Legal For Good helps individuals start up successful nonprofits, builds plans for growth, and keeps nonprofits compliant and on a path of sustainability. One item, “Founder’s Syndrome,” can sabotage innovation and viability, and ultimately lead to the failure of a nonprofit. This blog entry is dedicated to awareness and prevention of Founder’s Syndrome.
Sometimes called “Founderitis,” Founder’s Syndrome is a label normally used to refer to a pattern of behavior on the part of the founder(s) of an organization that, over time, becomes maladaptive to the successful accomplishment of the organizational mission. See Wikipedia. It is particularly common where there has been only one person leading the organization (or the Board of Directors) since its inception and commonly occurs in nonprofits.
A nonprofit organization faces Founder’s Syndrome as the entity grows – the scope of activities widens and number of stakeholders increases. Without an effective and inclusive decision-making structure and process, there is potential for conflict between newcomers who seek effective involvement with organizational development (new Directors, Officers, new staff members such as an Executive Director, development staff, and other critical day-to-day staff) and the founder(s) who seek to dominate the decision-making process. This can be very disruptive both to the organization and to the individuals concerned and should be carefully and clearly diagnosed and addressed quickly and decisively.
A number of negative effects may occur when an original founder seeks to maintain disproportionate power and influence beyond the initial growth phase of an organization.
Exclusion of newcomers: First, a founder’s passion and charisma, initially essential to the successful establishment of an organization in terms of funding and vision, becomes a limiting rather than a creative and productive force. As an organization matures, professionally trained and talented people are normally engaged and the Board is expanded. The founder’s domination of the decision-making process may frustrate effective and inclusive group decision-making. It may prevent talented, networked persons from joining the Board (or remaining on the Board), and it may result in tension between decision-makers.
Exclusion of other founders: In projects where there was more than one founder, but only one remains with the project, the remaining founder may use their influence to remove all references to the other founders from the project, in order to create the appearance that they were the only one.
Identity of the organization: The organization may, over time, be overly identified with the person or personality of the founder and may experience diminished public trust. If the founder experience reputations challenges, so will your organization. Moreover, there is typically little organizational infrastructure in place when founder retains too much control over the organization. The entity will lack thoughtful, written policies and procedures. There is no succession plan, and it is not unusual to hear the words, “That’s not how we’ve always done it.”
Decision-making: The founder is at the center of all decision-making. Decisions are frequently made quickly, with little input from others. Often, decisions are made in crisis mode, with little forward planning to prevent problems from recurring. This may create a lack of transparency between the founder and the Board of Directors, and the Board may not be apprised of crucial issues the organization is facing. As a whole, the organization becomes reactive, rather than proactive. Staff meetings are held generally to report crises, rally the troops, and get status reports on assignments. There is little concept of team strategy development and shared executive agreement on objectives. Limited or a complete lack of professional development for existing and new leaders reinforces and solidifies the imbalance of power.
Nepotism / cronyism: In its early development, the Board is often selected by the founder and thus is often composed of friends and colleagues of the founder. The Board’s role may be relegated to “support” for the founder, rather than to lead the organization. It is often a rubber-stamp Board, having little understanding of the work the organization does. Its commitment is not to the mission, but to the founder. It is unable to answer basic questions without checking first – such as the size of the budget, the major funding sources, the extent of the programs. This may limit the independent functioning of the board and deprive the organization of more diverse and representative views. Staff may also have been chosen due to their personal loyalty to the founder rather than skills, organizational fit, or experience. Founders tend to surround themselves with cheerleaders, rather than people with valuable insights and ideas.
The best way to cope with Founder’s Syndrome is awareness and prevention.
Nonprofit organizations are not “owned” by any natural persons. Nonprofit organizations are started by the founder(s), and, once formed, become property of the community. The community funds the nonprofit, the Board of Directors is entrusted with governing the nonprofit in accordance with their fiduciary duties, and the community (through the IRS, state attorney general’s office, state department of labor, state department of revenue, and other state entities) oversees the nonprofit for compliance and whether the community’s donations are being properly spent on the nonprofit’s mission and vision. The founder(s) do not own the nonprofit.
For another helpful article about Founder’s Syndrome written from a founder’s perspective, please see: Hildy Gottlieb, “Founder’s Syndrome? Who Me? If your nonprofit organization is currently experiencing Founder’s Syndrome, you need to have a realistic discussion of the problem with all decision-makers, create a plan of action, and be sure the organization begins focusing on infrastructure steps that can be taken to strengthen the entity. Legal for Good can help. The objective of the plan should be to allow the organization to make a successful transition to a mature organizational model without damage to either the organization itself or the individuals concerned.