At a time when nonprofits are struggling to raise money from government and private sources, the practice of some private foundations to compensate trustees is drawing scrutiny.
In May, the Massachusetts Senate voted to ban payments to board members of all nonprofits, including foundations, registered in the commonwealth; the Massachusetts House has yet to act on the measure.
An analysis by The Chronicle of Philanthropy of the 50 wealthiest foundations in the U.S., based on the latest available informational tax returns, found that 38 compensate board members to the tune of more than $11 million. A June 24 Chronicle article noted that debate around whether foundations should offer stipends often becomes “emotional” because very few charities pay board members.
The Chronicle’s analysis of board payments at the 38 foundations shows that the compensation paid is small compared with the amount provided in grants. The fees amounted to about 0.3% of the $3.8-billion foundations distributed at the same time.
Among The Chronicle’s other findings:
- The average board compensation for all 417 trustees at organizations that paid board members was $26,617, and the median compensation was $24,000. In many cases, not all board members were paid; dollar amounts paid also varied.
- Duke Endowment had the largest total compensation, its 15 trustees receiving a total of some $2 million in 2009, nearly 2% of the value of the grants it provided to charities that year. (The founder in 1924 ordered payments to board members.)
- The Doris Duke Charitable Foundation of New York, an umbrella organization for five foundations, paid the second largest total compensation, giving five of 11 board members $513,365 in 2009, about 0.7% of the total value of its grants in 2009.
- The W.K. Kellogg Foundation paid the third-highest total of $505,000 to 11 trustees in its 2010 fiscal year, about 0.2% of the total value of its grants paid.
- Of the grant makers that offer their boards stipends, the Carnegie Corp. of New York paid the least. Three of its 17 board members took compensation, totaling $22,800 in the 2009 fiscal year.
- Of the top 50 foundations, 12 did not compensate their directors, including the Charles Stewart Mott Foundation, the William and Flora Hewlett Foundation and the David and Lucile Packard Foundation. (Mott says it offers trustees “psychic pay.”)
- The Bill & Melinda Gates Foundation does not pay its board—the Gateses and Warren Buffett—but 16 members of the foundation’s three advisory panels are offered an honorarium of $4,000 for each of the two meetings held annually, and chairs of those committees are offered $5,000.
The Chronicle article noted that board compensation figures based on informational tax returns can be misleading. At the Ford Family Foundation, for example, the majority of board members donate their compensation, and the foundation provides $2 for every $1 a trustee donates, up to $30,000 a year.