'Founder Syndrome', Faith Charities, And Challenging Charity Commission Decisions

• Published date: 15 September 2020
• Subject Matter: orporate/Commercial Law, Charities & Non-Profits
• Law Firm: Veale Wasbrough Vizards
• Author: Shivaji Shiva

There were over 8000 applications to the Charity Commission to register new charities in 2019-2020. Behind each of those applications are the trustees and founders whose vision and hard work bring these new endeavours into being.

Enthusiasm, hard work and commitment to the charitable cause are at the heart of many charitable projects, and one of the joys of being a charity lawyer is meeting so many people who have these qualities in abundance. Despite their many qualities, or perhaps sometimes because of them, founders often struggle to find the right balance between the skills required to set up a charity and the often mundane and sometimes complex regulatory requirements that apply to charities once formed.

Founders have a particularly hard step to take at the point the charity is registered and begins to operate. Having brought a charity from vision to reality, they are to take a step backwards. The charity is to be independent, with an independent board taking equal and collective responsibility for its own independent decisions in its own independent interests. This independence is a key difference between private philanthropy and public charity. Charities with strong founders can struggle to distinguish between the founder's personal interests or vision from the corporate aims of the charity.

'Founder Syndrome'

One result is the well-recognised risk of 'founder syndrome' where a founder is a dominant figure in a charity and the board as a whole fails to fulfil its duties, instead 'rubber stamping' decisions of the founder. However, the situation can be more nuanced than is sometimes suggested. The apparent dominance of the founder may reflect the knowledge and experience that the founder has built up and the proper recognition of that knowledge and experience by conscientious trustees. This can be true even where some aspects of the charity's governance are plainly inadequate.

Given all this, it is not surprising that Commission case-officers are likely to investigate further where they believe a charity shows signs of founder syndrome or a dominant figure and that such investigations can be difficult for all those involved. The founder concerned will often feel that the accusation of excessive influence is misguided and unfair, Commission case-officers may struggle to be sure how far the allegedly dominant founder is influencing others, and the other charity trustees may struggle to ensure they fulfil their duties while continuing to manage the...