The Foundation Governance Project – US Report
Thursday, 8th April 2004 at 1:04 pm
Part of a research project by the US Centre for Effective Philanthropy exploring the distinctive challenges and roles of foundation boards has targeted how CEO’s perceive board effectiveness.
A survey of CEO’s from of the largest 250 US foundations, conducted late in 2003, has revealed that nearly three quarters of foundation boards have discussed governance responsibilities in light of corporate governance reforms and scrutiny of foundation practices.
A third say they have instituted changes as a result.
Corporate governance has become the trendiest topic in business writing; but the centre for Effective Philanthropy says little is known about philanthropic foundations’ boards of trustees: how they function, what roles they serve, how effective they are, and how they can become more effective.
The Centre says a corporation that continually disappoints its customers and shareholders or a Not for Profit that ignores its funders will quickly find itself out of business.
It says Foundations, on the other hand, face less external scrutiny. Only their boards of trustees are in a position to hold them accountable for their performance.
The majority of CEO’s say they are highly satisfied with their relationships to their boards and to a somewhat lesser degree consider their boards to be effective.
The survey found that the five key variables in assessing the effectiveness of boards in order of importance are:
1. the board’s involvement in assessing the foundations overall performance
2. bringing thought provoking and important issues to the attention of the CEO
3. responding to media and legislative scrutiny through board level discussions of governance
4. a lower proportion of donor’s family members serving on the board
5. actively representing the foundation to the public
Boards are perceived as most effective by their CEO’s if they are highly pro-active and deeply engaged in guiding and evaluating the substantive work of the foundation.
They don’t limit themselves to the traditional roles of overseeing investments and approving individual grants. Instead these boards spend substantial time on foundation business outside of formal meetings actively review policies in response to external events, help devise the foundation’s strategy and assess its social impact and overall performance.
Part two of the Centre’s Governance Project will explore board involvement in strategy development, performance assessment, public accountability, and board development (recruitment and education of new trustees).
The Governance Project will recruit 20 to 25 foundations to participate in surveys of trustees as well as those serving as staff to boards.
Trustees will be asked their opinions about governance and their assessments of their board’s effectiveness.
Foundation staff members who perform administrative tasks for their boards will be asked for details about practices and policies: board member orientations, number of meetings per year, length of meetings, agendas, attendance, and so on.
Results of part two of the report will be available later in 2004.
If you would like en electronic version of part one Foundation Governance: The CEO Viewpoint in PDF format just send us an email with the title in the subject heading to firstname.lastname@example.org.