A board member, who went through a traumatic founder transition, shared the story with me. In the organization’s early years, board members took on many staff roles and the ED and Board Chair were the same person. As the organization matured, the founders struggled to transition their roles. This led to personality conflicts, lack of accountability, and ultimately the resignation of both founders.

Clarifying Roles Is Essential

As told by a Board Member somewhere in the US

I remember when our nonprofit — which focused on special needs kids — was just starting out. It was founded by a couple, Sue and Jim. They had a special needs child as well as two other children. Sue was the Executive Director and Board Chair. Jim was the Treasurer. I was Board Secretary. There were three additional board members including a Vice Chair.

In those early days, we were scrappy and careful with our resources, like any startup. Jim not only managed the finances but also kept the books. Sue didn’t draw a salary initially. As time went on and our revenue expanded, we offered Sue the compensation she deserved. We hired a Director of Finance, which allowed Jim to focus on his Board role as Treasurer. We also expanded our staff to support more children.

We could not serve all children. I think that was why Sue decided to open a for-profit business that served a similar population. She told the board she wanted to step down as ED but stay on as Board Chair. She had already started her new venture, though we did not know this. The board discussed whether there was a conflict of interest. But it has a different methodology. So, we decided it was okay. She could stay on as Board Chair.

Founder Transitions Are Difficult

The problems began when we hired a new Executive Director. We put together a process, wrote a job description, and interviewed candidates. We had three strong candidates including Don who we hired. He was a great fit. Jim liked him a lot; Sue wasn’t so sure. Sue wanted an internal candidate. But none of the rest of us thought the internal candidate was qualified. Don came from a government organization that worked in the same area.

Because I had served on other boards through leadership transitions, I was coaching everyone a bit. We planned a six-month overlap with Sue and Don. Honestly, I was concerned about how much time Sue would have with her kids and her for-profit company.

Initially Don and Sue set up a schedule to meet weekly. However, six weeks in, we discovered they were not meeting often. Sue said Don was canceling meetings. Don told us it was Sue canceling. We found out it was Sue. Sue was Board Chair and ostensibly around – at least to answer questions. But she stopped even answering email.

Hard for New ED when Former ED Is Board Chair

Don was resourceful and capable, but he hesitated to make decisions independently. I reminded him that he was the ED, responsible for operations, and that he had the authority to make decisions. If there were significant issues, he could consult the board, but for day-to-day matters, he had authority.

Then an issue came up around finances: Don and the finance person presented the financials at board meetings, and Jim would challenge them. He said he did not trust the numbers. As Treasurer, he should have addressed these matters in the Finance Committee meeting. Sue was Board Chair but would not correct her husband in public. This created a tense atmosphere, and it was clear that a change was needed.

The board is responsible for ensuring that an organization’s finances are in order. So, the Vice Chair and another board member with a financial background started attending Finance Committee meetings. Jim was confrontational in those meetings as well, prompting the two of them to intervene at times.

Tensions Increase as Husband and Wife Founders Cause Turmoil

Then things got worse. Sue started questioning Don’s decisions. I reminded Sue that operational decisions were Don’s responsibility. But Sue insisted that she should be involved in every decision. I disagreed. I also pointed out that Don had tried consulting Sue, but she had not responded. Sue agreed to process emails once a week. I thought it was ridiculous that she was negotiating. But we decided to try. After only one week, Sue quit responding to emails again, though she continued to criticize Don’s decisions.

In an effort to ease tensions, I suggested that Sue bring in some external consultants she had used during the organization’s early stages. I believed that an outside perspective could be beneficial. She kept delaying this, eventually claiming that the consultants deemed the organization doomed unless Don was let go. This seemed highly unlikely as the consultants had never met Don. I suspected Sue may have fabricated it. I pressed on the issue for a while, but eventually, I had to let it go.

Then Jim weighed in, advocating for Don’s termination, citing vague concerns about trust and compatibility. However, there was no concrete evidence to support his claims. Don was performing well, and his numbers were backed by our Director of Finance and the Finance Committee members. It was clear that Jim’s objections lacked substance.

Then Don and the Director of Finance proposed a change to how we bill our clients. We dedicated time at a board meeting to the topic. Sue, as Board Chair, created the agenda and ran the meeting. This item was toward the end. Jim had to leave early because he had something at work. So, he missed this discussion. We looked at the pros and cons of the proposal and then voted. It passed unanimously.

Jim had a fit. He disagreed with the policy change. He accused Don of waiting until he was out of the meeting to discuss it and vote. However, the agenda had been shared in advance, and Jim could have requested changes if he had concerns. He spent about a week abusing Don. Finally, I said, “Listen, we are a small board. If you really think the decision was wrong, then we can look at it again. We all want what is best for the organization. We can call a special board meeting.” Jim just kept sending emails and calling me and other board members. I thought I had gotten him to the point of having a special meeting. Instead, we got a searing resignation letter.

I immediately called Sue. I said, “This is not good for the organization. Would he go back on this?” She said absolutely not. I asked her if she was comfortable staying on as Board Chair and she said yes. She said it was about Jim and perhaps it was best for him to step away.

The board member with professional financial background stepped up as Treasurer. The first thing he did was a deep dive into the finances. He did not find any irregularities, which was consoling to me. I had not believed something funny was going on or that Don was presenting the data in a biased way.

But things did not get better. Sue continued saying that she could not work with Don. I asked, why can’t you work with Don? I never got a straight answer. Sue emailed and texted me – and other board members — that we needed to fire Don.

It came to a head on a Sunday. I was not feeling well. Sue was texting me. And I’m saying, “Sue, I’m not feeling well. I really am not.” She says, “You have to fire Don. I will come back to the organization and run it.” And I say, “No, you’re not going to come back. You have three children, you have a business that you’re running, you are not going to come back full time as executive director.” But she kept arguing with me.

In retrospect, I don’t think I was texting with Sue. I think it was Jim on Sue’s phone. I had worked with Sue for years. If I had told her I was not feeling well, she would have backed off. I believe it was Jim and he was really angry.

Use Annual Review to Assess Performance

This exchange happened about a month before our big fundraising event. After that we were planning to do Don’s annual review. I texted Sue that we would do the review and if Don did not do well, then we would let him go. We had set up criteria for the review. Sue thought Don would fail on every criteria. I believed a fair, professional evaluation would address our disagreement. Unfortunately, Sue resigned the next day — before the evaluation.

The fallout wasn’t bad. We had an emergency board meeting. The board recommitted and confirmed the Vice Chair as Board Chair. The new Chair is meeting with Don frequently as a thought partner. The Treasurer is keeping an eye on the books. The Finance Committee is meeting. We lost one client and a couple of staff people – who are working at Sue’s for-profit firm.

Lessons Learned

We should have brought in a consultant to manage the transition. We needed somebody who could smooth out small problems as they arose so that they didn’t become personality conflicts.

We should have managed Jim differently. He was a bully. And I think he and Sue did not understand that they did not own the organization, even if they started it and invested both time and money into it.

We let Sue stay as both Board Chair and ED for too long. That may have been okay for a year. But we needed to separate the roles so there would be oversight. For example, we discovered later that she started her for-profit company long before telling us and at that time she almost never came into the office. The Director of Finance started to fill in. Sue wasn’t doing her job.

We needed to clarify that once Sue stopped being ED, she no longer had operational responsibility or power. Sue had a lot of trouble giving up that role. We tried to accommodate her because she was the founder. But that was a bad idea.