A charitable organization executive director asked for my guidance the other day on clearing up ties between the group’s founders, who serve as directors on the nonprofit board, and a business the founders operate that provides services similar to those of the charity.
I offered the following thoughts in response to the executive director’s keen hope that the group could operate as a legal, respectable, fundable entity able to grow and thrive.
Legal compliance, I said, is necessary, but not sufficient. The sort of respectability you want, in the eyes of donors and other community “sponsors” needed for organizational success, will come as a product of indisputable civic intent and a mission unclouded by any question – or potential question – of commercial ties that benefit private individuals. Fundability and the group’s capacity to grow generally emerges from a combination of “earned respectability” and the group’s fundamental, ground-level talent at drawing in board members and donors thrilled at the idea of harnessing their prestige, position and personal wealth to a compelling mission propelled by exciting, positive and community-minded people. You need a combination of well-connected board members, a superb public interest “product” in the form of the group’s work, and outstanding professional leadership and management. In sum, I advised, the venture must be “of the community,” not merely in the community and certainly not seen as commercially linked to a private business. The only way to truly achieve that high aspiration is by recognizing that for the group to be of the community, it cannot be perceived as or, in fact, of any particular individual’s private interests.
Charitable sector leaders, especially entrepreneurs starting up new ventures, must have the capacity – the instinct – to turn themselves outward in service to the community. Those who confuse – or, worse, masquerade – personal ambitions as public interests, very often run aground, compromise themselves, and end up doing real civic harm. It is the lurking, residual sense of personal ownership of any enterprise built and sustained with charitable contributions and tax exemptions that lies at the heart of the dreaded “founder’s syndrome.” At best, organization founders and nonprofit leaders possess temporary stewardship on behalf of the larger community for the programs, projects and organizations they run. Tempting as it is to let our possessive sensibilities run wild, we cannot conflate fierce attachment to a public interest mission with material ownership of the means – an organization – established to fulfill that mission. The working principles of good business practice help only partially in the civic arena, and then they get in the way. That’s why it’s best to keep ownership and stewardship separated, preferably with a bright line and no-man’s land in between.