As of this writing, there are more than 300 thousand nonprofit charitable organizations in the United States operating today, with approximately 60 percent of them reporting expenses of $500,000 or less. The expenditures of that 60 percent make up less than 2 percent of expenditures for the whole sector.

That’s 180 thousand small and very small organizations, together comprising 180 thousand ambitions to make the world a better place, with very few resources at their disposal compared to the rest of the field. That also means 180 thousand opportunities for anyone to throw an organization into disarray in the course of pursuing or abusing power.

In the for-profit sector, a board coup is defined as:

a sudden and often unexpected takeover or transfer of power of an organisation or company. The coup is usually performed by an individual or a small group usually from within the corporation in order to seize power.

In a for-profit corporation, where shares of the corporation can be bought and sold, a single investor or group of investors can purchase enough shares to gain control. But in a nonprofit corporation, a coup can happen in any one of a few different ways. In a membership-based organization, a faction of the membership can band together — if that faction is large enough — to oust the current board and install their own preferred candidates. In a non-membership-based organization, a rogue board member with a strong personality can convince other board members that it is time for a change of leadership in the organization.

The basic idea of a nonprofit board coup is that it is a sudden takeover action that is not planned by those in charge of the organization. Typically, these actions throw the organization into chaos and take energy away from the mission.

Who is in charge of the organization? If there is going to be a nonprofit coup, who, exactly, is being overthrown? Is it the board of directors, or is it the Executive Director? Is it both, or is it more complicated than that? The answer depends on the structure of the organization. In every case, the organization is legally a corporation. There is a board of directors that, at the very least, leads the organization at the top level.

Volunteer-run organizations, by definition, do not have a staff. In those organizations, it’s very clear that a coup will involve replacing most, if not all of the directors.

But in an organization with a professional staff, including an Executive Director, the board of directors is meant to serve an oversight role but not interfere with operations. A simple rule of thumb serves as a useful guide with regard to the role of the board: noses in, fingers out:

As a director, it’s your responsibility to nose in and pay attention to what’s happening with the business. At a high level this means you are aware of the company’s key risks, and you understand what management is doing to mitigate these risks. To get this type of insight, you have to have your “nose in”.

But you are a director, not management. “Fingers out” is just another way of saying, “Be a director – you can advise, but let management run the company.” If you are constantly micromanaging the business, you remove any power or responsibility the management team has to make decisions and move the company forward.

In this very common scenario, the staff is in charge of day-to-day operations, and the Executive Director collaborates with the board on strategy, risk management, and other high level issues.

With that in mind, I would define a nonprofit board coup to also include an unwarranted and sudden action to remove the Executive Director and possibly other staff members.

What is the motivation for a coup attempt? When it happens in a for-profit organization, there is (surprise, surprise) a profit motive. That’s easy to discern.

But when it happens in a nonprofit organization, the motives may be difficult to discern. The CharityLawyer blog has an article on the Nonprofit Coup that offers two possible motives:

Sometimes incumbent board members are removed in favor of new board members with a different policy agenda. In other cases, a donor or charismatic leader convinces a majority of the board to take the organization in a drastic new direction.

In other words: those initiating the coup could believe it is time for the organization to adopt a new mission, or they believe that it is time to find a drastic new way to pursue the current mission. Either way, these two possible motives share between them a common belief that those who are currently in charge of the organization are not capable of or willing to move the organization in the new direction.

A third possibility: a profit motive, though that motive would almost certainly remain unspoken. For example:

• An unemployed board member with a strong personality may create chaos on the board and within the organization that they would then try to take advantage of, with the intention of succeeding the Executive Director.
• A group of board members may be in business with one another, with the idea in-mind that the business has “services” to provide to the organization.
• Or, directors may have friends who would provide such “services.”

So long as profit-motivated actions fall under the guise of continuing the organization’s mission, it’s possible for usurpers to maintain a veil that hides their true intentions of private benefit.

Nonprofit coups and attempts at such are, unfortunately, far more common than what is reported in the news media. Power struggles like these are most likely to be found in the smallest organizations, especially volunteer-led organizations with elected boards. However, small but growing organizations with a full-time staff are those most ripe for board abuse.