Organizational founder

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An organizational founder is a person who has undertaken some or all of the formational work needed to create a new organization, whether it is a business, a charitable organization, a governing body, a school, a group of entertainers, or any other type of organization. Organizational founder_sentence_0

If there are multiple founders, each can be referred to as a co-founder. Organizational founder_sentence_1

If the organization is a business, the founder is usually an entrepreneur. Organizational founder_sentence_2

If an organization is created to carry out charitable work, the founder is generally considered a philanthropist. Organizational founder_sentence_3

Issues arising from the role Organizational founder_section_0

A number of specific issues have been identified in connection with the role of the founder. Organizational founder_sentence_4

The founder of an organization might be so closely identified with that organization, or so heavily involved in its operations, that the organization can struggle to exist without the founder's presence. Organizational founder_sentence_5

"One practical way to cope with overreliance on a founder is to distribute management duties so that others are clearly responsible for important operations. Organizational founder_sentence_6

If the founder is on the nonprofit's board, part of the solution is to make sure that the board is diverse, balanced, and regularly infused with new blood". Organizational founder_sentence_7

Legal status Organizational founder_section_1

The language of securities regulation in the United States considers co-founders to be "promoters" under Regulation D. Organizational founder_sentence_8

The U.S. Organizational founder_sentence_9 Securities and Exchange Commission's definition of "Promoter" includes: (i) Any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; however, not every promoter is a co-founder. Organizational founder_sentence_10

In fact, there is no formal, legal definition of what makes someone a co-founder. Organizational founder_sentence_11

The right to call oneself a co-founder can be established through an agreement with one's fellow co-founders or with permission of the board of directors, investors, or shareholders of a startup company. Organizational founder_sentence_12

When there is no definitive agreement, like a shareholders' agreement, disputes about who the co-founders are, can arise. Organizational founder_sentence_13

Founder emeritus Organizational founder_section_2

Some organizations maintain a connection with their founder by establishing a position of founder emeritus, either as an entirely symbolic post, or as a position with some power, such as a permanent position on the board of directors. Organizational founder_sentence_14

A drawback to such an arrangement is the possibility that the founder will clash with the person who has replaced him as leader of the organization, and that such a conflict will affect the performance of the founder emeritus as a board member. Organizational founder_sentence_15

Founder's dilemma Organizational founder_section_3

In some instances, the desire of the founder to maintain control over the organization becomes a problem because, when an entrepreneurial organization is successful, "[i]t outgrows the ability of the founder, or even of a small team around the founder, to control". Organizational founder_sentence_16

The Harvard Business Review identified this problem as the founder's dilemma, noting that in most successful companies, the founder is pushed out of control by investors within the first few years after the formation of the company. Organizational founder_sentence_17

In some cases, a company may have multiple founders, and a prominent source of conflict can be disagreements between these founders as the company evolves. Organizational founder_sentence_18

Efforts must be made to balance the responsibilities of each so that no one founding member feels involuntarily diminished in their role relative to the others. Organizational founder_sentence_19

Forgotten founder Organizational founder_section_4

Another problem that can arise is that of the forgotten founder, a person who participates early on in the formation of an enterprise, but leaves or is ousted before it achieves success, and then returns to claim a legal right to equity, intellectual property, or some other fruits of that success. Organizational founder_sentence_20

To avoid this problem, it is advised that the entity "incorporate early and issue shares that are subject to vesting over time". Organizational founder_sentence_21

See also Organizational founder_section_5

Organizational founder_unordered_list_0


Credits to the contents of this page go to the authors of the corresponding Wikipedia page: en.wikipedia.org/wiki/Organizational founder.