Ask NCFP: Should my family foundation board have term limits?

NCFP receives a number of questions about family philanthropy and is particularly equipped to answer inquiries about philanthropic purpose, governance, next-generation engagement, family dynamics, and succession and legacy. This series is designed to answer commonly asked questions and provide resources and considerations for family funders. If you have a family philanthropy question, consider posting to NCFP’s Peer Exchange Platform for peer advice or submitting a request for information to NCFP staff members.  

Question: I’m on the board of my local music arts nonprofit, and we have set term limits, but my family foundation board doesn’t have any term limits. Are term limits considered a best practice? Should we adopt them?

As with many things in life, there are no clear-cut answers to your question. While most nonprofits have defined term limits for their boards of directors, not all family foundations do. There are advantages and potential drawbacks to board term limits and several considerations to reflect on when weighing whether they could support the effectiveness of your family foundation board.

Advantages

Fresh perspectives: Setting term limits for board members can provide a forcing mechanism to rotate in individuals who have fresh voices, perspectives, and skills. This can also be particularly helpful as your foundation’s grantmaking evolves or reaches a moment of transition and new expertise is helpful in setting your strategic direction.
Equal opportunity: If you have a large family, you may have many members in the rising generation who are eligible for board service. Term limits allow for participation by many individuals without having to infinitely expand the number of board seats available. They also can provide a sense of fairness for interested and qualified family members to have equal opportunity to rotate through the board.
Succession planning: Term limits can support thoughtful succession planning. Having term limits provides specific deadlines by when new, qualified board members are identified and onboarded.
Accountability: Effective governance requires thinking intentionally about how to hold yourself accountable. Having term limits can be a useful tool for reinforcing accountability as new board members are likely to ask questions about intended impact, the history and mission of the foundation, etc.
Engagement: Term limits can be useful mechanisms for both keeping members engaged (knowing they have a limited time on a board may help some people be more actively engaged for that period), as well as holding board members accountable for their engagement and responsiveness (for example, if you set board terms that are three-years long, renewable twice, at the renewal period, there can be an honest assessment on the part of the board member and the board about whether there is a good fit).
Equity: If your family foundation board has both community and family trustees, having term limits that apply to all board members in the same way can help reinforce equity among board members—giving both family and community members to the same opportunities to serve.
Flexible on- and off-ramps: Term limits create natural start and stop points. Some boards set term limits, but allow people to re-engage after a set hiatus. Within the context of families, where individual family members go through stages of family and career development, term limits allow for formal and natural points to assess if board service is the right fit at specific points in time for that person.

Drawbacks & Challenges

As with any tool, term limits are not panaceas, and must be considered within the context of your foundation’s history, values, and intended impact. Some factors to consider include:

Discontinuity: As directors leave the board, they take with them institutional knowledge and history, so it’s important to consider how to support continuity in the work of the board and foundation. This, of course, is also true for boards on which there are no term limits, so building systems to support continuity is an important approach for all boards.
Relationship building: It takes time for any group to develop a sense of group cohesion and relationship, even within families. Term limits mean that relationships and trust have less time to develop and coalesce.
Translating vision and values: Family foundations often have a strong central vision and set of values inherited from the founders. New board members will need to have a careful orientation process so that they can fully understand those values and vision, as well as have the space to contribute their own views.

As you can see, term limits can be useful, but must also be evaluated within the context of your foundation’s goals and circumstances, including the size and skillsets of your family. And, in all events, we strongly recommend that all board positions have well-crafted role descriptions with clearly defined expectations.

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