August 2, 2019

Exit right: Nonprofit founders must plan their transition well

When it comes to succession planning, it is important for founders of nonprofits to do it smartly, while adequately empowering the CEO, if they need to.

3 min read

Founders are passionate and usually stubborn, two qualities that make for their organisation’s growth from an idea to an institution. Many founders rightly believe that they have it in them to do what’s best for the organisation, and for a long time to come. There are very few examples of organisations that have failed because the founder ran it for a long time.

However, recent years have seen an increase in discussion around what’s called “founder’s syndrome (or founderitis).” The internet defines it as a “difficulty faced by organisations where one or more founders maintain disproportionate power and influence following the effective initial establishment of the project, leading to a wide range of problems for the organisation.”

Related article: A founder’s guide to transition

There are several assumptions that the diagnosis of the syndrome makes, and some of them are that:

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  • The founder and the organisation are synchronous and will always be
  • If the founder exits/dies, the cause and people served will perish or come to great harm
  • If a founder continues to run the organisation, it’s detrimental to the organisation and the cause it serves
  • The exit MUST be made and transition is ALWAYS beneficial to the organisation
  • “New blood” will always be beneficial
  • The vision of the organisation, as defined by the founder, is sacrosanct.
  • The founder-built Board will continue to engage with the professional CEO in the same manner

Donor-driven pressure to create a succession plan has also driven many founders to consider retirement, even if they and/or the organisation is not ready.

Obviously, not all these statements are true, and is highly subjective.

However, founders transition out of their organisations for several reasons other than diagnosis of founderitis. The sanest (and rarest!) is that they truly believe that the organisation will benefit from someone else running it. However, donor-driven pressure to create a succession plan has also driven many founders to consider retirement, even if they and/or the organisation is not ready.

The transition

Typically, several things happen once a founder decides to transition out of the organisation. The most common of these is to hire a CEO, often an external candidate, while the Board remains the same.

This situation results in several complex relationships having to be redefined: Board-CEO/CEO-Staff/ and, of course, the Founder-CEO, if the founder, as is typical, continues to be engaged in a few key aspects of the operations such as donor acquisition and management.

The new CEO must also now understand the role of the Board that is not well defined in transition, work with a team that must get used to a new way of working with a new leader, and deal with the pressure of keeping the DNA of the organisation (as defined by the founder) intact.

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The Board now has to play a more active and demanding role of working with a CEO they might not have prior experience with. The CEO might have different expectations of them, and may work in a way very different from the founder. Boards then might grip the reign too tight, afraid of making too many CEO-led changes.

Related article: Founder transition requires preparation

The founder, though on her way out, may tow the line of the Board, out of prior comfort, and also because of prior connect with the Board. This may lead to multiple power centres within an organisation.

All of this can result in a merry mess.

The solution?

The solution lies in the founder transitioning out in a smart manner, within a well-defined period of time. The CEO must be empowered and the founder must facilitate better CEO-Board relations.

Ideally, the founder must cut all formal ties with the organisation within a planned period of time. If, as a consequence, some Board members decide to leave, the new CEO must be empowered to bring in new Board members.

Ideally, the founder must cut all formal ties with the organisation within a planned period of time.

The founder can also be available “on call”, although it’s not an ideal scenario. If the founder wants to remain on the Board, it will be best if she keeps away from some agenda items, to allow the Board and the CEO to have unmoderated time to get into a working relationship. In such a case, the founder’s role must be well-defined, and include enabling the acceptance of change and open communication.

The chair of the Board might be another bone of contention, and as such, it should be a person that the CEO is very comfortable with. The chair can be a good bridge between the Board and the CEO.

The best solution is an empowered CEO with a Board he has created on his own, with a set rhythm of operation and communication. If founders wish to remain actively invested while exiting day-to-day operations, hiring a smart COO might be a better option.

This article originally appeared in AsianNGO and may not be republished without their explicit consent.

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Aarti Madhusudan-Image
Aarti Madhusudan

Aarti Madhusudan is the founder of Governance Counts, an initiative which helps nonprofits build more effective boards. This includes identifying key board related issues and recommending good practice guidelines. She has consulted several Indian and international organisations. Aarti is passionate about volunteering, and runs Whiteboard, an iVolunteer initiative that brings senior corporate professionals together as a group to provide strategic guidance pro bono to nonprofits. She volunteers herself with DaanUtsav. Aarti is an alumna of TISS, Mumbai and NIMHANS, Bangalore.