Stuck Between a Financial Crisis Wrought by the Founder and a Hard Place

First Person Nonprofit [1] • By Judith Long • July 23, 2012 • forward article

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A deputy director describes the crisis that befell her organization as the founding executive director left, how that organization almost closed down, and what she's learned from it for her new job as an executive director in another state and another field.

When I started with this Brooklyn organization as the deputy director, there was an understanding that the executive director, who had been there 20+ years, was going to retire in 3 to 5 years. She was the founder. The organization was trying to be thoughtful about the founder leaving, trying to be proactive.

We went through a major strategic planning process, worked on executive transition, and brought in a transition consultant. We did all the right things: we had the right committees and the ED announced her retirement fully a year ahead of time.

I didn't see any problems coming

They hired someone, but then after this candidate accepted the job, she pulled out at the last minute.

It was then the outgoing director began acting out.

We were just at the end of our budget year. The outgoing director met with the board finance committee and the executive committee and made the case that she wanted severance of 30 weeks of full pay (one week per year of service) with full benefits, and a consulting contract for about half time -- because no one had her expertise.

In addition, she urged the upgrade of two half-time positions to full time. The effect of all these changes was to add approximately $120,000 in uncovered expenses to the budget.

The board -- they were her handpicked board -- said yes! The treasurer, though, resigned in this process because she found the situation unsustainable. I agreed with her.

The original ED left, and in the window between executives, the board appointed me as interim. (The board had asked me if I wanted to apply for the job, but I knew I would be moving out of the area in about a year due to my husband's job, so I respectfully declined to apply.)

Crisis

As we spun into financial crisis, I stopped giving myself a paycheck. I tried to talk to the now former ED and tried to get her to step back from her severance package so the current staff could continue to be paid. She wouldn't take my calls or answer my emails. I went over to her house finally. She said, "I don't want to hear about it; this is your problem now. I need my money." I felt her attitude was: "I was everything. See if you can survive without me."

The board advised me to keep sending her the severance payments. I thought to myself, "You've got to be kidding; you're going to pay her over the people who are still working here?"

I was devastated by the destruction to the organization during this whole time. I was not sleeping. I felt like I'd been thrown into this interim position and felt like I was completely responsible for trying to make something work even though it was a doomed, untenable situation. I spent a lot of time on my knees, praying for, hoping . . . is there a way we can solve this?

I didn't have contacts with the donors, but I contacted them. It was an awkward place of calling people who didn't know me and asking for help when we didn't have a new director and their loyalties were to the former director. We were losing ground every day. It was horrific.

A new director comes, only to close it down

I had given my notice by the time a new director started. She was not told about the financial situation; the board had handled all the contact with candidates. When she got there and got a picture of what was going on, I became an easy scapegoat that allowed her, the founding director, and the board to be allies. After three months -- maybe not even that long -- she laid off the entire staff, and recommended closing the doors. Volunteers and long-time supporters rallied to save the organization, which has now rebounded to a place of real strength, returning to its core mission . . . albeit as an all-volunteer organization.

When I look back on it, the old ED wanted to leave the organization looking like a successful, dynamic organization. Her sense of self was very attached to the organization.

Onto my new job: lessons learned

I've got some of that identity issue here now -- but for me, I try to maintain clarity that being the executive director of these health clinics is only part of my identity.

In terms of the board, I am very open with them, almost to a fault. In terms of finances, we don't put a single thing in our budget that I don't have commitments for on paper (such as a contract or grant). I know this is residual from what happened at my previous organization, and that probably I'll soften over time.

In my current position, I’m the longest serving ED (seven years). Now that I've been here awhile there's a whole lot of trust between the board and me. Some of them even give me the impression that I can almost do no wrong. So we're doing that kind of dance in board development where I have to remind them of their responsibility, wanting their trust and yet not wanting them to hand over the farm. My consistent message is, "I need you all to continue to keep me in check appropriately." I am very conscious about the fact that I don't want to move into guru-hood.

For me personally, I'm also a minister; serving as ED of the clinics is my community ministry. Given that other identity, I feel I have a good level of self-awareness and try to learn from mistakes. I also tend to look at things from a systems perspective and am intentional (as best I can) about not personalizing situations to be about me but about the organization and the mission. I feel it's made me a better director here.