The Challenges and Opportunities of Family Foundation Governance
Author: Emily Davis
Article extracted from BoardSource
Family foundations are such a critical part of the philanthropic community. Originally set up as tax havens for philanthropists, they are now much more than that and making considerable, positive changes in our local and global communities. This is due in large part to an increased focus on nonprofit transparency, greater sophistication in philanthropy, and an unprecedented number of generations engaged in family philanthropy. And this is why best governance practices are more important than ever for family foundations, and especially so when multiple generations of family, money, and grantmaking intertwine.
Most family foundation boards are comprised purely of family members – immediate or extended. As both a BoardSource senior governance consultant and a certified advisor with 21/64 (a nonprofit practice specializing in next generation and multigenerational engagement in philanthropy and family enterprise), I have seen firsthand the benefits and challenges of having many generations involved in giving and governing. In my work with family foundations, I use a variety of tools and resources — some of which I’d like to share with you here — to highlight best practices for overall governance success.
One of those best practices is board diversity, and I’m happy to report that more and more family foundations are valuing board membership representing a diversity of perspectives. They are welcoming non-family board members who might be philanthropic experts, stakeholders who are grantees, and governance experts. The diversity in perspective is helping to further advance their grantmaking impact and create a more inclusive culture.
I always recommend family foundation boards use a governance committee to help determine the best mix and approach for recruitment and engagement of a more diverse board. Board self-assessment and strategic planning (also coordinated by a governance committee) also are helpful in creating the foundation for a strong and healthy board. BoardSource has a number of tools that my clients have found worthwhile, including the board self assessment tool for foundations, the Leadership Certificate for Nonprofit Board Chairs, and foundation membership.
Many foundations use a “junior board” to create a training space and pipeline to the governing board. A word of caution about this — don’t isolate these individuals. In other words, don’t separate these individuals and put them at the kids’ table based on the assumption that they are uneducated about board service. Most nonprofit board members, no matter their age or experience, need education on governance and philanthropy.
An important component of success for any nonprofit board, and especially family foundations, is a strong healthy orientation process. Because family dynamics play a unique and critical role in successful governance and grantmaking, all members need to be knowledgeable of the foundation’s history and culture. Board leadership needs to understand everything from setting an engaging meeting agenda to establishing an inclusive culture to capturing the family legacy and individual legacies. Orientation to the foundation’s bylaws, policies, job descriptions, and more are also critically important to leadership success.
Family foundation board members have a complex web of topics and issues to consider that go beyond the basics. Utilizing facilitators and customized resources to address these topics and issues can be incredibly helpful. I suggest the following:
Multigenerational dynamic – 21/64 is a great resource!
Grantmaking essentials – National Center for Family Philanthropy is another helpful resource!
Succession planning in family foundations
In multigenerational family foundations, it is especially important that there are meaningful ways for every generation to participate in board meetings, which might mean that there are options for participating virtually. To better engage and include all board members, family foundation boards often need to adjust their approach from “the way things have always been done.” This will help to foster a stronger culture of diversity, equity, and inclusion while meeting mission and grantmaking goals.
A final recommendation is to connect incoming board members with their peers or tenured board members. This will allow incoming board members to have a sounding board for their individual questions and increase their confidence in governance. Some boards use board buddies, and there are even board chair peer groups around the country.
When it comes to governance, family foundations present unique challenges and opportunities to come together and make an impact in our communities. To make this a positive and enjoyable experience for everyone who sits around the board table, I encourage you to consider all of the above strategies and resources. They are designed to set you up for success.
What is your experience with family foundation governance? What are your challenges and successes? What questions do you have about improving your board?