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Financial Planning > Charitable Giving

About Half of Foundations Pay Board Members and Allow Unlimited Terms

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Private foundation governance is a topic of general interest in the philanthropic sphere, and of specific importance to foundations themselves in helping them better understand the range of approaches others are taking.

What are the common areas of expertise among a foundation board’s members? Does the original donor or a family member sit on the board? How involved in grant making are board members?

The Center for Effective Philanthropy conducted an online survey focused on foundation governance from mid-December to mid-January, and issued a report this month using the responses of 64 chief executives of private U.S. foundations that give $10 million or more in grants annually.

CEP said its goal was to provide data about current practices, not to examine their effectiveness.

Foundation boards surveyed comprise an average of 10 members, six men and four women. The original donor sits on 22% of the boards, and his or her relatives on 50% of boards.

Forty-six percent of foundations compensate all their board members, while 7% compensate only some members.

Nearly half of foundation boards have no limits on the number of terms members are allowed to serve.

Ninety-five percent of foundations have at least one member with expertise in investing and accounting/finance and with program-specific knowledge.

Expertise is less robust in other areas. For example, only 39% of boards have at least one technology expert and 60% at least one member with experience in communications.

Eighty-one percent of foundation boards surveyed have committees: 92% ones focused on audit and on investment, 74% on governance/trusteeship/nominating, 54% on finance/budget and 40% on compensation.

Discretionary grant making by board members, with little or no input from the staff, is allowed at 39% of foundations. The survey showed that the median board member’s annual discretionary grant budget was $50,000, and $100,000 or more for 25% of boards.

At 59% of foundations, staff do not need board approval for grants below a median $125,000.

How are the boards doing?

Forty-eight percent reported that they had assessed the board’s performance during the previous three years, and 77% had done a formal assessment of the chief executive during that past 12 months.

Fifty-seven percent of foundations boards consider systematically collected grantee feedback when assessing the foundation’s performance.

The chief executives surveyed reported varying levels of board involvement in the foundation’s work. Eighty-eight percent said they were subject to board evaluation. 

Seventy-seven percent of boards are involved in developing the foundation’s programmatic strategy, and 73% in evaluating the foundation’s overall performance.

Boards generally do not micromanage the foundation. Only 18% are involved in developing and approving operating policy and 7% in making operational decisions.


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