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Can founder be board president and executive director?

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Can founder be board president and executive director?

The founder of a new nonprofit is currently the board president. There are no employees at this point, but the nonprofit is starting to grow and the founder would now like to become the executive director and be paid. However, he would still like to remain on the board. Can he stay the board president? Or should he be a board member (not an officer) and have a non-voting role? I help many start-up nonprofits and this question of moving from board president (or member) to employee with retaining a board role comes up every time!  

Although there are a lot of people who disagree with me, I have never had a problem with the founder serving as president of the board and executive director.  I am not aware of any law against it.  I go even farther to recommend that the founder be the sole member of the corporation so that he/she can control the board, if necessary, to assure that the initial vision and mission are sustained.  (See Ready Reference Page: “Sole Member Bylaws Can Protect Founder of Nonprofit”)

It is the founder’s vision and energy that drive the organization. (See Ready Reference Page: “The Key Question: Whose Organization Is It?”)  I hate to see it frustrated by the founder’s “friends” on the board who want to do something else.  The founder still has to work with the board to obtain their support and assistance, but those with far less personal stake in the organization cannot arbitrarily change the direction.

I don’t feel the same way about a mature organization that has had many changes in leadership and developed a more settled organizational culture, approach and history.   There a good partnership between the board chair and CEO can expand capacity and increase the effectiveness of the organization, and I am less eager to give so much power to someone who is building on the prior work of so many others.

Wednesday, December 26, 2018

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I always ensure that if the founder is on the board there are at least a majority of directors with no conflicts.

I am the founder of two 501 (c) 3 foundations.
Under the new NYS laws governing non profits,
You cannot be a paid employee and president of the board. I had to remove myself as an employee of one of the organizations so I could retain my position of president of board of directors. Even this action was not frowned upon with our accounting firm and NYS.

Isn't it the role of a board of directors to oversee the Executive Director and the agency? I do not see how it is possible for the founder to lead an agency and provide appropriate oversight if they operate as their own boss. This would undermine the role of a board of directors.

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