I spoke with an individual who spent decades doing innovative work in the nonprofit sector. They shared three stories – each about an organization that closed its doors. Each experience brought new insights. They noted that sometimes the lessons were tough, but all shed light on how boards and staff interact, who really holds power, and what it means to end things well.

How an Organization Is Closed Provides Insight into Power

As told by a nonprofit leader somewhere in the US.

I’ve had an unusual career in that I’ve been part of three nonprofits that have closed down – or “sunsetted.” Each one taught me something different — sometimes the hard way — about boards, staff, mission, and how power really works in our sector.

Founding Board Retains All Power and Makes Unilateral Decision

The first organization had a powerful founding board of mostly retired business leaders who had an idea for a program that they thought would really help people in poverty. They wanted to do a “proof of concept.” In the early years, they were very much a working board. They traveled together, learned together, and shaped a vision for what they wanted to accomplish.

Eventually, they hired a founding CEO — someone they trusted deeply. From the beginning, though, there was an implicit mental model that this was their organization. Staff were hired to execute their vision. I was not the CEO but on the senior leadership team. I joined early. Over about ten years, the organization grew dramatically — from a handful of people to roughly 50 staff.

My role involved hiring people with strong private-sector skillsets. I convinced investment bankers and others to walk away from million-dollar careers for nonprofit salaries. And they did. We built an incredibly talented, professional team that made real sacrifices and worked at near-burnout levels for years to build something meaningful.

What never changed was the board structure. There were no term limits. The founding members stayed. Even as new people were added, the core group remained firmly in control.

Then the founding CEO had to step down suddenly for personal reasons. There had been no succession planning. The trust and partnership that had existed between the board and staff, which was mediated entirely through that CEO, vanished overnight. The board and staff essentially began operating in parallel.

The board hired a new CEO. She had never worked closely with a board before and didn’t know how to build that partnership. She’d been hired to fundamentally rethink the strategy, but she didn’t know how to bring the board along. She assumed that once she had the answer, the board would agree.

Six months in, she presented a new strategy. Unbeknownst to the staff, the board had already been meeting privately. They decided — without staff input or awareness — to shut the organization down. Fifty people were given 30 days’ notice.

Mission Accomplished

I want to be clear: I think the decision to sunset was defensible. The organization had set out with a very specific mission — to prove a concept. After 10 years, that question had been answered. And the board concluded that the strategy the new CEO developed wasn’t compelling enough to justify continued investment.

I agreed with the decision. But the process was deeply flawed. There was no meaningful engagement between the board and staff. And the decision landed suddenly and secretly. Donors were surprised and angry. Staff were confused – and there was some real damage done. The staff carried a reputational taint afterward. For years, former employees were asked, “What really happened?” People assumed something bad had been uncovered. The board didn’t carry that burden — the staff did. And that power imbalance stayed with me.

Ironically, I had resigned weeks before the shutdown, having independently reached a similar conclusion to the board. But I had no idea what the board was planning. I simply decided that the organization’s next chapter wasn’t compelling enough for me to stay around.  

Hypotheses Do Not Work, but Shutdown Is Orderly

At the second organization, I started as COO. Later, I became a board member overseeing the sunset. This organization also had an idea. We wanted to develop a unique funding model for a specific type of program, one that would eventually not rely on philanthropy. It was intriguing if we could pull it off. The founding donor, who was also the board chair, was excited to see if the idea would work

We tried three different models. All our early assumptions turned out to be wildly optimistic. When we evaluated a fourth option, we got honest with ourselves and said: This is not going to work. Good idea, but not realistic.

This time, the staff was involved throughout the conversation. Donors weren’t surprised. We communicated early and often. We gave plenty of notice, shut down in an orderly way. Plus, we shared everything we’d learned publicly so others could build on it. Even today, I still hear from people using our data. I feel good that the work didn’t die — it evolved beyond us.

Intentional Sunset

The third example was almost the opposite of both of those: this was a nonprofit that was designed to sunset from day one.

The local government had developed a plan for a comprehensive social program. The government would make grants to local nonprofits. But it became clear that there was no existing organization to implement one portion of the plan. So, a group of us formed a new organization with a 10-year horizon. We said that out loud from the beginning – that we would get things started, but have these aspects of the program adopted by other agencies over time.

The goal wasn’t to build an institution that would exist forever — it was to get a specific set of things done and then make sure they could live inside existing systems or programs. Over the ten years of our existence, the programs we developed were adopted by other organizations. These programs continued after we shut down.

At the ten-year mark, we wrapped it up — not with drama, but with follow-through. And I have to say, I liked the urgency of it. There’s something clarifying about saying, “We have ten years to do what we came here to do.” You don’t waste time protecting the organization for the organization’s sake. You make decisions based on outcomes.

Of course, not many organizations close. Some start with a time horizon and then decide, “We’re doing such great work, we should keep going.” But in this case, the sunset was the plan, and because it was expected, it was also much easier to do well.

An Act of Integrity, Not Failure

Having three different scenarios gives me some perspective about the bigger picture: I think our sector needs to get a lot more comfortable with failure and with endings. We don’t have the same market forcing functions the private sector does. Donors are separated from results by long chains of reporting and optimism. Organizations can limp along, doing just enough to survive, without making real progress — and without freeing talent to do something more impactful elsewhere.

Sunsetting a nonprofit is one of the hardest things a board and leadership team can do. But done thoughtfully, transparently, and collaboratively, it can be an act of integrity — not failure.

Lessons Learned

Looking across these three experiences, I keep coming back to a few core lessons.

Sunsetting Can Be Mission Aligned: Sometimes sunsetting is actually the most mission-aligned thing you can do — especially when the mission has been accomplished, or when the core hypothesis isn’t true.

How Is Key: How you close an organization matters enormously. You need a communications plan, enough time, and an approach that brings staff and key stakeholders along so nobody feels blindsided or suspicious.

Boards Need to Be Accountable: Boards need more accountability for how they engage with staff throughout the process. When a board has all the authority and no real accountability, staff end up bearing the consequences.

Shift Perspective: Boards need to shift perspective. Their responsibility isn’t to preserve the organization at all costs. It’s to advance the mission. Sometimes that means merging, spinning off programs, or sunsetting entirely. That’s hard when identity and ego are wrapped up in the institution, which is one reason mergers are so difficult.

Trust Is Essential. Boards must build enough trust so that the CEO feels that it’s safe to say, “This isn’t working the way we thought it would.” When boards act primarily like monitors or funders, staff learn to report only what’s working. When boards act like partners in problem-solving, entirely different conversations become possible.