A Parting of Ways

When Millard Fuller, founder and president of Habitat for Humanity International, was

fired by the charity’s board in January 2005, the official reason given was that he had been too outspoken about an investigation into allegations of sexual harassment.

Mr. Fuller had been accused by a female Habitat employee of making suggestive comments and touching her inappropriately in 2003 while en route to the Atlanta airport from the group’s headquarters in Americus, Ga.

The board investigated and dismissed the allegations — and then fired Mr. Fuller, charging that his public comments about the case were “divisive and disruptive to the organization’s work.”

But Mr. Fuller, who has since gone on to found a new charity, the Fuller Center for Housing, insists his outspokenness was just an excuse for getting rid of him. The real reason for his dismissal, he says: He didn’t get along with his board.

As the housing charity grew during Mr. Fuller’s 28 years at the helm, becoming a billion-dollar-per-year operation with a presence in 100 countries, its 25-member board evolved too. In contrast to the original group of friends, pastors, and church workers whom Mr. Fuller had handpicked in 1976, the year he founded Habitat, the board now resembled a who’s who of corporate America.

“We had the heads of Dow Chemical, Citibank,” recalls Mr. Fuller. “The board had become a prestigious place to be, and people campaigned to get on it.”

The presence of so many corporate leaders around the board table came with a price, he says. In the final years of his tenure, he clashed repeatedly with the Board of Directors over the charity’s direction.

“I wanted to run it like a ministry and they wanted to run it like a business,” he says, citing disputes over such issues as the appropriate rate of expansion (he sought to open chapters in every country in the world, while the board supported consolidating the least-productive affiliates) and whether the charity’s headquarters should remain in Americus, as Mr. Fuller wanted, or move to Atlanta as some board members thought was wise. (Habitat officials declined to comment on Mr. Fuller’s statements.)

A Broken Relationship

Mr. Fuller’s split from the housing charity may have been unusual in its high profile — the allegations against him garnered extensive news-media coverage, as did former president Jimmy Carter’s two appeals to Habitat’s board on Mr. Fuller’s behalf, and Mr. Fuller’s decision to accept (and later reject) a lucrative but stringent nondisclosure agreement.

However, charity experts say that by singling out his deteriorating relationship with the Board of Directors, Mr. Fuller may be on to something.

A communications breakdown is often at the root of a breakup between a board and a charity leader, says Richard L. Moyers, director of the Nonprofit Sector Fund at the Eugene and Agnes E. Meyer Foundation, in Washington. Mr. Moyers is a co-author of a 2006 survey of nearly 2,000 executive directors that found that more than a third of respondents had been hired to replace a leader who had been fired or otherwise forced out.

“An important part of an executive director’s job is that relationship with the board,” says Mr. Moyers. “Executive directors who neglect that aspect of the job can find themselves lonely and isolated at a key moment.”

One indicator of communications problems between board and leader, says Mr. Moyers: a lack of honest feedback from board members regarding the executive director’s performance.

He notes that, according to the 2006 survey, 25 percent of executive directors aren’t getting regular performance reviews from their boards, and even those who are receiving assessments say that they aren’t helpful. “That’s where you end up with a situation where, from the executive director’s point of view, everything is going fine, then suddenly the board is really unhappy,” says Mr. Moyers.

And unhappy boards are prone to drastic action, argues John Tropman, a professor of nonprofit management and social policy at the University of Michigan’s School of Social Work, in Ann Arbor. “All of a sudden something happens that requires their attention and they freak out and make things much worse,” says Mr. Tropman, who studies the causes of what he calls “flameout” among charity leaders and what happens to the organization as a result.

In a recent study, Mr. Tropman examined eight high-profile cases in which a scandal or management crisis led a board of directors to fire an executive. In most of the cases, he says, the charities were damaged not just by the initial problem but by the way it was handled.

“When you act in crisis, time is short, options are few, and emotions are high — it’s the worst-case scenario.”

A Fatal Split

Boards may sometimes find that an executive director needs to go, especially when they discover impropriety, financial misconduct, or mismanagement. But for the health of the charity — including avoiding a messy public breakup — it is essential that the firing be handled properly, say nonprofit experts.

Many executive departures happen because of a leader’s “failure to correctly perceive their situation” with regard to the board, says Jon Pratt, executive director of the Minnesota Council of Nonprofits, an umbrella association for the state’s charities.

“The board can very quickly go from playing a supportive role to pathologizing the performance of the executive,” says Mr. Pratt. And once that process starts, he argues, it can be damaging to both the individual being fired and the charity itself.

In the winter of 2005, Matthew Richter, founder of Consolidated Works, a contemporary-arts center in Seattle that provided local artists with studio and performance spaces, sensed that his relationship with his board was suffering.

While board members were reportedly concerned about employee turnover at the charity — several key staff members had left in swift succession — Mr. Richter was frustrated with the board’s refusal to aid with fund raising and believed that the trustees were increasingly out of touch with both Consolidated Works and the artists it served.

“The board was self-sustaining, and over time it had evolved from arts supporters to a group of folks who didn’t fully understand the structure of nonprofits or the specifics of the organization,” says Mr. Richter, who began the charity in 1999 and handpicked its first board.

Still, nothing could have prepared Mr. Richter for the drastic action that the 10-member board of directors was about to take. One February afternoon, the board fired him, giving him 10 minutes to clean out his desk, after which two board members led him out of the building.

What prompted such a dramatic end to his tenure at Consolidated Works? Mr. Richter says he still doesn’t know.

“The board basically told the press that ‘we’re not going to discuss the reasons why we fired him because it’s personal and private.’ But they never told me either,” says Mr. Richter, who ultimately sued the board in an effort to learn what was behind his dismissal.

Before long, the conflict between the founder and his board became an ugly, and very public, battle played out in the Seattle news media.

In the days following the firing, some three dozen leaders of local arts charities and galleries signed a statement demanding to know why Mr. Richter, a well-regarded figure in the Seattle arts world, had been let go and urging board members to hold a public forum to discuss the firing and the plans that the board had for the organization now that he was gone.

Robb Krieg, then the board’s chairman, declined, telling the Seattle Post-Intelligencer that he considered a public discussion of the matter inappropriate. (Mr. Kreig, who was an executive at the online travel company Expedia at the time of Mr. Richter’s firing, did not respond to The Chronicle’s requests for an interview.)

The final result of the showdown was disastrous, not just for Mr. Richter, who endured the humiliation of being fired, but for the charity too. In the wake of Mr. Richter’s departure — he now makes his living as a furniture designer — staff members left, donations dropped, and the organization’s programs were scaled back.

Just a year later, the arts group closed its doors for good. As a consequence, Mr. Richter dropped his lawsuit against the now-disbanded board.

The lesson of a case like that of Consolidated Works, say charity experts, is that drastic actions can produce drastic consequences.

“Boards don’t always understand the disruptive effect of a sudden, precipitous decision,” says William G. Bowen, former president of the Andrew W. Mellon Foundation and author of The Board Book: An Insider’s Guide for Directors and Trustees, which will be published next week. “With charities, so much depends on long-term relationships, and you can’t just sever those ties without adequate planning.”

The Power of One

When one executive director, who asked not to be named due to fears of retribution, was hired in early 2005 to lead a small arts marketing charity, the group’s board expressed high hopes that their new chief executive would help the organization become more locally prominent.

The CEO says those plans quickly came to fruition. In less than a year, the executive doubled both the size of the budget and the number of organizations that were affiliated with the charity, and attracted plenty of news-media attention for the group.

But the leader soon learned a hard lesson about the relationship between charity leaders and their boards: The fate of an executive director often lies in the hands of a single board member.

Within months of starting the new job, the executive became embroiled in a dispute with the board’s chairman after criticizing what the executive thought were inappropriate relationships between the board leader and several of the charity’s staff members.

“I stood up to him, and next thing I knew, he was coming after me,” the charity executive recalls.

It is not unusual for an individual to drive the process of firing an organization head, says Mr. Moyers, of the Meyer foundation. At a charity with a strong board of directors, many people would weigh in on a decision, says Mr. Moyers, but on a weak board, one person can have a disproportionate voice.

“It might be a high-powered local business leader, even a large donor,” he says. “If the board isn’t really engaged, it can be easy for a single person to push things in a particular direction.”

That is exactly what the arts-group executive believes happened: “Even as I was trying to carry out the board’s instructions, the chair was going board member to board member, building a case against me.”

The executive was determined to try to hold on to the leadership job, but felt increasingly powerless against the chairman.

A year and half after first accepting the position, the executive was called into a board meeting and was offered a generous compensation package in exchange for leaving quietly. “I loved the job, but the situation was not fixable,” the executive says.

Slowing Down

While the arts-group leader’s tale ended happily — the former executive now heads another charity, while the organization the leader left remains intact — nonprofit experts say it is essential that an entire board help make a decision as important as whether to get rid of an executive director.

“These decisions really need to be collective,” says Mr. Bowen. “You don’t want a situation where a board leader functions as an autocrat or tries to act alone.”

How should board members respond when they find themselves on the receiving end of an attempt to force the termination of an executive?

By slowing down the process and encouraging a more thoughtful debate among trustees, say nonprofit experts, boards can potentially avoid the damage caused by a hasty firing.

Last spring, board members of a public-policy group on the East Coast were presented with a plan by their board chair to oust the existing executive director and hire a replacement right away.

A female board member, who asked to remain anonymous to protect the identity of her organization, says she wasn’t surprised by the proposal to replace the founder and longtime leader of the charity — some staff members had complained about his management style, and the executive director himself had said that he wanted to change his job — but she and some other board members were troubled by how quickly the board’s leader sought to bring about such a major transition.

“The general tone was that this needed to happen with as much speed as possible,” recalls the board member, who has served the charity for several years. Last spring, board members were asked to vote on the proposal to fire the executive director as well as on a measure to substantially redefine the mission of the organization.

Both plans passed, though not unanimously, and later a group of board members said they felt uncomfortable with the process.

“It felt like it was moving way too fast and that we didn’t have enough information,” says the board member.

She and several other trustees wrote a letter to the entire board articulating their concerns. The letter prompted weeks of discussion, and a consensus soon emerged: “The general sense was that we needed to slow the process down and figure out another strategy,” says the board member.

Then the chair stepped down, citing time pressures. The move helped calm the remaining trustees, says the board member. When the board met again in the fall, it began devising a plan for the charity’s future, enlisting the aid of its current leader and 12 staff members.

In January, after a new vote by the board, the executive director moved to a new position within the organization, a resolution with which everyone is comfortable, says the board member: “This might have been the outcome of the situation anyway, but we thought it was important to get everybody’s input.”