession in NGOs is an important research gap.Its existence and the need to address it are also emphasised by foreign researchers [Bozer, Kuna, 2013;Froelich et al., 2011;Varhegyi, Jepsen, 2017].They highlight that this research is a great opportunity to contribute to the development of succession knowledge in the nonprofit sector, expanding it into previously unknown areas [Bassi, 2013: 69;Santora et al., 2015: 68;Santora, Sarros, 2013: 6].Taking into consideration all the above circumstances, the importance of recognizing the nature of the organizational succession process and preparing proactive answers to it may become crucial in the near future for the organization's ability to survive in the next generation.Hence, the aim of the article is to describe and analyse formal solutions referring to succession practises included in the statutes of Polish foundations and to put the results into perspective building on family business theoretical background.Organisational succession in Polish foundations -formal statutory solutions

Background Organisational succession in family business
Research on organisational succession in Poland is well represented in the field of family business, which is facing the same circumstances.A family business can be defined as a business entity in which the majority of the ownership structure and the management function of the entire entity are in the hands of one family [Sułkowski, 2006: 20].Family businesses are the oldest form of business and are one of the foundations of the global economy.Their creation, operation and collaps has a major impact on the development of both domestic and global economies [Dźwigoł-Barosz, 2018: 33] The basic understanding of organisational succession in this context is a transfer of ownership and power by the current owner to the chosen successor [Jeżak, Popczyk, Winnicka-Popczyk, 2004: 59].Koładkiewicz and Wojtyra [2015] claim that the market economy in Poland has existed for more than 30 years now -as long as the oldest businesses in the country.Their leaders have just taken the first step towards succession.Kempa [2015] also pointed out that such a short period of democracy in Poland means that the family business leaders are the first generation that has to face this process and its problems.
Organizational succession in family businesses is a complex process which includes such elements as ownership structure, business strategy, organizational culture, as well as human resources management policy [Karski, 2017].A successful succession has to be an ongoing long-term process, planned out for many years.It should include many stages of the successor's commitment: from occasional help, appropriate education, internships, also in other similar businesses, to finally embarking on the path leading from the lowest to the highest organisational positions [Sułkowski, 2006].The purpose of all these steps is the transfer of power, knowledge, and wealth, while simultaneously preserving all the core values important to the family and organisation [Lewandowska, 2014: 80].In other words, we can talk about the method of complex continuation of the founding heritage of the company.The heritage of one or more family members involved in the bussines should be seen as a notion referring to tangibles (buildings, landscapes), intangibles (skills, competencies), metaphysical values (cultural, corporate, and spiritual), and institutional values (corporate identities and brands) [Balmer, 2013: 302].
The main succession actor is the senior.The most common reasons for initiating succession are: the seniors' retirement age, health condition, inability to hold position or unexpected death [Rejmer, 2015].Their attitude is a key factor concerning power transfer success.The researchers noted that the resistance of seniors, the inability to distance themselves from their position and duties, as well as the feeling that there are no biological limits to organisational activity, often affects the effectivness of succession [Santora, Bozer, 2015].In Poland, there are currently around 15 thousand entities the owners of which started their businesses in the early 1990s and are now over 65 years old [Sukcesja firm…].A similar situation applies to leaders of Polish third sector organisations.In 2015, 52% of the leaders of nonprofit organisations in Poland were older than fifty years old [W jakim wieku..., 2015].Since 2002, the percentage of Poland's oldest nonprofit organisations has been increasing year after year.A 2015 study shows that 43% of NGOs were older than 11 years [Stowarzyszenie Klon/Jawor, 2015: 4].In 2018, more than a third of all nonprofit organizations were over 15 years old [Stowarzyszenie Klon/Jawor, 2019].

Succession in business organizations in Poland: Legal solutions
Polish law and Polish businesses, did not have to face generational change until now.In recent years, organizational succession has also become the object of legislative initiatives in Poland.All of them were focused on the business sphere, relating to securing legal solutions for the continuation of the bussines activity after the death of its owner.First solutions were dedicated to sole proprietorships.Succession mechanisms are included in the Act on succession management in an enterprise of a natural person and other facilities related to the succession of enterprises [Ustawa z dnia 5 lipca 2018].This Act gives entrepreneurs the opportunity to appoint a succession manager.In case of the owner's death, this person is entitled to finish all current operations, make decisions concerning the organizational wealth, perform all administrative duties and potentially continue the activities.In 2020, The Act was extended to other kinds of businesses.
Another legal act, supporting succession in bussines organisations, widely discussed in recent months, is the Act on Family Foundation from 2023 [Ustawa z dnia 23 stycznia 2023].It is dedicated to a group of around 830 thousand family businesses in our country, to support succession processes within their orgnisations.As Małachowski pointed out [2021]: [Family foundation is] the concept that has been operating successfully in numerous countries for years, to preserve family wealth according to the last will and testament of the foundation's founder.A well-planned succession through a family foundation allows us to solidify and unify the goals of a family business and in consequence to define them not just for the next generation but for the long term.In this sense, a longterm strategy is absolutely crucial.
At this point, it is worth emphasising that, in Polish law, the legal term foundation describes organisations established for socially or economically useful purposes [Ustawa z dnia 6 kwietnia 1984].The term family foundation in Poland since 2023 refers only to private business.This may require a clarification or distinguishing between concepts relating to family foundations in the nonprofit and business sectors in the near future.From the perspective of third sector research, it seems most appropriate to suggest the term non-governmental family foundation.

Succession in nonprofit organisations
Succession in nonprofit organisations is not well represented in the research and literature, resulting in many unanswered questions and unanalyzed problems.The literature on succession in nonprofit organizations is limited.The majority of studies are the works of American researchers, with a few studies from Australia or Brasil also available.The authors often focus on similar aspects, providing complementary conclusions.Faced with the lack of detailed research in the literature on succession in nonprofit organisations, the presented study was built on the theory of family businesses.The core elements of succession in this context are transfer of knowledge, power, and wealth [Lewandowska, 2014: 80].Only such triadic composition may ensure the survival of the organization in the next generation.
Foreign authors point out that the nonprofit sector does not pay enough (much needed) attention to the succession in its organizations.Moreover, non-profits are not ready to face this challenge [Santora, Sarros, 2013].Santora and Bozer claim that only 24% of the NGOs studied between 2006 and 2015 had an organisational succession plan [Santora, Bozer, 2015].Brazilian researchers present results tells that "[N]aively, many organisations seem to expect a spontaneous emergence of a 'clone' of the founder, and that the passing of the baton will be a natural and painless process (…)" [Comini, Paolino, Feitosa, 2013].The authors find that the lack of an organisational succession plan is a source of risk, such as conflicts between successors and seniors or successors and staff [Comini, Paolino, Feitosa, 2013].Succession planning is valuable also in the context of the future needs of the organisation.It allows us to take into account development efforts, organisational behaviour and culture.Researchers point out that only focussing on all of them simultaneously could result in a successful organisational succession [Comini, Paolino, Feitosa, 2013].
Another problematic issue concerns initiating and managing the organizational succession process.Santora and Bozer [2015] suggested that boards and seniors are simultaneously responsible for these tasks.Their activities in this field should be supported by the human resources department, as a change agent.On the other hand, organizational practice demonstrates that in most cases the charismatic leader (very often being also the founder) is the one who initiates and manages the organizational succession in nonprofits [Comini, Paolino, Feitosa, 2013].However, Australian researchers analysing internal and external successions stressed the key role of the board in transferring the duties to a new director.At the same time, they claim that there is no consensus as to who is responsible for planning a succession within the board [Varhegyi, Jepsen, 2017].

Organisational succession in Polish foundations -formal statutory solutions
Addressing the research gap Varhegyi and Jepsen [2017: 107] note that succession planning in private business is a key, well documented issue, while in the field of nonprofit management, there is still a very limited number of publications concerning this particular topic.While research on organisational succession in family businesses in Poland is being conducted constantly, at the same time, there is a research gap when it comes to the nonprofits.Currently there is only one complex Polish publication addressing this issue [Reichel, 2018].The gap is probably caused by the fact that the problem of succession processes in the Polish nonprofit sector is only beginning to emerge.
It is worth stressing that at the end of the 18 th century the First Republic of Poland vanished from the map of Europe.From then until 1989, the Polish people as a nation did not have a period of undisturbed development longer than the twenty years between the First and Second World War.This reflexion refers not only to society, but also to the organisation of the state, private and public wealth, legal frameworks, democracy, and finally the duration of the organisations through generations.
The Polish nonprofit sector has a long, rich, and multidimensional history, shaped throughout the centuries, dating back to the Middle Ages [Leś, 1999].However, the time of the partitions between the end of the 18 th and the beginning of the 20 th century, two global wars, and finally the soviet occupation, lead to a deep crisis in the sphere of nonprofit activities.The period of the Polish People's Republic was a particularly tough time for the nonprofit sector in Poland.In the late 1940s, all independent associations and initiatives were forbidden.The ones allowed to continue their activities had to face structure reorganisations, name changes, and transfers of wealth ownership.All associations were statecontrolled entities, used as tools of public policy [Bogacz-Wojtanowska, 2006;Leś, 1999;Leś, Nałęcz, Wygnański, 2000].Moreover, the decree introduced in 1952 by President Bierut made foundations in Poland illegal for more than thirty years [Bogacz-Wojtanowska, 2006;Iłowiecka-Tańska, 2011;Leś, Nałęcz, Wygnański, 2000].The Act on Foundations was re-established in 1984 [Ustawa z dnia 6 kwiet nia 1984], but the decrease in public trust in the state and government reflected the willingness of people to set up new foundations.In 1989, 288 foundations were operating in Poland; in 2000 there were over six thousand [Anheier, 2005: 316].In this context, the research gap, as well as the gap in Polish experience in performing organisational successions, is no longer surprising.From this perspective, we are talking about more than 200 years of negligence in building the succession potential of Polish organisations -both for-profit and nonprofit.

Method
The study was based on document analysis [Polonsky, Waller, 2011: 157] conducted in November 2021.The research covered 10 foundations operating in Poland for at least 10 years, with no historical successions, whose mission was built on the foundational heritage of its founders.The selection of organisations was purposefully based on the theory developed in the field of family business.The reasons for choosing foundations were: their foundation structure and the structure of the internal bodies of the determined by Polish law.These dimensions allow to consciously manage power transfers to a greater degree than in the case of associations.None of the selected foundations experienced generational management change.All of them were managed by the first president of the board.The reason for using this criterion was resemblance to family business organizations, run for years by one strong owner.
The time limit assumed the selection of organisations that had the opportunity to consolidate their structures and methods of operation, and create potential organisational succession mechanisms over the years of their activity.2011 was also a year when the number of foundations registered in Poland began to increase visibly [Stowarzyszenie Klon/Jawor, 2019a: 7], which gave an opportunity to select research subjects from a wider spectrum.
Family business researchers point out that succession is a method of complex continuation of the founding heritage of the company.Therefore, the selection of foundations was based on the founding heritage, providing a greater possibility of including provisions that enable the continuation of activities in the multigenerational dimension in the statutory documents.
Organisational succession was analysed as a power transfer in the position of board president.The analysis covered registration documents from the National Court Register, in terms of the date of registration, age of the president, age of the founder and the founder engagement in board activities.Foundation data are presented in Table 1.The second group of documents was the statutes of the foundations.The analysis referred to the procedures of selecting president, the managing role of the founder, and any other provisions relating to succession.Another analysed aspect included records regarding emergency procedures for continuing management activities.

Results
A summary of the data concerning the organisations listed in Table 1 is described below.

Fundacja Rodziny Staraków
The founder is involved in all decision-making and control processes.The board president is appointed by the council, which is composed of the founder and members selected by him.The founder is also the council president, with a term of office not limited in time.The council's vice president is nominated by the founder.No emergency procedures or other records referring to power transfer were found.

Fundacja JAGODA im. Jagody Pachota
The first board president and members are appointed by the founder, and subsequent boards by the council.The founder also appoints the honourary chapter.No emergency procedures or other records referring to power transfer were found.

Fundacja Wspierania Kultury Ruchu -OCELOT
The board is appointed by the founder.The founder can be a board member and can dismiss other members of the board at any time.No emergency procedures or other records referring to power transfer were found.

Fundacja Wspierania Rodziny "Korale"
The first board is appointed by the founder, and subsequent boards by the council.The founder also appoints the council.In the event of a temporary inability to hold the function, the president shall appoint a person to discharge his duties.If such person has not been appointed by the president, the appointment is made by the council.No other records referring to power transfer were found.

Fundacja Firmy Rodzinne
The board is appointed by the founders' council, which is the main decisionmaking and controlling body of the foundation.There is an emergency procedure concerning the event of resignation or death of a member of the founders' council, where other members of the council may appoint a new member in his place.Moreover, the founders' council imposes a moral obligation on its successors, in particular on their heirs, to continue pursuing the foundation's goals and to pass on the foundation values, to serve future generations.

Fundacja im. Juliana Tuwima i Ireny Tuwim
The president of the board is appointed by the founder.The founder plays a key role in all decision-making and controlling processes, appoints all other organisational bodies, and has the exclusive right to change the statute.There is an emergency solution that refers procedures in cases of founder's death or other circumstances that make their organisational performance impossible (eg, court ruling).In such cases, the founder's duties shall be taken over by the president of the board.If the president does not assume the performance, the duties shall be assumed by the other board member who has held this function for the longest time.No other records referring to power transfer were found.

Fundacja im. Lesława A. Pagi
The board is appointed by the council from among candidates proposed by the founders.The founders appoint the council and confirm the council decisions as a last stage in the decision-making process.No emergency procedures or other records referring to power transfer were found.
Organisational succession in Polish foundations -formal statutory solutions

Fundacja im. Leszka Podkańskiego
The board is appointed by the council of founders for an indefinite period.The founders appoint the management and supervisory boards, can be members of the board and are allowed to dismiss members of the board at any time.Each of the founders may appoint, in writing, a representative who will take over the duty of selecting members of council.No other records referring to power transfer were found.

Fundacja im. Kazimierza Pułaskiego
The board is appointed by the council.The founders are involved in council duties, can recall board members, and have a final voice in cases of fusion or liquidation of the foundation.No emergency procedures or other records referring to power transfer were found.

Fundacja im. Arkadiusza Rybickiego
The board is appointed by the council, which is the decision-making and controlling body of the foundation.Numerous founders are involved in the activities of the council by the power of statutory regulations.No emergency procedures were found.Other records referring to power transfer: (1) members of the board can be recalled and the council is obligated to complete the board, (2) after the expiry of the term of office, the board shall continue to perform its duties until the new board is elected.

Discussion
During the analysis of the gathered data, four main themes considering organizational succession in polish foundations emerged.

Succession procedures
None of the analysed foundation statutes refers directly to succession procedures.No other separate bylaws or instructions for conducting succession were referenced.Only in one case did the founders include in the statute a provision referring to the managerial obligations imposed on the next generations.In this particular example, the intention to pass the mission was also expressed also in a family context, by means of organisational inheritance.This general overview stays in line with the Polish historical background and organisational succession conditions described previously.

Organisational succession perspectives
The age of foundation presidents clearly indicates the high probability of managerial change in the coming years [Rejmer, 2015].In six organizations, current presidents already reached the retirement age, the rest of them are over forty years old.At this point it is worth stressing that the selected foundations had no organizational experience in generational transferring of power.All of the presidents had been holding their positions for over a decade, and the first succession in their foundations is about to happen.Without experience in conducting such a process and without succession plan, the willingness to become a successor and the ability to hand over responsibilities are becoming more complex issues each year [Lewandowska, Tylczyński, 2015].

Founder's role
In all the foundation statutes analysed, the position of founder or founder's council is crucial: not only for effective management in the strategic dimension, but also for day-to-day operational activities.In all cases, the founders concentrate in their hands, directly and indirectly, all power and control over the foundation.In seven cases, the founders are also presidents of the board.This managing concept is similar to family businesses, run by strong, charismatic leaders, who consolidate all power and control in their hands [Andrzejewski, 2014].Their age also indicates a high probability of organizational succession in the coming years.

Emergency procedures
Emergency procedures are an initial and integral component of an organizational succession strategy [Kempa, 2015].Concerning all above data, this issue addresses the founders' and board presidents' performance simultaneously.The mentioned aspects refer to situations of his death, temporary inability to hold the function, resignation, or other circumstances that make their organisational performance impossible (eg.court ruling).The content of the solutions is secondary in this context.The value lies in having procedures thought-out in advance.In five foundations, there were no emergency procedures, although four of their founders are in retirement age.

Conclusions
The aim of the presented study was to describe and analyze formal solutions referring to succession practices in foundations.This study sought to address a gap in the nonprofit organisations literature by putting the results into perspective, based on family business research and experience.The picture emerging from the gathered data shows that the foundations studied face conditions that determine organisational succession.At the same time, in the foundation's legal Organisational succession in Polish foundations -formal statutory solutions documents there are no direct records that refer to generational power transfer.Some of them mentioned procedures prepared for emergency situations, but external detailed instructions for such cases were not referenced.On this basis, it can be stated that the analysed foundations are not prepared for organisational succession in context of internal legal records.
Another issue refers to demographical profiles of the presidents (and, in most cases, also founders) in the context of their strategic entitlements and duties.Having no written procedures of power transfer or even emergency procedures with detailed instructions, should be seen as a real threat to the organization's ability to operate through generations.On the other hand, some of the statues of the analyzed foundation included very basic emergency procedures.This could be seen as a sign that organisational succession strategy building processes are emerging [Kempa, 2015].If we treat legal documents as a final stage or a result of intellectual processes concerning succession, we might expect more valuable and effective solutions in the future.The issue worth investigating at this point is wheder the foundations founders are already beginning to think about organisational succession and if any initial actions related to this process have already been taken.A wider qualitative study may support answering these questions.

Table 1 .
Data on foundation activity and management