We Need a Team -- to Do it MY Way

Picking up from yesterday, what we're doing here is examining the phenomenon of "Founder-itis" as found mostly in new, and therefore smaller, nonprofits. This is the phenomenon where the founder has become the executive director, has stayed on too long, and has led the charity to a greater or lesser quality of dysfunctionality by paralyzing its growth and its capability to change with the times. We're taking a look at the factors that can, early on, indicate trouble for such founder-dominated nonprofits, and how these are related to the early decisions and actions of the founder.

Last week we dealt with two critical factors, the first of which was the haste with which these founders sometimes rush to mission accomplishment without thinking through certain strategic questions. One of these has to do with whether another nonprofit is really needed in the specific field. Another one has to do with whether it would be best for the would-be founder to simply go to work for one of the existing charities. Thorough strategic planning is critical to a charity start-up, and any founder needs to take the time to involve a whole community of people in assessing, first, whether another charity is needed, and then where it will go and what it will do.

Next we took on the problem of how the initial board of directors is formed by the founder. We examined what happens when the board is put together of friends and associates of the founder, is not given true governance capability, and is done simply to satisfy the IRS regulations, but is kept under the close supervision of the founder/executive. Boards need clear job description and performance standards. They also need to be allowed to be true governors, and they need to be the real supervisors of the founder, as distasteful as that may be to many founders.

This week we are delving into a new realm: fundraising, and the kinds of subsequent effects that early fundraising decisions have on a nonprofit. Such decisions set the tone and pace for fundraising for years to come; the newly-formed nonprofit has just as good a chance of becoming dysfunctional in its fundraising as it has in its governance and strategic planning.

Most often the charity suffering from founder-itis doesn't get to my door until the start-up nonprofit is about three to five years old. By that time they're in serious trouble. Often the reason they're in trouble is because of their inability to raise contributions from the public. Early problems with fundraising are masked by the founder's haste as he/she sets up a nonprofit that is initially dependent on foundation grants and special events, with a couple of direct mail letters to friends and acquaintances.

That configuration may seem adequate for a few years as a way to get started serving the target population immediately. However, it brings in only the relatively easy money, and, as we saw last week, this makes the founder and the board feel good early on that something is being done in the field with the target population, but it ultimately leads to trouble.

What happens is that in the haste to feel good and get something done, the founder does not test to see if there is a significant groundswell of public support in the community for the work he/she wants to do. That means the early dollars are going to come from friendly local foundations who want to help a start-up, and from special events.

The idea seems to be this: "Everybody likes a party, and networking is a key to advancement of just about any kind in our society. So if we bring people together, charge them a donation to get in, they'll support us just to get to the party." The founder can then spice things up a bit at year's end by sending out a direct mail appeal, and that brings in a few dollars too, even though if one were to look closely at the statistics of such a mailing trouble is forecast from the beginning. So, the early dollars are easy.

The next decision, however, compounds the problem that's starting to happen: those early dollars are spent solely on program – meeting the needs of the target population. The founder is in a hurry to get results, puts on staff, undertakes the essentials of rent, utilities, materials and the like.

This sets up the operating budget, but there's nothing invested in fundraising infrastructure. The executive writes the grant proposals, the executive plans and holds the events, the executive writes and sends the direct mail appeals – with the board members being called in to participate in the events and stuff and lick the envelopes.

Through all this, the founder/executive wants to show all donors that the costs of administration are low and spending on "fundraising" is practically non-existent. No better way to do that than to actually not spend anything on fundraising, right? Double trouble is ahead.

We now have the set-up for a first class set of mistakes by the Founder and his/her board of directors. More tomorrow.