Tag Archives: Capitalism

The Nonprofit Leader Trap

Different people have different skills and abilities. You and I know that, but don’t stop reading. During the past year, as part of my executive coaching sabbatical, I’ve had a great opportunity to work with and observe two dozen nonprofit organizations and their leaders. More than observe, when your coaching training comes mainly from John C. Maxwell, you tend to notice the leadership elements of the organization — he’s kind of big on that. Here’s what I’ve noticed.

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Founder-entrepreneurs are unique. There are precious few leaders who are uniquely designed (or accidentally evolved – we’ll have that debate somewhere else, at another time) to serve as founders and entrepreneurs. Three traits are required: see a problem that is currently going unmet; create an intervention that will address the problem; and convince others to join in bringing the idea to reality. Hold that thought.

The US has more than one million nonprofit organizations. They are schools and churches and hospitals and homeless shelters. They are youth programs and advocacy groups and international orphan feeding programs. Every one of these organizations had a beginning and most can point to an individual that saw the need, envisioned the solution, and rallied a team to make a difference. These leaders are founder-entrepreneurs.

Different people have different skills and abilities. Founder-entrepreneurs are extremely gifted in seeing and creating and inspiring. They are not necessarily gifted in the skills that are most relevant to running a maturing organization, things like organizing, controlling, monitoring, hiring and un-hiring (and yes, my compulsion to use that particular euphemism is largely because I fall personally more on the entrepreneurial side of the spectrum). Now, these skills are not so crucial in the first few years of an organization’s life-cycle. However, as the organization succeeds and grows and matures, these are the skills that increasingly determine sustainability. The all-too-common result is that year-by-year the founding leader becomes less well matched to the important leadership needs of the organization.

This happens in for-profit organizations too. Thus far, we haven’t said anything that isn’t just as true for founder-entrepreneurs who create new businesses and sell lots of products or services. They are also likely to see their successful enterprise out grow their particular leadership gifts and abilities. Here’s the difference: in businesses, the founders have a capital ownership stake in the business and so do other owners. At some point, it becomes clear that the organization would be better served with a different leader and the successful organization buys the founder out and replaces him or her with a leader skilled in the areas relevant to a maturing organization. The founder leaves with enough return on their efforts to go off and solve the next problem that they alone can see. The organization has the leadership it needs to continue to grow.

Short of replacing the leader, for-profit organizations are also likely to add a second senior executive to partner with the founder and fill-out the leadership skills available to the company. Much has been written on leadership teams, because when it works, it can be the best solution.

Back to the nonprofit organization and the leader trap. Neither of the for-profit solutions to the founder problem are readily accessible to the nonprofit agency. Replacing the leader with a seasoned executive more gifted in leading a mature organization happens, but only at the retirement or termination of the founder. There’s nothing to “buy out.” There’s no liquid capital with which the founder can head off to solve the world’s next problem. There’s not even much in the way of lovely parting gifts. For this reason, boards and their organizations rightly avoid dismissing founding leaders until there is no other option. It’s ugly, it’s failure, it invariably does damage to the organization, sometimes irreparably so.

Hiring a second executive, while more possible, is not much more common. This is largely because nonprofits run on a shoestring and any additional income is more likely to go into programs as opposed to overhead in the form of a chief operating officer. The board and its organization starve themselves of leadership for the sake of the program beneficiaries, often until it’s too late.

This all leaves us with a class of founding leaders who are trapped in roles that don’t best serve the organizations that they love. Toiling at the top of an organization that is more and more facing problems that are outside the leader’s sweet spot wears the leader out. Five or ten years of this struggle is sometimes enough to sap the best energies of the visionary founders we met at the top of this essay. That is a tragedy.

What should a leader and board do? It is true that admitting that you have a problem is the first step. Boards and founders should consider the implications of this trap early. They should take initiative to understand the unique and growing leadership gaps that are likely in their organizations as success and growth of mission transform the demands of the top job. Knowing this, they must put in place the necessary plans to supplement and support the leadership and management supplied by the founder, up to and including hiring supporting executives with complementary strengths. Different people have different skills and abilities. We must lead and govern our organizations accordingly.

I’m rooting for you.

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