A Recipe for a Nonprofit Meltdown

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July 3, 2011; Source: Orange County Register | Take a charismatic leader who launches a nonprofit with big vision and a talent for self-promotion. Let it grow rapidly with little outside oversight. Pour on debt, and sprinkle throughout with difficult family dynamics. Stir in founder’s syndrome. Add paid employees until they constitute a board majority and bring to a boil.

Nearly two years after his son and appointed successor as church leader was forced out of his position, the Rev. Robert H. Shuller has been ousted from the board of Crystal Cathedral Ministries, the church he founded in an Orange County, California drive-in theater over fifty years ago. For the past few years, the organization has struggled with declining membership and donations. Finally, it declared Chapter 11 bankruptcy last year to address nearly $55 million in debt, including $7.5 million owed to unsecured creditors. The church is now awaiting approval of a reorganization plan, which includes the sale of much of its real estate assets.

There’s good reason why best practices for nonprofits include independent, active Boards who guide the vision, provide skilled financial oversight, and avoid conflicts of interest. There’s a reason why good succession planning should involve both leadership from both the board and the departing chief executive. While it may be an extreme example, the downward spiral of Crystal Cathedral Ministries is a cautionary lesson for the field.—Kathi Jaworski