Building and Maintaining a Highly Functioning Board: Ginny’s Governance Checklist

About this Series

In the early days of a family foundation, the donors and other enthusiastic family members tend to turn first to the excitement of grantmaking and, soon thereafter, to the practicalities of management and investment needs. Governance doesn’t often make it into the conversation right away— and that makes a certain sense. Early governance tends to be informal and may even be seen as supportive of a strong founder. Eventually, families and their foundations evolve and founding structures and systems may not serve the foundation (and/or the family!) as well as they once did. Thoughtful attention to governance helps position the foundation for early success. And, when organizational development calls for it, attention to governance must be a vital part of any review/refresh of the foundation’s leadership and operations.

In both circumstances, boards often ask for advice and support. They usually are looking for answers to a long list of questions:

• How many board members should we have?
• How often should the board meet?
• Do we need committees?
• Do we offer discretionary grants or other incentives/acknowledgments of service for participation by the board and/or extended family?
• How does the board access community and program expertise?
• When do we bring on the next generation?
• And many, many more.

My work as a Senior Fellow focuses almost exclusively on helping families ensure great governance. When faced with the “list,” my first instinct is to look more deeply at what is prompting the questions. Just as importantly, I look for the questions that aren’t on the list.

I recently worked with a family hoping to set up good board processes for their very new foundation. In mapping out a thorough review of all the issues and questions they might consider, I realized I was finally getting the chance to offer other boards a list of my own: Ginny’s Governance Checklist.

In this series of new blogs, I’ll be covering a list of questions you might want to address with your board. While there are good resources to help you identify common and effective practices in each area (many of which can be found in the NCFP Knowledge Center), I’ll be focusing less on the outcomes and more on making sure everything is on the table. Think of this as a roadmap rather than pinpointing your destination. By presenting it in this format, my hope is that family foundation boards will have a practical guide to building the board their foundation deserves.

The series will cover:

• Foundation Needs and Expectations of Board Members
• Board Composition, Selection and Terms
• Board Committees and Decision Making
• Board Assessment and Renewal
• Additional Considerations.

Let me begin with the theme and questions that, without a doubt, are the most frequently overlooked and the most fundamental; Governance Guiding Principles and the Role of the Board.

Ginny’s Governance Checklist: Guiding Principles and the Role of the Board

Founders, families, and advisors bring diverse perspectives and opinions to board service. The best of family philanthropy is often found in the richness of that diversity. Yet, when those views are very different—and perhaps even in direct conflict—resolution can be impossible without a common understanding of what it means to serve on this particular board. Before determining any governance policies or practices, start with the first and the most fundamental of questions:

Which principles will inspire and guide board service?

Guiding principles for board service reflect critical issues of attitude and approach. The earlier these can be developed and shared with current and prospective board members, the more likely there will be a common basis for developing and adhering to governance policies and practices. When I encounter stridently different positions on a particular practice or policy, with everyone absolutely sure they have the right idea, I almost always find that each person is operating with a different set of goals or expectations. Affirming guiding principles for your foundation board gives invaluable context for all the board work ahead for years to come.

I recently asked this question about guiding principles of a foundation trying to position the board to include the next generation. What followed was an inspiring and enlightening discussion of humility and service. Board service, as they had learned from the founders, is a privilege and not a source of any tangible personal benefit. They went on to emphasize that future members should come to the board to support the shared values and mission; personal interests should be supported by personal volunteering and giving. Understanding the value this family places on selfless service went a long way to developing specific policies on eligibility, terms, discretionary grants, and more. Another family, also trying to find a place for future generations, felt the foundation benefited from as many family members as possible bringing diverse passions, networks, and opinions to the work. Their policies would have to balance individual initiative with the need to work as a collective. As you think about your values, your motivations and aspirations, and your goal to ensure the best possible governance for your foundation, here are some questions that might help you frame your guiding principles, document them, and use them as the basis for the policies and practices you establish.

Critical questions of attitude and approach:

• For founders: In choosing to establish the foundation, what were your hopes for the giving and for the family’s involvement? Have you shared those hopes with those you’ve chosen to involve? Candor and clarity about your motivations and goals can eliminate early and endless misunderstandings by those charged with carrying out your wishes.
• For older foundations that don’t have a founder legacy statement, think about your memories and personal reflections. While each person will have memories unique to their relationship with the founder, the important work will come from discussing those reflections with family members and board colleagues and capturing a shared statement of founding principles.
• Stewardship vs. Ownership: Do board members see themselves as stewards of a family legacy as appropriate to a public trust? Do some use other frames of reference (a family business or office) to (often inappropriately) behave as owners of a financial asset?
• Does the family serve the foundation or does the foundation serve the family? Do board members understand their legal and ethical obligations as private foundation trustees?
• To what extent is this to be a family foundation where a shared vision and mission are pursued and to what extent is it a vehicle for the giving interests of individual board members? (Recognize that this issue—like many on this list—becomes more complicated as the family grows; the founding solutions may need to be revisited over time.)
• Given that systems do not always age well, is the foundation intended to exist in perpetuity and, if so, how will your governance policies and practices reflect that goal? (I am always reminded of the small family foundation with the policy that all blood relatives could serve on the board—and they intended to be a perpetual foundation.)
• If there will be a shared vision and goals, how will those be determined?
• How do you define the privilege of trusteeship: as honor and responsibility or as personal prerogative? Should/will there be any tangible personal or individual benefit to board service?
• How will the spirit of the foundation and its governance reflect the fact that this is, first and foremost, the philanthropy of the founder’s family in its entirety? In the first informal years, foundations may divide up the work, the grantmaking opportunities and board seats among “segments” of the family – usually the branches represented by the second generation. Other foundations determine roles and privileges based on generations. Over time, what was an organizing mechanism can become the endgame. The board struggles to maintain “fairness” among those segments and often lose the sense of the founding family as a whole. But fair to whom? Or to what? Reaffirming the legacy of the founder and the entire family can help counterbalance the ongoing demands of family divisions.
• How will you build your foundation community to access the expertise and experience you’ll need for maximum effectiveness? How will others complement the knowledge and perspectives family members bring to the table? To what extent is family control a priority? (Note: we will share more on this important topic when the Checklist addresses eligibility.)

Taking the Next Steps

If you’re thinking about a governance refresh, or planning to welcome a new generation to voluntary service, or if you’re looking to identify community board members who will understand your approach to governance, consider developing your statement of guiding principles. Which principles guide governance and your approach to the privilege of board service? How might those be reflected in your board policies and practices? If you’ve already done work to articulate your values, that is a great start. What do your values say about your governance philosophy and your approach to board service—for now and for the years ahead?

Coming in Future Blogs: More of Ginny’s Governance Checklist

As indicated in the overview, additional questions in the Checklist will be over the next several months. The work you do to understand and document your guiding principles will position you to address those questions in a more logical and thoughtful way. And those who work with you now and in the future will be able to interpret and carry out your intentions with greater clarity, context, and insight.

To learn more, visit Ginny’s Governance Checklist Part 2: Clarifying Foundation Needs and Board Member Expectations.

Ginny Esposito is a Senior Fellow and Founding President at the National Center for Family Philanthropy