Benchmarking Foundation Governance: Insights and Opportunities

Last week, the Center for Effective Philanthropy (“CEP”) released the Benchmarking Foundation Governance report, which summarizes survey responses to governance-related questions.   CEP created these questions in collaboration with BoardSource; and the questions were posed to leaders of large, private U.S.-based foundations.  Although, the report represents “a straightforward reporting of the data – no analyses or interpretation,” CEP’s Phil Buchanan wrote this helpful article about it.  Mr. Buchanan’s article raises a few questions about the data and provides a number of valuable insights.  The purpose of this post is to build upon his questions with a few of my own.  My hope in doing so is to call out some of the particularly interesting data and to add just a bit of related commentary.

1. Board Expertise: Ninety-five percent (95%) of foundation boards have at least one member with expertise in: (1) Investing, (2) Accounting / Finance, and (3) Program-Specific Knowledge…but only 60% have at least one member with expertise in Communications and 54% with expertise in Marketing / Sales. Comment: In a world where brand is an increasingly important strategic asset that demands sophisticated management by non-profit organizations, these appear to be major opportunity areas for foundation boards to bolster their ranks.

2. Board Expertise, Part II: Thirty-nine percent (39%) of foundation boards have at least one member with expertise in Technology. Comment: Same comment – technology plays a substantive role in virtually every business – potentially as a strategic advantage, too often as a disadvantage.  One of boards’ mandates is to protect the organizations they serve; and board members with technology expertise are in an advantageous position to deal with issues related to cyber-security and decision-making regarding technology.  They can also potentially provide valuable insight regarding the inevitable technology-related issues encountered by grantees.

3. Board Meetings: Fifty-nine percent (59%) of foundation boards distribute board meeting materials through a secure website portal…and 63% distribute board meeting materials as hard copies. Comment: So…this seems to indicate a real “belt-and-suspenders” approach to the distribution of board materials.  Although back-up plans are generally a good idea, the practice (to the degree that it exists) of distributing materials both electronically and in hard-copy undermines the benefits (efficiencies, savings, access, agility) of having a board portal in the first place.  Where this is the case, it may be time to remove the training wheels and cease providing paper!

4. Board Material Distribution: Less than a third of foundation boards (31%) distribute board meeting materials through email attachments. Comment: That means a third of them still do – YIKES!  In addition to the seemingly obvious concerns this raises around data security, this practice also is detrimental to the board’s productivity – often forcing board members to do an archaeological dig through their inboxes in search of the right files and versions.

5. Orientation vs. Discretionary Grantmaking: Three-quarters of boards have an orientation process; and 39% have discretionary funds from which board members can make grants with little or no staff involvement. Comment: If my math is right, this means that potentially as many as 14% of the foundations surveyed allow boards to make grants without having received an official orientation to the foundation. Wow!  The big opportunity here seems to be orientation.  The benefits are broad and deep, whereas the energy and investment needed to establish a solid orientation is comparably tiny.  This is particularly true for the ~60% that already have a board portal in place to easily support activities within the Board Development Cycle such as board orientations.

6. Term Limits: 48% of boards have limits to the number of terms board members may serve. Comment: That means that more than half do not!  Although term-limits can be in conflict with the mission and history of many family foundations, they otherwise seem like a good idea all around.  But, if this statistic is influenced because term-limits are administratively burdensome to manage, then board portal software can ease that burden substantially and make the management of term limits a breeze.

Please note: I am grateful and very much indebted to the Center for Effective Philanthropy’s Benchmarking Foundation Governance for the lion share of this post.  Although I have used formal quotations only sparingly, anything in italics comes directly from the Benchmarking Foundation Governance study.  In those italicized passages, I have made a few cosmetic changes (e.g. pronouns and punctuation) that are intended to enhance the readability of the post, versus quoting verbatim throughout.

As an aside, I wrote a similar post last February in connection to BoardSource’s 8^th version of its national survey “Leading With Intent: A National Index of Nonprofit Board Practices.”  If you found this post useful, please check that one out, as well.