Founder Syndrome Results in Board’s Mass Resignation—When is a Nonprofit not a Nonprofit?

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A rapa das bestas de Sabucedo – Mordisco – Bite / Dani Vázquez

October 9, 2016; The Bulletin (Bend, OR)

Being a new board member for a nonprofit with a great programmatic track record is usually an exciting experience. You’ve made it through the vetting and selection process, you get to know your colleagues that you will be working with on the board, and now you can finally get down to work giving back to the community through your board service. Except…what if you can’t? What if you are the newly installed treasurer and you can’t get access to the financial records or discern if employees being paid in cash are even receiving the appropriate documentation? Such was the case for new board members elected to a small nonprofit near Bend, Oregon. No love was lost as the issues spiraled downward and culminated with the entire board resigning this month.

Joan Steelhammer founded Equine Outreach in 2003 with a mission of caring for and rehabilitating abandoned and neglected horses. The work is hard, both emotionally (caring for neglected and abused animals always is) and physically, and comes with a high fixed cost related to housing and feeding the horses, making fundraising and donor relations crucial. The horses are cared for on Steelhammer’s ranch, and she is paid over $2,200 a month to lease the facilities.

NPQ readers should take this as a big red flag: Steelhammer and Everett have control over a pivotal asset, and they are on the board.

Steelhammer and her husband, Gary Everett, wanted to step off the board and into an advisory role earlier this year. New blood was added to the board, which usually serves as a conduit for unresolved issues to bubble up to the surface as innocent questions are asked. It wasn’t long before accusations started flying that the newly constituted board was micromanaging the founders and staff and that they had unrealistic expectations. The new board members reportedly felt that there was some “founder’s syndrome” at play. Then, Everett pulled his trump card.

Everett said as tensions between him and his wife and the new board members continued, he decided that their ownership of the ranch and much of the equipment there could be used as leverage to force them out. The organization has been on a month-to-month lease since the first of the year, he said, and he felt if he threatened to end the lease, he’d be able to push the board to change direction.

Nonprofit Quarterly readers are well versed in the double-edged sword of dealing with passionate founders from the many articles on the subject. Founder’s syndrome can rear its ugly head in many ways—much like the proverbial volunteer who will love the organization to death, founders are sometimes guilty of being resistant to changes like modernizing operational and financial procedures because “we’ve always done things this way.”

As the tale of woe goes, employees and volunteers are often pitted against each other as the fight plays out. In this scenario, the board tapped out rather quickly. According to a statement on the nonprofit’s website, the veterinarian, president, vice president, treasurer, secretary, and communications director all resigned from the board effective October 3, 2016, citing irreconcilable differences.

So is there a real nonprofit here? It does not look like it to us. By any standard, it was long time for Equine Outreach to modernize its practices and live up to the standards that are demanded of nonprofits in return for the privilege and ability to accept the trust and philanthropic support of the general public.

Reviewing the nonprofit’s 2014 IRS Form 990 on raises several questions about Equine Outreach’s governance, such as the founders’ relationship with the nonprofit, including the nonprofit’s investment in capital improvements to Steelhammer and Everett’s property. In addition, there are disquieting statements in the 2014 990 that “no review was or will be conducted” by the board prior to filing the 990 and that “no documents [are] available to the public,” despite federal regulations requiring certain documents to be made available upon request.

As the nonprofit with a great mission but no board looks to move forward, the founders claimed that new board members were being recruited and a new board of directors should be in place by the end of the year. We would like to think that the “sunshine” let in by these recent public jousts will be just what the doctor ordered to help the organization move forward in a new and structured direction. But the fact that the founders were able to run this board out does not bode well for the future. We assume that the new board will be handpicked from a more compliant bunch.— Carrie Collins-Fadell

  • R Wade

    Carrie, This is the first article that I remember reading authored by you. VERY well done! Well organized, poignant, fact based, and opinionated based on elements presented. I hope this is on your follow-up list, in fact my hope is that you will do some investigative reporting of the proposed board members. A FOIA request for backup documents related to the 990 would be very interesting.

    My interest is derived from mixed emotions; NPO management and the fact that in my youth of 65 years ago I had a companion, “Babe” a brown gelding that was several hands taller that I was. A move to town and other circumstances required that we part as pals. My father found a facility similar to the one described and “Babe” went to spend time there, not because of abandonment or neglect but because it was a caring facility catering to the needs of the animals in their custody. BTW “Babe” found another young person to become pals with shortly thereafter.

    Respectfully Submitted

    Ronald L. Wade