I have been speaking recently to groups of nonprofit board members and executive directors. A question came up at one session that reflects a common problem – founder’s syndrome. A woman expressed surprise that she could be removed from “her” nonprofit organization. After all, she had formed the organization; she was its president and chair of the board. She claimed to own it. She was mistaken.
In an earlier Legal Musing, I discussed that nonprofit corporations differ from their for-profit kin in a very significant way: they do not have owners. This comes as a surprise to many nonprofit founders. They created their nonprofits and they have invested much of their time, money, skill, energy and devotion to them. They are their “babies.” But, like human babies, they are not owned. Babies grow up to stand on their own, separate and apart from their parents. Parents are caretakers, not owners, of their children. So it is with nonprofit founders.
Founders, with the mistaken notion that they own their organization, believe that they are in charge of all the organization’s affairs and answer to no one. They select the initial board of directors, oftentimes from among their friends. They expect loyalty from the directors and a continued position of importance in the organization. Their expectations may be the downfall of the organization, if they are unwilling to secure board members with the range of skill sets and abilities necessary to responsibly oversee the organization’s affairs and who recognize that their obligations run to the organization and not its founder.
A nonprofit’s directors must be mindful of founder’s syndrome and ensure that they are acting with due care and in the best interests of the organization, not its founder. If the nonprofit has outgrown its founder, the board must be able to act to obtain the right talent and management for the organization. Friendship should not interfere with the director’s ability to fulfill his or her duties of care and loyalty to the organization.
Directors should review the nonprofit’s bylaws and other governing documents and make sure that the founder takes direction from the board and may be replaced if he or she does not adhere to board policies or is otherwise not capable of leading the organization. Directors should ensure that the founder’s job description has been prepared and is up-to-date. Regular performance reviews are essential. Founders should welcome this oversight.
When the board members and the founder are truly working in the best interests of the organization and not their own self-interests or in the interests of only the founder, their actions are likely to be aligned. The founder, by allowing others to share his or her vision and work to fulfill the mission of the nonprofit, may find greater security. Letting go may be what it takes to hold on.
— Melanie S. Tuttle
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