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I am the co-founder of a new nonprofit organization and the question has come up as to whether or not I can assume a paid position within the organization. Can a co-founder ethically become an executive director?

There is no ethical or legal reason that a co-founder may not become the executive director of a nonprofit organization. (Some states may require a certain percentage of independent directors on the Board.) Some of the most effective groups are run by their founders. If the founder is the executive director, it is probably even more important to be sure to follow the rules for excess benefit transactions to assure that an independent group of the Board approves any financial arrangement. (See Ready Reference Page: "Charities Must Avoid Excess Benefit Transactions.”)

Comments from our Readers
Good idea to point out that being ED means not being board chair too and therefore subjecting oneself to the supervision of the board, no longer being in charge of "one's own" organization. Tough pill for some founders to swallow. M.P. - Jamaica Plain, MD

I am not aware of any law that a person cannot be Executive Director and also be on the Board, even chair of the Board. While it is true that in a mature organization, the Executive Director is typically not on the Board, a founder is frequently head of the Board and CEO at the same time. It all goes back to my question: Whose Organization Is It? - Don Kramer

Rev: 1/29/07