For Immediate Release

STUDY OF FOUNDATION GOVERNANCE REVEALS HOW BOARDS HAVE RESPONDED TO RECENT SCRUTINY AND HOW TRUSTEES DEFINE BOARD EFFECTIVENESS

Cambridge, MA…In a study of boards of a broad range of large foundations, Center for Effective Philanthropy (CEP) reveals the perspectives of those ultimately responsible for the significant charitable assets those foundations control. Beyond Compliance: The Trustee Viewpoint on Effective Foundation Governance is based on a survey of nearly 550 trustees of 53 large grantmaking foundations that collectively control approximately $43 billion in assets.

The report describes the steps these boards have taken to implement governance reforms on the basis of recent scrutiny and discusses how trustees’ definitions of effective governance go well beyond compliance with minimum standards. CEP’s study, which is co-sponsored by BoardSource and Grantmakers for Effective Organizations (GEO), shows that foundation trustees see board effectiveness as related to utilization of board members’ capabilities and skills and board involvement in key areas, such as strategy development and assessment.

“Our research indicates that trustees take compliance seriously but also want to be centrally involved in developing strategy, assessing impact and performance, and contributing their capabilities,” said Associate Director Sarah Di Troia, who leads CEP’s governance work and co-authored the report. “Understanding trustees’ conception of effective governance is of crucial importance in ensuring that the significant charitable resources foundations possess are most effectively used.”

CEP Executive Director Phil Buchanan, also co-author of the report, said, “In this study, we endeavored to understand the views of a group whose perspectives and motivations have been a source of much discussion and speculation, but whose voices are surprisingly rarely heard in the debate on foundation governance: the trustees themselves. This study does not provide all the answers, but we hope it spurs productive discussion and reflection in foundation boardrooms.”

CEP’s analysis of survey responses revealed that there is a common sense of what constitutes board effectiveness among foundation trustees. The trustee definition of board effectiveness is comprised of five key characteristics:

• Appropriate mix of trustee capabilities and utilization of those skills. Board members are more likely to see their boards as effective if they possess certain broad capabilities beyond financial expertise, if their roles have been communicated clearly, and if they feel well-utilized.
• Engagement in strategy development and impact assessment. Perceptions of board effectiveness are influenced by whether the foundation has a strategic plan that has been meaningfully shaped by the board as well as clear, quantitative indicators against which progress is tracked.
• Focus of discussions on important topics. Board members see the board as most effective when discussion topics at meetings are focused on important issues, including the essential strategic and fiduciary responsibilities, and meeting materials are of a high quality.
• Positive relationship with the CEO. A positive relationship with the CEO is essential to perceptions of board effectiveness and is influenced by the quality of communication outside of board meetings.
• Opportunity for influence and respectful dissent in board meetings. Dynamics in the boardroom, including a respect for healthy dissent and a sense of equal opportunity for participation, are crucial to perceptions of board effectiveness – but board dynamics are often misjudged by board chairs.

The report outlines a number of implications of these findings for foundation CEOs, board chairs, trustees, and staffs, including ways in which foundation staffs and boards can better manage trustees’ contributions of their capabilities, time, and insights.

In addition, the report also describes how dynamics differ among different types of boards:

• While average ratings of boards’ mix of skill and experience do not vary between boards on which all members are compensated and those on which none are compensated, compensated trustees reported that they spend a third more time on foundation-related business outside of board meetings.
• Among family foundations, trustees who are related to the original donor reported that they feel less clear about their role on the board and less comfortable opposing other trustees and staff members in board meeting discussions than non-family trustees serving on the same board.
• People of color on boards with only one or two other minorities gave lower ratings than non-minority trustees when asked about the extent to which each board member has equal opportunity for influence. Once minority membership reaches higher absolute numbers – three or more – ratings of opportunity for influence do not vary between minority and non-minority members.
• Community foundation trustees reported that they are not satisfied with their current level of participation in fundraising, including cultivating new donors, maintaining relationships with current donors, and representing the foundation to the community and are seeking more involvement.

ABOUT THE FOUNDATION GOVERNANCE PROJECT

The Foundation Governance Project has been funded by grants from the following foundations: Gordon and Betty Moore Foundation, Lumina Foundation for Education, The Ewing Marion Kauffman Foundation, Carnegie Corporation of New York, Charles and Helen Schwab Foundation, Charles Stewart Mott Foundation, The David and Lucile Packard Foundation, and an anonymous foundation funder. The phase of the project described in Beyond Compliance has been co-sponsored by BoardSource and Grantmakers for Effective Organizations (GEO).

ABOUT THE CENTER FOR EFFECTIVE PHILANTHROPY

The Center for Effective Philanthropy is a nonprofit organization focused on providing management and governance tools to define, assess, and improve overall foundation performance. CEP received initial funding in 2001 and is located in Cambridge, Massachusetts. For more information on CEP's work, including its research, publications, and assessment tools, see www.effectivephilanthropy.org.

ABOUT THE PARTNER ORGANIZATIONS

BoardSource, formerly the National Center for Nonprofit Boards, is the premier resource on nonprofit governance information worldwide. One of the largest publishers of nonprofit governance materials, BoardSource offers consulting services to nonprofit boards and chief executives, as well as training programs for nonprofit governance consultants and the general public, and hosts an annual conference highlighting new research and practical tips on nonprofit governance. BoardSource is a 501c(3) nonprofit organization. For more information, visit www.BoardSource.org.

Grantmakers for Effective Organizations (GEO) is a community of grantmakers dedicated to building strong and effective organizations. GEO’s mission is to maximize philanthropy’s impact by advancing the effectiveness of grantmakers and their grantees. Through research, conferences, its Web site, publications and other activities, GEO highlights knowledge and practices in the field that advance the organizational effectiveness movement. More information about GEO and a host of resources and links for funders are available at www.geofunders.org.