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May we remove founder?

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May we remove founder?

The board of directors of our 501(c)(3) corporation includes a founder, co-founder, president, vice-president, treasurer, secretary, and member-at-large.

Currently, the founder is upset because we voted to remove his mother from her position as treasurer because she did not have the capability to use a computer, spreadsheets, and accounting software.  We then voted in a new treasurer, who coincidently is the spouse of the president. He has the knowledge and know-how of computers, software, and spreadsheets.

Because the founder is being unruly and has now begun to threaten the board, say malicious things about the board, putting words into our mouths, etc., we have decided to consider voting him out as the founder.  This would leave his spouse as the co-founder and the rest of the board intact.  Are we permitted to vote to do so?  

This will be controlled by your bylaws and state law.  If being “founder” is an officer position (and not just a description of historical fact), ordinarily the board is able to remove an officer.  If it is also a board position, removal from the board may require a special separate procedure that is likely to be spelled out in the bylaws. If the co-founders set up the corporation as a “sole member” corporation to protect their right to continue to lead the organization as long as they want to, your bylaws may say that one or both of them can’t be removed from the board even if they can be removed as an officer.  (See Ready Reference Page:  “Sole Member Bylaws Can Protect Founder of Nonprofit”)  If the co-founders didn’t provide protection for themselves, you can undoubtedly find a way to get rid of either of both of them.

We like to protect the founders of a new nonprofit from directors who want to take the organization in a different direction after the founders have spent years of their lives getting it up and running.  Your question is a good one, however, to show “the other side of the coin.”  You want to get rid of a founder who is being unruly and threatening the progress of the organization.  That can be a very legitimate position. 

But we have seen enough situations where the people who started an organization and dedicated their lives to a particular way to improve the world have been involuntarily ousted from their own organization, much to the detriment of themselves and their vision of the world.  Where it is their vision and energy that has brought the organization its budding success, we think it is unfortunate to deprive them of the opportunity to continue to develop it.  If the others on the board are really concerned about the mission, they can start their own organization to pursue the goals.

For founders who don’t protect themselves, they can be ousted by a majority of their family and friends who they put on the board, as is likely to be the case in your situation.

Tuesday, July 18, 2017

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Comments

It seems this action of voting out the founder is very drastic. It sounds like getting a divorce before going to marriage counseling! I would first bring in someone who can facilitate an open discussion of all issues, and look for shared solutions.

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