Q:  How do you deal with someone who, while acting as president of our organization, forms a similar organization to compete against us?  Can and/or should legal action be taken against her?  She continually uses inside information that she gathered as our president to benefit her new organization.  For instance, she has usurped many opportunities that were presented to our organization and has applied for all the same government grants.  We have obviously removed her from the presidency of our organization, but she continues to try to shut us down with willful and malicious acts.  Our organization is 13 years old and we won’t let this force us to close our doors, but it is difficult to function with this woman and her new organization interfering with our day to day operations.

A:  What a difficult place in which to find your organization.  Surely, the sense of betrayal is as devastating as the actual damage this woman has caused.  Sadly, in today’s world, these things do happen.  Admittedly, though, it’s more typical to see someone “redirect” donors to or “plagiarize” programs for an already existing organization than to see someone go through the numerous hoops of starting a new one.   Frankly, this is one reason why governance consultants often recommend that directors identify and cultivate people for board service that are not already sitting on other boards – particularly other boards with similar missions.

What is most interesting to me is that this woman felt the need to start a competing organization when she was sitting in the ultimate power position on your board.  Was she promoted to the presidency without understanding and buying into the vision of your organization?  Or, was the board intractable when she tried to move the organization forward to accomplish that vision?  In either of these cases, the board must share some of the blame.  However, that is not the question you asked.

You do have a legal leg to stand on if you choose to sue since there are three legal duties, one of which is the duty of loyalty.  This requires that you make decisions in the best interests of the organization – not in one’s personal best interests and certainly not in the best interests of another organization!  If you can document that this individual has willfully disregarded the duty of loyalty and, in addition, has done harm to your organization, you would have a case.  That case would be strengthened if you have – as you should – a conflict of interest statement that is signed by everyone, preferably annually.  Whether you want to invest the time, energy, money and potential loss of goodwill in pursuing the case would have to be a decision of the board.

Whether or not you take legal action, I suggest the board and staff immediately begin discussing what sets YOUR organization apart from hers and other organizations that may have similar or overlapping missions.  Set up opportunities to listen to what the community says IT needs, rather than smugly determining that you know what it needs.  Focus on the broad issues that the community cares most about, rather than focusing on your internal concerns (e.g., a senior care center that frames its appeal to the community around its beds rather than on aging in America – the cost to businesses in lost productivity because workers have to take care of sick parents or the stress on the Sandwich Generation – will have a more difficult time winning the hearts and minds of the community).  Discuss how you can best share with the community what your organization brings to the table that is unique and critical to the community’s well-being.  Have the board directors go out and talk with people, lots of people including funders.  Ask your volunteers and those that benefit from your services to do the same.  Share your success stories – after 13 years you must have some great ones.  Do this and pretty soon, you won’t have competition – at least any viable competition.