For Immediate Release

SURVEY OF CEOs OFFERS NEW INSIGHT ON GOVERNANCE PRACTICES AND CONCEPTIONS OF FOUNDATION BOARD EFFECTIVENESS

Large foundation boards are reviewing responsibilities in light of recent scrutiny; CEO conceptions of board effectiveness linked to engagement in a set of key activities; trustee compensation and time spent are linked

Report represents first phase of new Center for Effective Philanthropy Foundation Governance Project

Cambridge, MA... Foundation boards are re-assessing their structure and practices in light of increased scrutiny, according to a new report released today by the Center for Effective Philanthropy, a nonprofit research organization serving foundation leaders.

The report - Foundation Governance: The CEO Viewpoint - is based on a survey of CEOs of the largest 250 foundations in the country. It reveals that nearly three quarters of boards at the 129 responding foundations have discussed governance responsibilities in light of corporate governance reforms and scrutiny of foundation practices. A third report having instituted changes as a result.

These changes in governance practices, however, tend to focus on the "basics" of accountability - which are not the key practices that differentiate boards viewed as most effective from boards viewed as less effective. More central to CEOs' conception of a foundation board's effectiveness is the level of engagement of the board - especially in the difficult, substantive work of the foundation, such as overall performance assessment.

"Our findings suggest that, while the current attention to ensuring basic levels of stewardship and accountability is undoubtedly healthy and appropriate, there is a more fundamental challenge," said Phil Buchanan, CEP's Executive Director. "For the majority of foundation boards that are performing these basic functions already, the challenge is to step up the level of engagement in key activities that are more closely connected to the substance of the foundation's work, such as performance assessment and strategy development." Boards rated as more effective were estimated by CEOs to meet more frequently, spend more time outside of meetings on foundation business, and be substantially more engaged in a variety of key activities.

The report also sheds new light on a number of practices, including average number of meetings held, committee structure, and the level of engagement in a variety of board activities. "The development of this type of data is a necessary precursor to identifying - through further research - the most effective foundation governance practices," said Buchanan.

The report includes new information on the practice of compensating foundation board members, which has drawn increasing scrutiny during the past year amid media accounts of excessive compensation at some foundations. For the 50 percent of responding foundations that reported paying their board members, the median compensation level is $22,000 per year. When boards are compensated, their members are reported to spend more time on foundation work. "It appears that compensating foundation board members does correspond to their putting more time into the role," said Buchanan. "It is surely not the only way to motivate a higher level of engagement," he added, "but it appears to be one way."

The question of foundation trustee motivation is identified in the report as an area requiring further research. The survey of CEOs is the first phase of the larger Foundation Governance Project. In the next stage, the Center for Effective Philanthropy will examine in-depth the perspectives and practices of trustees at 20-25 large foundations. A task force of CEP's Advisory Board - comprised of foundation CEOs, staff, and trustees - is advising on the Study.

"Given that foundations control well over $400 billion in assets," said Alexa Cortes Culwell, CEO of the Charles and Helen Schwab Foundation and a member of the Board of Directors of The Center for Effective Philanthropy, "it is surprising that the distinctive challenges facing foundation boards have not been more thoroughly studied."

"This is particularly surprising," Culwell added, considering that, "for most foundations, the board is the primary force for accountability. In light of the current environment of increased scrutiny from the media and regulators, the need for this kind of research to advance the field's thinking and practice could not be clearer."

To obtain a copy of the governance report, please click here.

ABOUT THE CENTER FOR EFFECTIVE PHILANTHROPY

The Center for Effective Philanthropy is a nonprofit, nonpartisan organization dedicated to advancing the practice of philanthropy by providing management and governance tools to define, assess, and improve overall foundation performance.

Major funders of CEP include: The Atlantic Philanthropies, David and Lucile Packard Foundation, Surdna Foundation, Rockefeller Brothers Fund, John D. and Catherine T. MacArthur Foundation, Charles Stewart Mott Foundation, and Charles and Helen Schwab Foundation.