Jonah Patel
Founders of organisations can take on a number of different roles, including being a volunteer board member, a paid executive, or a member. Founders often want to protect their position within the organisation they have built, and this can be done by including a 'Founder's Clause' in the organisation's by-laws. This clause would outline special rights, privileges, or protections for the founder, such as always retaining their status as founder, having veto power, or maintaining a specific level of control over the organisation. However, in the case of nonprofits, Founder's Clauses can conflict with the nature and legal structure of the organisation and may jeopardise its tax-exempt status.
| Characteristics | Values |
|---|---|
| Founder's Clause | Provision that outlines special rights, privileges, or protections for the founder of an organization |
| Stipulates that the founder will always retain their status as founder, have veto power over certain decisions, or maintain a specific level of control over the organization, regardless of their current position or involvement | |
| Can be included in the nonprofit's by-laws | |
| Can be used to protect the founder's vision and maintain control over key decisions | |
| Can be used to secure the founder's position within the organization | |
| Role in the organization | Volunteer board member who votes to make major decisions for the organization |
| Paid executive who makes day-to-day decisions (usually referred to as executive director or CEO) | |
| Membership role |
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Founder's Clause
Founders of organisations can take on one of three roles: a volunteer board member who votes to make major decisions for the organisation, a paid executive who makes day-to-day decisions (usually referred to as an executive director or CEO), or a membership role.
However, founders may be concerned that at any point, board members can vote to fire them. To protect their position, founders can include a 'Founder's Clause' in the organisation's by-laws. This provision, typically used in for-profit businesses, outlines special rights, privileges, or protections for the founder. It often stipulates that the founder will always retain their status as a founder, have veto power over certain decisions, or maintain a specific level of control over the organisation, regardless of their current position or involvement.
In the context of a non-profit organisation, a Founder's Clause could be created by establishing a membership where the founder is the sole member and changes are not made without their approval. However, it is important to note that any clause that gives a founder unilateral power or a permanent position would likely be considered improper and could potentially jeopardise the organisation's tax-exempt status.
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Volunteer board member
Founders of an organisation can choose to be a volunteer board member or a paid executive. As a volunteer board member, the founder can vote to make major decisions for the organisation. However, the founder can be voted out of their position by other board members at any time.
A Founder's Clause can be included in the organisation's bylaws to protect the founder's position. This clause outlines special rights, privileges, or protections for the founder, such as retaining their status as a founder, having veto power, or maintaining a specific level of control over the organisation. However, such clauses are typically used in for-profit businesses and may conflict with the nature and legal structure of nonprofit organisations.
To effectively protect their position as a volunteer board member, founders should focus on organisational governance rather than individual protections in the bylaws. Any clause that gives the founder unilateral power or a permanent position may be considered improper and could potentially jeopardise the organisation's tax-exempt status.
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Paid executive
Founders of an organisation can choose to be a paid executive, which means they make day-to-day decisions and are usually referred to as the executive director or CEO. Founders often choose this role in the hopes of eventually pursuing their position running the organisation part-time or full-time. However, this role does not guarantee the founder's position, as board members can vote to fire them at any time.
A Founder's Clause can be used to protect a founder's position in a for-profit business. This clause outlines special rights, privileges, or protections for the founder, such as always retaining their status as a founder, having veto power over certain decisions, or maintaining a specific level of control over the organisation. However, such clauses conflict with the nature and legal structure of nonprofit organisations and can jeopardise their tax-exempt status.
To protect their position as a paid executive, founders can consider creating a membership where they are the sole member and changes are not made without their approval. This would allow them to maintain control over key decisions and secure their position within the organisation.
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Membership role
Founders of an organisation can choose to take on one of three roles: a volunteer board member, a paid executive, or a membership role. Most founders choose to take on a paid executive role, which usually involves making day-to-day decisions and running the organisation part-time or full-time. However, this role comes with the risk of being "fired" by board members at any time.
To protect their position, founders can consider including a "Founder's Clause" in the organisation's bylaws. This clause, commonly used in for-profit businesses, outlines special rights, privileges, or protections for the founder. It can stipulate that the founder retains their status, has veto power over certain decisions, or maintains a specific level of control over the organisation.
While a Founder's Clause can be effective in privately owned businesses, it may conflict with the nature and legal structure of nonprofit organisations. Nonprofit bylaws should focus on organisational governance rather than individual protections. Any clause that grants a founder unilateral power or a permanent position could be improper and jeopardise the organisation's tax-exempt status.
One way to address this challenge is to create a membership structure where the founder is the sole member, and changes cannot be made without their approval. This approach allows the founder to protect their vision, maintain control over key decisions, and secure their position within the organisation. It provides a mechanism for the founder to safeguard their interests and ensure that their contributions are recognised and valued.
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Veto power
Founders of an organisation can protect their position in the constitution by taking on one of three roles: a volunteer board member who votes to make major decisions for the organisation, a paid executive who makes day-to-day decisions, or a membership role. Most founders choose to take on a paid executive role, but this means that board members can vote to fire them at any time.
One way founders can protect their position is by including a 'Founder's Clause' in the organisation's by-laws. This outlines special rights, privileges, or protections for the founder of an organisation. Founder's Clauses often stipulate that the founder will always retain their status as founder, have veto power over certain decisions, or maintain a specific level of control over the organisation, regardless of their current position or involvement.
However, Founder's Clauses are typically used in for-profit businesses and conflict with the nature and legal structure of nonprofit organisations. Bylaws should focus on organisational governance rather than individual protections. Any clause that gives a founder unilateral power or a permanent position would likely be considered improper and could potentially jeopardise the organisation's tax-exempt status.
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Frequently asked questions
Founders can protect their position by including a 'Founder's Clause' in the organisation's by-laws. This would allow them to protect their vision, maintain control over key decisions, and secure their position within the organisation.
A Founder's Clause is a provision that outlines special rights, privileges, or protections for the founder of an organisation. These clauses often stipulate that the founder will always retain their status as a founder, have veto power over certain decisions, or maintain a specific level of control over the organisation, regardless of their current position or involvement.
There are three different roles that founders can have in an organisation: volunteer board member, paid executive, and membership role. Volunteer board members vote to make major decisions for the organisation, while paid executives make day-to-day decisions and are usually referred to as executive directors or CEOs.
While Founder's Clauses are typically used in for-profit businesses, they can also be used in non-profit organisations. However, it is important to note that any clause that gives a founder unilateral power or a permanent position may be considered improper and could potentially jeopardise the organisation's tax-exempt status.
