Firing My Friend, the Founder
A board member shares a story about the difficult process of firing a nonprofit founder when money just wasn’t coming in.
Article Highlights:
Navigating personal relationships between board members and the founder.
Blue Avocado’s recent article, The Board Just Fired Me, and I’m the Founder! generated a huge reader response. For this issue we interviewed a board member from a different organization.
My wife became friendly with someone she knew from PTA, and one day they invited us and our kids over for dinner. We hit it off. Ben [names have been changed] ran this nonprofit for low-income kids that did after school tutoring, had a big summer camp, and did some programs in the public schools in a low-income, mostly African-American neighborhood. Something like 1,500 kids a year. Anyway, we got to be friends and he ended up asking me to join the board.
At first everything seemed fine. The board president Carter was a very impressive African-American man. He ran his own company and he did a good job of running board meetings. He was the only African-American on the board. [Ben and the author are both white.]
I wasn’t sure what the board was adding to anything. I’m in banking so it was inevitable that I became the treasurer. It wasn’t much work because most of the money — maybe 80% — came from the school district or city government. Ben really loved the kids and you could see he really bonded with them.
Financial troubles
Then we started to lose some of the school district money. They were cutting back; things got pretty tough. We laid off a few people, but we were still bleeding.
We lost a city government contract. Board members were supposed to call anybody we knew in city government, and I called someone I knew. He said that the organization didn’t have a good reputation at the school district. I was pretty shocked and told Ben about it, and he convinced me that it was just a political thing. Looking back, it was a red flag and maybe I should have done something more about it, although I don’t know what I would have done. And it probably was just a political thing.
Things were going from bad to worse financially. We were running in the red and Ben kept saying — and we believed him — that he was going to get this or that grant but then it wouldn’t come through. It was very frustrating because we just couldn’t get him to focus on finance stuff. It just wasn’t in his repertoire. He kept saying it was about the mission, and he had spent so many years on it and things had always worked out before somehow.
Ben was a very controlling executive director; he never empowered anybody financially because he was unsure himself about financial stuff. The board chair before Carter had been the board chair for a very long time, and he hadn’t paid attention, didn’t hold Ben accountable. So when Carter came in he started to try to hold Ben accountable, and Ben had never had that experience before. It was oil and water.
I didn’t know what we could do. The board president kept saying we had to do something really different and Ben kept saying he was optimistic about money coming in. Board meetings became unpleasant and it was frustrating for everyone.
How long did this go on? Months.
Talk of firing
I can’t remember how it first came up, but people on the board started to talk about how Ben had to go, even though he was the one who started the organization a decade or more before. Carter called an emergency meeting of the executive committee at his office. (Ben always insisted that the board meet at the nonprofit’s office — which was a good idea — so we would be in the neighborhood, so that meeting really stood out.) At the meeting, it was deja vu all over again: Ben said we would be late on payroll again but that he was sure some new grants would be coming in soon.
At that point, Carter said we had to go into executive session and Ben left. After he left, Carter laid out his case for firing Ben. We had a really terrific #2 person, a woman who was a real spark plug, and he said that we should put her in the top job.
Everybody more or less agreed about Ben. I argued and finally got them to agree to give him six more months to turn it around. After all, it was his business, and he knew more about it than we did. Ben had never had an evaluation by the board and we decided we had to have one.
I was very impressed with Carter’s dedication to the organization. I knew him from business and he is very smart, very capable. I was extremely frustrated with Ben, but I was also very dubious about the direction that Carter seemed to be taking the board.
To make a long story short, six months later the organization was still in trouble and we agreed to give it another six months. After months of agony there was another meeting of the executive committee where I was told, “We tried it your way and it didn’t work. Now we have to fire him.” The board president had talked to the #2 and asked her if she would take over. She was very loyal to Ben and told us that she would take over only as an acting director.
Game over
I told the group I wanted to resign so that I wouldn’t be on the board when they voted to fire Ben. I could see it was inevitable at this point. The next week I called Ben and told him that I was resigning from the board. The week after that the board had a special meeting and they unanimously fired him.
What happened? I don’t know the details, but the #2 person did step in, although she didn’t want the job permanently and really wasn’t up to it. Six or seven months later they closed the organization. They were broke. She moved to Texas.
You gotta wonder: who was ultimately right? We were in very big financial trouble and Ben had no idea how to deal with it. At the same time I don’t think Carter gave Ben enough credit for the successes the organization had had, and that these were largely due to Ben. The organization was Ben.
Am I still friends with Ben? No. He never talked to me again. It broke up the friendship between my wife and his wife. My wife heard that he was looking for a job with retirement benefits and without a board. She heard that he eventually got a job at a hospital but that might not be right.
What would I have done differently looking back? I wouldn’t have joined the board in the first place.
Thank you for sharing this story with Blue Avocado readers.
See also:
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- A Nonprofit Partnership: How One Board Member Connected Two Organizations and Boosted Both
- Innovative Leadership — Culture Doesn’t Have to Eat Strategy: Tending to Human Factors During Strategic Planning
- Insider Newsletters: An Easy Way to Keep Your Board in the Loop and Engaged
- Board Horror Stories: How to Reduce Board Resignations
- Five Years and Growing: How One Nonprofit Built a Sustainable, Collaborative Mission
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After reading last issues’ column from the ED point of view and now this article from a board member’s point of view, I want to think that everyone wants to do what is best for the organization. But, each side has its mistakes.
I keep wondering what are the lessons learned? Better communications? Better transparency? Better board understanding of nonprofit management? Better grasp of reality?
As an ED myself, my solution would be to bring in a financial/ fundraising person to work with the ED/ founder. By firing the ED, the board distroyed the organization. Maybe the organization would have closed anyway, but at least it would have been through the efforts of the ED and the staff. The BOD was looking for a quick fix – that never works. If the BOD disagreed with the direction the ED was working, they should have quit the board and wished the ED the best of luck.
Absolutely both sides made mistakes.
The ED should have called upon the board (and perhaps a specialist) to help with fundraising.
The Board should have seen that the organization was built on a single person and therefore not sustainable in his absence. They needed to address that structural issue, common with small non-profits where the founder is also the current director.
Ultimately, something had to change because the organization was not financially viable. Because the ED did not offer a solution other than vague promises that the money will come in, the board did what they thought would work… fire the ED.
There is a good chance the organization would have failed in a few months in either case.
A frank ED evaluation can help in a situation where the ED is neglecting a major part of their job. I experienced a similar dynamic where an organization where I served on the board hired a person as ED who was had great relationship building skills and quick became beloved, but didn’t have the finance and fundraising skills (she came from higher education, where her budget had been handed to her).
After 10 months, we did a formal evaluation and gave her honest feedback about her strengths and her weakness in this area, confirming that it was a crucial part of the job and that we would provide training. Upon reflection, she realized she wasn’t motivated to improve that skill set, and resigned with appreciation for us helping her understand how the job was not a fit for her. She wasn’t a founder.
In this case, I think it is important to communicate the new skill sets required to maintain (versus establish) a nonprofit. Helping the founder think about legacy and leadership succession is important as well. Ideally, a mutually-agreeable exit strategy can be found, but it is a tough one when the founder is so highly identified with the organization–in that case, their determination may be what is carrying the whole thing.
Thankis for sharing this story, as well as the last one.
As a former board member of a national organization for 19 years, I feel that this author forgot the most important job of a board member – to be accountable to the stake holders (all of them) of the organization. When a board member (or members) try to do what is right for an employee, or donor, or class of recipient of services, and thus neglect the rest of the stake holders – stories like this become inevitable.
I must say this is like the organization that I’m currently with, with the exception that my organization has been around for 90 years and the #2 person was completely forgotten about and not even approached about acting in a Interim role even though they were 100% qualified. Sad that a start up organization doesn’t have the foresight to prepare themselves for transitions like this better. I hope this proves as a lesson to all NPO’s to start succession planning NOW… your ED may get hit by a bus… then what?
I’m not sure I see much of a parallel between this and the piece that generated it other than both center on firing founders. There’s an effort here for balance, I suppose, in that this is from a board member’s perspective. Otherwise, the two pieces characterize very different situations to my mind.
This writer recounts a recipe for disaster:
1.The board seemed woefully ignorant of what its programs were about.
2. The board did not evaluate its programs or require the ED to do so.
3. The board did not evaluate the ED.
I sympathize with the writer, who will now probably stay as far from nonprofit boards as possible. Before we decide to join a nonprofit board, especially one with a staff, and we don’t want to lose a friend and gain an ulcer, we should know something about nonprofit board work, we should ask a lot of questions, and we should make sure the board has the proper governance procedures in place.
Thank you for bringing up the question of the quality of the programs. Almost all of the comments are focusing on the ED evaluation (or lack thereof) or the financial situation. Why aren’t people questioning the comment with regard to the “bad reputation”? Perhaps it was “political” but what does that mean? What was the quality of the programs — does any one know? Perhaps they were indeed “bad” or not as good as the other programs that were still getting contracts. Evaluating the quality of services is essential. Frankly, missing either a regular monitoring and assessment of programs or an evaluation of the ED is red flag that the organization is not likely to be doing anything well. Poor quality programming may have been at the heart of the financial difficulties — it says something that so many grants were “falling through.” There’s likely a larger story here.
I think there was good and bad in this story. Firstly, the writer walked away from a tough decision that in fact he agreed with. Don't join a board if you're not prepared to make tough decisions. In fact, your continued involvement might have helped the #2 do a better job. However, you managed to sway the board for a full year to help your friend. This was admirable (for the board as well, to accomodate the new guy to such an extent.) But during that year, what did you do to help your friend realize the seriousness of the situation? Did you push the board to engage with the ED more? Did anyone on the board look into fund raising themselves, or was everyone just waiting for the ED to flop? Sounds like the board wasn't too involved in creating a healthy situation for the organization. They could critique, sure, but what's also needed are ideas and efforts. A board should not be simply a feedback forum. The ED, for his part, never understood the form his organization grew into. It wasn't only about him anymore and it takes an adult to realize that. Ask Steve Jobs of Apple. If you form a board, it's supposedly because you realize the well-being of (your) organization is more important the you being the leader of it. Allen Craig www.allencraigphotography.com
Responsibility for the demise should be shared by the founder, who didn't responsibly oversee finances, and by the board, which failed to oversee the founder (e.g. no evaluation process). It is possible that additional training for the founder in financial management or hiring someone to assist with finances could have improved the situation. The board should have been better deployed to seek additional resources and/or ameliorate the relationship with the government funder. Finally, the withdrawal of government funding also could have been a major contributor to the demise of the nonprofit regardless of the board and founder's actions and inactions – sometimes there are environmental factors beyond anyone's control. However, had their communication been healthier perhaps that issue could have been addressed before it became fatal. Katherine Morrison Morrison Nonprofit Transitions
Much has been already said about this story and the saga of Ben. What is critical in this picture is what the board’s real responsibility is and that is to be the gate keepers of the mission. They needed to operate to ensure the mission could continue beyond Ben and beyond them. MANY organizations lack diversified funding and the board does nothing about it, and then when funding gets cut boards will look to the ED/CEO and say what is YOUR plan. It should be what is “OUR” plan. First, the board should have been paying attention to the funding sources and planning for revenue replacement with Ben. Next the board should have been setting annual goals for the organization, Ben and the themselves and performing evaluations.
As a board member for nonprofits, an executive director (who once took over from a retiring founder and who has been fired once in my checkered past from another organization) and now as an consultant, this story brings back lots of memories! Succession planning, as mentioned earlier, is very important. Also important: boards must hold themselves accountable. The problems did not appear overnight. Someone (several someones) let this happen. When the executive director and the board are not working as partners and there is no accountability for anyone bad things happen. There is plenty of blame to go around here. Thanks for the cautionary tale.
You should never join a Board when the organization’s Executive Director is your friend. You will be expected to be supportive of the ED (which you appear to have been) and will avoid doing anything that might jeopardize your friendship.
Also, you referred to the organization as HIS business. It’s not. He does not own it. Just because he was the founder doesn’t mean that he should be deferred to.
I would not have given him six months to shape up. He wasn’t likely to change in any way.
I’d say two things strike me:
The board member said the “organization was Ben.” Thereby lies the road to ruin – it’s not Ben’s business, it’s a nonprofit. When you start a business, if you want, it can be all you – you are taking the risk, investors are willing to invest in you, and if the business dies, it hurts you and your investors. But nonprofits get special benefits (no taxes, etc.) because they are for the public good – and they are supposed to be sustainable beyond one person. The board, like many boards, relied too much on the executive and then blamed him for all the flaws of the organization.
Which leads to the second thing. The board, besides not doing its job on evaluating and leading Ben, wasn’t do its job ensuring the fiscal sustainability of the organization. Yes, many nonprofits have been badly hurt financially. But once the writing is on the wall about the changes in funding (and no organization should for long allow itself to be so dependent on one funding source), the board along with the executive director had the responsibility to develop some new plans and strategies for revenue. Instead it sounds like this board just kept wringing its hands and saying we’re in bad financial shape.
Blame to go all around.
Non-profits and religious organizations have a sensitivity about them that is largely missing in the for-profit sector. I’m not saying that some large corporations don’t try to “improve” employees (work plans, etc), I’m just saying that the NP sector typically works much harder at improving problemed employees even when it might be a lost cause. I guess that’s mostly a positive characteristic of the NP sector. However, the principle role of the board is to define and protect what is in the best interest of the organization and its mission. I have witnessed a number of organizations struggle under a period of “reform” involving some individual only to eventually be worse off, closed, or eventually firing the person under reform. I can’t really say that I’ve ever seen one of these “reform projects” turn out positive for the organization or the subject individuals.
So, when do attempts at improvement become detrimental to organizations? Some churches and charities chose to attempt “reforming” staff stealing from them while keeping them in the same positions. Is that a good practice that protects the organization’s mission?
A nonprofit should ALWAYS be larger and “longer” than one person. It belongs first to the community it serves and the people who invest in it, but also to the board and all of the staff. To make choices that serve the ED best when the ED is not making choices that serve those persons best is a misguided interpretation of the board’s role. The board must make choices that best benefit the greater good, and sometimes that means moving past a founder.
People with the vision to create a nonprofit are frequently not good at the financials that is why the duties are usually seperated. The ED should have had a money person that he worked with. If he insisted on micromanaging the organization then he undermined everything he built.
Board members often seem to think that their only involvement is to show up at the board meeting (most of the time) and tick off "non-profit board member" on their resume. They are often executives of for-profit organizations who are used to sitting back and doing none of the hard work; and they expect a non-profit to run the same way. These people make terrible decisions and are more grief than help to an organization. Boards should be the driving force in fund-raising and in creating/maintaining the reputation of the organization. They should have contacts, influence, and energy. Otherwise they are just taking up space.
If they aren't going to bring resources to the table and help the mission, then they should not waste space at the table. Boards should have term limits. Board members who hang around for 15 or 20 years are usually an impediment to moving the organization forward because they become proprietary about the organization and out-dated in their approach to how things should work.
In the above story it seems that no one on the board had any political contacts or influence even though they were on the board of an organization funded primarily through government. No one on the board tried to figure out why the reputation with the school board was bad, or if it really was, and no one on the board tried to remedy the situation by doing anything more useful than making it the ED's problem/fault. These board members were apparently all a bunch of useless ponces who were on the board for their own ends, not for the organization.
People with the vision to create a nonprofit are frequently not good at the financials that is why the duties are usually seperated. The ED should have had a money person that he worked with. If he insisted on micromanaging the organization then he undermined everything he built.
Board members often seem to think that their only involvement is to show up at the board meeting (most of the time) and tick off "non-profit board member" on their resume. They are often executives of for-profit organizations who are used to sitting back and doing none of the hard work; and they expect a non-profit to run the same way. These people make terrible decisions and are more grief than help to an organization. Boards should be the driving force in fund-raising and in creating/maintaining the reputation of the organization. They should have contacts, influence, and energy. Otherwise they are just taking up space.
If they aren't going to bring resources to the table and help the mission, then they should not waste space at the table. Boards should have term limits. Board members who hang around for 15 or 20 years are usually an impediment to moving the organization forward because they become proprietary about the organization and out-dated in their approach to how things should work.
In the above story it seems that no one on the board had any political contacts or influence even though they were on the board of an organization funded primarily through government. No one on the board tried to figure out why the reputation with the school board was bad, or if it really was, and no one on the board tried to remedy the situation by doing anything more useful than making it the ED's problem/fault. These board members were apparently all a bunch of useless ponces who were on the board for their own ends, not for the organization.
One of the major functions of the Board is to evaluate and provide supervision to the ED. This Board acted appropriately in recognizing their failure to date and rectifying that before firing the ED.
To do otherwise would have furthered their own failure.
The fact that the ED didn’t use that feedback as an opportunity to grow or to identify another resource for the financial decisions (working more closely with the Treasurer, perhaps?) was his failure.
I worked for an org like this one — where the ED budgeted based on her “wishful thinking” and ALWAYS ran a deficit, which somehow surprised the Board every single year.
In this case, the Board had responsibility to approve smaller income budgets, requiring the ED to cut expenses — even at the cost of layoffs or trimming programs.
I think it is worth noting that the trouble started when the organization started to experience financial hardship. Without getting into causality, it is important to remember that things get really hard for everyone IN the organization when it is struggling.
Our library has gotten on the bad side of our conservative, small-government, privatizing mayor. Is it the Director’s “fault?” I can’t imagine being able to say yes to this. But the now overworked staff is upset, annoyed at him and at each other’s throats. They’ve stopped communicating effectively with him and each other and frequently try making end runs around him to the Board of Directors and even the Friends Board.
Could the director handle the situation and/or the mayor more effectively? Perhaps. But there is a lot of anger all around that may get amplified when the mayor speaks disrespectfully to him.
I think it is worth noting that the trouble started when the organization started to experience financial hardship. Without getting into causality, it is important to remember that things get really hard for everyone IN the organization when it is struggling.
Our library has gotten on the bad side of our conservative, small-government, privatizing mayor. Is it the Director’s “fault?” I can’t imagine being able to say yes to this. But the now overworked staff is upset, annoyed at him and at each other’s throats. They’ve stopped communicating effectively with him and each other and frequently try making end runs around him to the Board of Directors and even the Friends Board.
Could the director handle the situation and/or the mayor more effectively? Perhaps. But there is a lot of anger all around that may get amplified when the mayor speaks disrespectfully to him.
Having run a number of non-profits, funding is always an issue and it is not the ED’s responsibility alone. Legally, the BOD has the fiduciary responsibility for the non-profit corporation and, in some cases, can be held legally liable for losses, etc. A good BOD will work in committee to ensure fiscal stability, fund raising, employee evaluation and succession planning, etc. Founders of organizations (and I was that at one point) do not ‘own’ an organization, the community does and it should serve its clients first.
Hard financial times face us all, today and yesterday, and a sound financial plan for the future is paramount if we want to perpetuate what we start. That is a board, not staff, responsibility!
The very first mistake was getting on a board of an organization where the ED is a friend. I see this happening all the time – the ED asks friends to sit on their board rather than the board taking control of their own succession plan.It is not possible to take an objective view of anything when the person whom you are supposed to evaluate is a friend.
It seems to me that the problem nobody identified was that the organization was capable of “getting’ contracts but obviously could not manage them after they got them so they had developed a bad reputation. That normally comes from bad program audits, not being in compliance with a contract, not submitting reports to the funder timely, etc. Somebody should have looked at their quality control for their contracts and grants and brought things into compliance. A plan should have been developed for an in person meeting with some of the government officials to see exactly what caused their comments and to demonstarte to them that corrective action would be taken. A good reputation comes from doing what you promise and good public relations which means performing according to the contract and maintaining good relationships.
The Foundation Center in NYC mentioned the three-Gs the other day pertaining to board members and their defined responsibilities: Give money, get money, or get off the board. Sound advise as I develop a board for a start up educational NPO.
Wow! Thanks for sharing this story with our Texas Nonprofit organization!
I know a group in Texas that is about to face the same thing! Foundations have been withholding funds just at the time we are in a capital campaign and working to get funds for fulltime staff to run the mostly volunteer organization.
The founder used his own money to start the organization and he and his wife drive in from the suburbs daily to run the nonprofit and receive no salary. However, they also control the funds and decides how, when, or if someone should get paid or reimbursed for items for the nonprofit.
I will share this story with that nonprofit in hopes that they see they must make a change ASAP to keep funders assured of leadership, while yet giving appreciation to the founding family. They will need the wisdom of Solomon!
My observation reading this article is that certainly the ED needed to develop better financial management skills, but I wonder if the board ever provided that opportunity? Was ongoing professional develoment something they made sure was included in the budget when the approved it, or was it something they considered non-essential? I also notice that although the organization seemed to be in constant financial flux, the board didn’t seem to do very much to attract support or assist with fundraising either, at least not that was mentioned in this article. Grants and government funding are mentioned, but it seems that neither the ED nor the Board did much to develop private donors. The ED was too optimistic and the board was too willing to lay blame without also assessing themselves, or take a leadership role except to fire the ED. Instead of putting on a search for the best replacement, they took the path of least resistance by giving the role to somebody who cleary didn’t really want it. This organization collapsed due to founders syndrome, plain and simple. Very sad, but also unfortunately very common.
I am struck looking over these comments the degree to which executive directors blame the board and assume either that the executive could have improved with evaluation or that the exec could have turned it around. Another reading might be that the executive director ran it into the ground and the board stepped in too late to stop it. And, like most founders, the executive director purposefully (whether consciously or not) recruited board members who would stay out of his way, and he didn't let them see bad information.
Sometimes determining who is to blame provides a worthwhile lesson and opportunity for reflection. In this case it was the ED's fault.