"We Need a Team… to Do It My Way"

Picking up from last week, 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 the questions about whether another nonprofit is really needed in the specific field, or 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.

Then 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 the real supervisors of the founder, as distasteful as that is 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, and they're in serious trouble. 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 is good for a few years as a way to get started serving the target population immediately; it brings in 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 is: "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 a t 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.

But the next decision compounds the problem that's starting to happen: those early dollars are spent solely to 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'll get into the first mistakes here in fundraising this afternoon.

Case Study: "I wanted to get started and show what could be done"

I am approached regularly by would-be start-up nonprofits. People come looking for whatever advice they need. Sometimes people seek fundraising advice, sometimes governance alternatives. Other times they want to know how to set up the new charity with the IRS. But rarely, if ever, does someone come and say "I'm thinking about doing this kind of work. What are some of the blocks and barriers going to be, and do I stand a chance of surviving long term?" Mostly people seem to want self-affirmation; they want to know that their ideas about something are, generally, in the right direction. They are rarely prepared to accept criticism or negative comments; they don't seem to like a cautious approach and they seem to have little tolerance for much analysis, particularly if it cuts across their grain of an idea about how things should be.

One case I worked with is typical enough that I'll lift it up as a case study. The charity's request for assistance in fundraising involved a long-time school teacher who had developed over the years a marvelously effective method of teaching youngsters to read. This woman has some of the highest scores available today in teaching kids to read, write and think. The results this nonprofit gets each year are unbeatable, and they do improve over time. Gives a great case for support.

I was enlisted by the founder's board to assist them in fundraising, with the first step in the process being a development audit to determine past and current fundraising practices and results. In the process of the development audit, it quickly became apparent that the organization had a serious case of founder-itis. The founder was the executive director, as well as an officer and voting member of the board. The board members were all long-time personal friends of the founder, pretty much ready to approve whatever she wanted to do. The organization's management pattern tended to follow the founder's personal pattern of disjointed, unfocused thinking and planning. No idea was acceptable unless it fit the founder's personal preferences. Fundraising had come virtually to a halt after the first six years of operation. The board was allowed not to give; personal friends couldn't be solicited for major gifts, simply because of the "embarrassment" that would accrue to the personal relationship.

As I explored further into the organization's history, it was revealed that the founder had early on became embroiled in local school politics around the issue of the knowledge gap between white and African American students, advocating that the school system should be responsible for bringing minority students back into the literate mainstream.

At some point the frustration of dealing with the political and bureaucratic process became too much, and this woman made a precipitous decision to start a literacy charity on her own, letting the schools stew in their own juices, but moving ahead to solve the problem on her own, at least for a few youngsters. Direct service to a few was preferred over an institutional solution. Whether because of impatience, lack of political skill, lack of supporters or whatever, this charity was created to get action, now. And the resulting situation gives us a good case study in which to see the ingredients that eventually can lead to Founder-itis.