The philanthropic sector has seen steady growth over the past decade, and while some new foundation boards may be made up of veteran philanthropists, I'll wager that many of those entrusted are taking on the job for the first time. It's a big responsibility, and many of the early choices made by a new board can determine whether the new foundation will move forward smoothly and effectively or become mired in a culture or in policies that stifle effectiveness.
I was recently invited to speak with a new health legacy foundation board and shared with them 10 mistakes that new foundation boards often make, and how to avoid them. Here are the first five (I'll cover the other five next week.)
1. Making the simple complex
We should all strive to make the complex simple, but too often in philanthropy we make the simple complex. It's easy to assume that complexity is a means to ensure stewardship, or fairness, or inclusion. But what complexity often does is create chaos and frustration. For any foundation practice or process- from how you make grants to how staff prepare for a board meeting - ask yourself, "Is this approach really going to provide benefit for our operation? What is the simplest way we can accomplish our objectives?" Just because another foundation is doing something in a complex way doesn't mean you have to. Let common sense be your guide and do what is most useful to you!
2. Managing instead of governing
Remember, the role of a board is governance: clarifying mission and vision, setting strategic direction, setting policy, and providing financial stewardship. Avoid the temptation to manage staff or micromanage your CEO or other staff leadership.
On the flip side, do make sure your services, wisdom, or expertise are available when staff requests it. And also, recognize that there may be times when your board may need to roll up its sleeves and be a "working board" in addition to a "governing board."
3. Failing to manage and support the CEO
Although you have a governance role for the organization, the board - usually the board chair - does manage the CEO. Upholding your responsibility for managing the CEO can be a delicate dance; you want your CEO to bring her specific expertise and creativity to the job, but at the same time you want to feel confident that things are moving in the direction and pace you desire. Open and honest communication with the CEO is critical to maintaining that balance. You must be receptive to the CEO's ideas and instincts and put measures in place to support his or her work within a framework that you both consider appropriate. Conducting annual evaluations, regularly scheduling "check ins" and providing professional development or networking opportunities are all ways to provide CEO support. And when you do provide assistance, and make it clear that asking for help is not an admission of failure or weakness. Of course, if you feel she is consistently not meeting your expectations, you need to take action.
4. Operating with a poverty mentality
In my opinion, one of the worst things a board can do is confuse thrift with stewardship, or mistake austerity for efficiency. Saving money is not the same as growing it. (If it were, we wouldn't have the stock market.) A poverty mentality means not investing in your foundation's own internal resources for growth and development, and consequently stunting the growth and abilities of your organization. Foundations with an abundance mentality understand that dollars and time invested in training, technology, creativity, capacity, relationship building, and professional development make their operations more efficient, intelligent, and effective for the communities they serve.
5. Misunderstanding fiduciary and legal obligations
It is the fiduciary responsibility of the board to ensure that the foundation follows the laws and regulations that govern private foundations. An experienced CEO may bring substantial knowledge about issues such as self-dealing, the 5% payout requirement, and conflicts of interest, but his knowledge is no substitution for your own. Penalties can be stiff, and problems can be complicated and expensive to resolve. Better to find seasoned, professional legal advisors to help your board fully understand its obligations and responsibilities. You can also learn a great deal from foundation membership associations, such as your regional association of grantmakers, Exponent Philanthropy, the Council on Foundations, or the National Center for Family Philanthropy.
These five items in and of themselves are more than enough to get a new board (or even a veteran one) moving in the right direction. Next week, we'll look at five more!