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What is Nonprofit Founder’s Syndrome?

what is nonprofit founder's syndrome

Founder’s syndrome. It affects nonprofits and for-profits alike. And it can be crippling to any organization, regardless of the form it takes. Understanding what it is and how to avoid it, or fix it, is crucial to the future of your 501(c)(3) organization.

Introduction

In a previous article, our CEO wrote about a form of nonprofit governance called Sole Member. That governance structure allows founders to maintain an element of control over the direction of the organization, while still requiring a compliant board of directors. As stated in that post, it is only advisable in situations where a founder has an outsized risk of loss. It is ill-suited to most charities and has the potential to result in founder’s syndrome. But you don’t have to have a sole member nonprofit to experience the negative impact of founder’s syndrome. It can happen to any nonprofit where the founder has a dominant influence.

Wikipedia describes founder’s syndrome as:

The difficulty faced by organizations where one or more founders maintain disproportionate power and influence following the effective initial establishment of the organization, leading to a wide range of problems.

Something that may have started with good intentions can easily spiral out of control. Nonprofits are generally started by passionate, charismatic people. But the key is finding complimenting board members who can meet the passion and hold the founder accountable as well as provide support. Otherwise, a foreboding, wide range of problems may ensue due to the founder’s over-extended influence. So, what does that look like?

Nonprofit Founder Misconceptions

In our years of experience, we’ve come across many assumptions of what the founder(s) of a nonprofit can do and the authority of such a title. And it’s time to debunk some of those misconceptions

Can a founder be on the board of directors?

We run into this thought process if a founder is generally overly cautious or has a fear of there being a conflict of interest. However, “founder” is not actually a designated role recognized by the IRS or any state. So, yes, a founder can be on the board. Often founders will occupy the role of board President, at least initially.

Can a founder have a lifetime appointment as head of board of directors?

This is the opposite concern. For the most part, yes, a lifetime appointment is technically achievable. While some states actually require nonprofit boards to have term limits, there are virtually no requirements that would prevent successive terms being served in perpetuity.

The question is, however, is this a best practice? Generally speaking, it isn’t. Lifetime appointments as head of the governance team often results in stagnant thinking and stunted growth.

Your nonprofit has the chance to live beyond you, whether you’re a founder or on the board of directors with a founder. It just has to be given the chance to do so. While, yes, the leadership of the nonprofit is incredibly important, the mission is ultimately why the nonprofit exists in the first place.

What Does Founder's Syndrome Look Like?

Founder’s syndrome wears many faces and happen gradually. This makes it hard to recognize the early symptoms of it infecting your organization. It may be a founder being overly cautious, one who hesitates on decisions out of fear of facing heightened scrutiny because they are the founder. This then results in frustrations from other board members due to the mission taking longer than anticipated to come to fruition or stalling out entirely.

More commonly, though, we see the other extreme where the founder is the one doing everything. He or she becomes the super-volunteer and sometimes the primary source of funding and the person fronting the majority of the risk. It’s their passion and charisma that launches the organization forward.

But, maintaining that level of intensity and involvement for an extended period of time, especially if it isn’t your only focus, is exhausting. More often than not, we see founders get burned out because they aren’t leaning on their board for support. By that point, the founder may have a hard time passing the baton to someone new out of fear that the new person will change everything they worked so hard to create. The organization often times ends up closing its doors and dissolving as a result.

How to Avoid Founder's Syndrome

Whether you’re just getting started and you’ve already heard the horror stories… or you’re stuck in a bad situation and need a way out… you have options. In Stephen Covey’s book Seven Habits of Highly Effective People, he lists one of those habits as, “Begin with the end in mind.” This means that if you’re just starting out, inventory your own skill set and purposefully recruit those who share your passion and possess skills you do not. Then continue with that by insisting on board involvement and input.

This established culture built on contribution and commitment, and practicing delegation of responsibility, will set up a healthy organization positioned for success.

Addressing Founder's Syndrome in Your Nonprofit

If you’ve made it this far into the article and have been thinking that some of these scenarios are sounding all-too-familiar, don’t worry… you’re not stuck. There is one last misconception we haven’t addressed yet:

Can a founder be fired or removed?

If it comes to that, yes, in most instances they can. As previously stated, the founder holds no special role in the eyes of the IRS or the state, so there is no preferential treatment. You simply need to follow the process outlined in the organization’s bylaws for removing a director (and that provision should be in there!). You can read more about removing and replacing a problematic board member here.

At the end of the day, as a member of the board of directors, you’re obligated to the organization, not the founder.

Conclusion

Founder’s syndrome is not inevitable and is avoidable. However, it’s crucial to recognize that no one is exempt from the effects of it… even those who are tax exempt and well-intentioned. Follow these steps and don’t let egos get in the way of accomplishing your nonprofit’s mission.

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Katie Koenig

After starting as a Client Care Specialist with our Compliance Team, Katie transitioned to Foundation Group's Marketing Team at the beginning of 2020, helping to keep our readers and clients up-to-date on important compliance, best-practice, and informational content critical to their success.

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