Can the founder of an organization also be an employee?

Summary:

Hard as it is, everyone must work to keep the relationship between the founder and the organization on a clear, business-like footing.

Michael L. Wyland of Sumption & Wyland (http://www.sumptionandwyland.com), a consulting firm in Sioux Falls, SD, wrote this response to a question in Nonprofit (see http://www.rain.org/mailman/listinfo/nonprofit) about the how a board and founder of a nonprofit should work together to assure the ongoing strength of the organization:
As Executive Director under contract to the nonprofit, you would be a
"disqualified person" under IRS Section 4958 "intermediate sanctions" (IS)
regulations, just as board members are. Your board would have to hire
and/or contract with you based on a market analysis of reasonable
compensation and with due regard for conflict of interest policies that
should be part of your organizational framework. As a start-up
organization, though, you and your board could plausibly maintain that, as
the creative force behind the new organization, you would be uniquely
qualified to be its first executive.

(NOTE: for more about intermediate sanctions, see http://www.nonprofits.org/npofaq/18/13.html.)
Also, as executive, it would be reasonable that you would be given an ex
officio seat on the board and access to all board committees. ["Ex
officio" in this case means "by reason of holding office," in this case as
Executive Director.] Whether or not your board position should also be a
voting one (the common (mis)use of the term "ex-officio" is as a synonym
for "non-voting") is a decision your board should make.

(NOTE: for more about the question of whether the Executive Director should be a board member, see http://www.nonprofits.org/npofaq/03/17.html .)
In fact as well as theory, you would serve at the pleasure of the Board of
Directors and be subject to a contract. In practice, however, your job
security comes from your status as the single entrepreneur. Without you,
the organization fails (or at least suffers tremendous artistic and
financial crises). You are the organization's single largest asset.

If your asset value diminishes to the point where it threatens the asset --
the work -- then it would be the board's responsibility to replace you. If
they fail to recognize your significant value and terminate you, you carry
your asset value with you (subject to contractual limitations, of course).

An entrepreneur is always looking for new worlds to conquer or new ways to
succeed, so this would not be a bad thing, necessarily. Besides, an
entrepreneur aspires to create, not to be a custodian. A key component of
entrepreneurial success is the exit strategy.