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What should founder do when removed from the board?

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What should founder do when removed from the board?

I am the founder of a 501(c)(3) nonprofit spay/neuter program that I started in 2013.   When I got sick in 2016, I wanted to close the program and asked the other three board members to start their own nonprofit or work with another organization. We agreed they would continue until the end of 2017 since we had funding until then. I didn’t participate in any more events or meetings and focused on getting healthy. Although I had concerns with what they were doing, I didn’t say anything.  In December 2016 I started asking for a board meeting but either got excuses or was ignored.  I was recently removed as administrator of our Facebook page and my organizational credit card was cancelled.  I made a factual post on my personal Facebook page to let my supporters and donors know what had happened.  An attorney on the board then wrote a defaming and inaccurate post about me and removed me from the board, putting herself in as the president.  I never received any notice they were going to do this. Is this legal? What can I do?  

I assume that you didn’t create the organization as a sole member nonprofit so you were merely one of the four directors and could be outvoted any time the others wanted to do something different from what you wanted to do.  It is unfortunate that more founders don’t protect themselves when they care so much about the mission and are the driving force to make the organization effective.  (See Ready Reference Page: “Sole Member Bylaws Can Protect Founder of Nonprofit”)              

Having said that, however, it is unlikely that they would have had the power to remove you from the board without some advance notice and an opportunity to be heard.  You might actually win a suit against them.  But even if you were to spend the time and money to win, they could probably follow the proper procedure and remove you anyway or fail to re-elect you at the end of a term.

If you can’t work things out with them directly, your best bet may be to post another factual statement on your Facebook page, giving your side of the story, and go on with your life.  They will be able to continue, or not, on the basis of what they do from here on out.  But they may have to do it without the help of your supporters and donors.

Tuesday, May 22, 2018

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Comments

I sometimes hear people talk about "protecting the founder". That is not the purpose of a nonprofit. If someone wants to remain the manager and "owner" and to keep the organization on their own path, then they should do so as a corporation and not expect the public to pay for it. Establishing a nonprofit means creating a community owned entity that does and should evolve over time. Industry best practices include term limits for board members for a reason. The community theoretically speaks through the board to guide the nonprofit. And news flash- a nonprofit should never be about a person but the about the mission. Before I get slammed- I have served in the nonprofit world for 39 years so I am well-versed on this topic.

This is a legitimate point of view, probably even a majority point of view, but I disagree with it.  A charity should operate for the benefit of the community, but the community doesn't "own" it.  The community is unlikely to step in if the organization has trouble and take over to be sure that someone is fulfilling the mission of the organization. Essentially "the community" doesn't care whether a start-up makes it or not.

The whole reason to have a sole member corporation is to protect the vision of the founder who wants to spend a career pursuing a specific way to make the world a better place and is willing to do whatever it takes to make that happen.  Without the founder's work, the organization doesn't happen.  This doesn't mean the organization doesn't evolve over time, or that the founder doesn't follow the advice of the board.  But I have seen too many situations in which the founder works many years, often with little or no pay, to develop the organization to pursue a specific vision, only to have a board of the founder's best friends say they don't like what the founder is doing and get rid of the founder to go in a different direction.  If they want to do something else, they can always quit the board and found their own new organization, but they usually don't have the interest, energy or time to do that.

There is a self-limiting aspect to the founder's control.  If the founder is arbitrary about firing directors, it will be difficult to attract good people to serve.  If the mission is not relevant to the community, it is unlikely to gain support and is likely to fail.  But where the founder has a passion, a vision and a mission, we like to assure that the founder will be in a position to pursue that vision and mission as long as he or she wants, without being displaced by a bunch of friends who are not nearly so invested and think it would be nice to do something else.  —Don Kramer

A Director cannot disagree with a Board. The Directors' role as a team is to hold discussions until there is a consensus, vote the issue, and everyone then agree with the vote. No Director has the right to go public with why they were right and the rest of the Board was wrong. This guy is no longer a Director because he was a terrible Director. He should NOT repeat NOT post any negative findings to his personal FB page. His only path forward is to start another neuter program. If you must ask, yes I have been a founding Director of a successful nonprofit and yes the nonprofit eventually displaced me for very rich Directors (like the billionaire scion of an NYSE company). I accepted that the Board found a better candidate. I'm sorta proud of how high the Board had to reach to find my replacement. ;-)

While your support of a Founder being able to protect her/his control is understandable, in my 40 years of experience as a nonprofit attorney and consultant, focusing on "founder control" as an overriding objective is not a "best practice". Too often I have seen founders operate "their" organization as a "vanity nonprofit" that serves the ego of the founder rather than benefiting the general public which is what a public benefit nonprofit is supposed to do. Additionally, a major failing of founder controlled nonprofits is that the nonprofit becomes a "one trick pony" because of the founder's control. As a result, there is often no plan of succession and the nonprofit dies along with the founder.

I've been on both sides of this issue, and it's never pretty. But yes, unless you set up a sole member organization, you are at the mercy of the Board. I believe a director who does not have the confidence of the Board should step aside, because the alternatives are lousy. If things are being done illegally, that is another story. But generally, yes, I agree with Don on this question.

"Industry best practices include term limits for board members for a reason."

Where might I find those "industry best practices" you cite? Because I think term limits for nonprofits are just a self-inflicted wound for most nonprofits. In my opinion, term limits are either excuses for bad governance (conflict avoidance) or pointless self-harm. That is, nonprofits either use term limits to weed out deadwood who should have been weeded out affirmatively a long time before, or they cause the lose of good, contributing folks who would like to continue board service.

The appropriate term limit for apathetic or poorly suited directors is immediately if not sooner. The appropriate term limit for a contributing director who pays attention and makes the board stronger is death if you can persuade them to stay on that long. There are always enough of the former to provide for regular turnover on the board such that the few long-timers are not a problem.

(And, yes, I have seen low performing nonprofits where ALL the directors are subpar -- they tend to have term limits in their bylaws, because bad drives out good in nonprofit boards just as in money. The term limits don't help in the least -- I'd say they make things worse.)

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