Why Foundation Boards Should Have Term Limits

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Foundation boards hold the privilege and power to influence social change with trillions in assets under management and annual grantmaking in the billions.

Yet too often, governance models cling to the tradition of lifetime appointments with no term limits for board members. This complacency risks stagnation, thwarts impact, and prevents accountability to evolving community needs. Implementing thoughtful term limits provides essential catalysts for continuous improvement.

What exactly are board term limits? Simply put, they are rules that require board members to step down from their positions after serving a set number of terms. Many nonprofit and foundation boards have term limits of two or three terms lasting around three years each.

The problems caused by not having term limits for board members are plentiful.

Here are the top seven I’ve seen advising hundreds of foundations for the past 25 years:

 

1. Entitlement

Trustees without term limits can easily embrace a mindset of entitlement, where board positions are viewed as rewards rather than responsibilities. A striking example comes from one of my health conversion foundation clients. During a candid conversation, a board member shared his justification for a lifetime board appointment: “We were there during the tough times, steering a failing nonprofit hospital. Now, we deserve to be part of the good times, experiencing the fun of giving money away.”

2.  Self-Serving Tendencies

Those granted lifetime board appointments have little incentive to leave the power, prestige, and access their positions provide. Many private and family foundations pay their trustees or provide them with discretionary funding to make grants to the nonprofits of their choice. A trustee of one of my private foundation clients once told me, “I like the $25,000 annual payment. Why would I want to leave?”

3. Stagnation

Without enforced turnover through term limits, the same people work together on foundation boards for decades. Ideas recycle and innovation stifles. Power imbalances perpetually dominate discussions. And the energy? Well, it’s often about as vibrant as a room full of napping cats!

4.  Ineffectiveness

Many trustees with lifetime appointments stay on the board long past the time they can contribute. Several of my family foundation clients had elderly board members who regularly slept through meetings. Another developed dementia but stayed on the board for another two years before it became physically impossible for her to continue. These board members were not contributing to the foundation’s effectiveness. Without natural exists through term limits, asking them to leave is difficult and awkward.

5. Groupthink

Without term limits for board members, foundation trustees can fall into groupthink faster than teenagers on a fashion trend. Risk-taking dies and foundations stick to tradition rather than embracing change to drive impact on shifting community priorities.

6. Homogeneity

An important value of board term limits is they allow for increased and ongoing diversity in all forms such as ethnicity, race, lived experience, professional experience, expertise, geography, gender, sexual orientation, age, etc. As one of my current clients adeptly shared with me, “It just makes good business sense to have a diverse team. Diversity helps your organization perform better. I’m a big believer in that. It just really does. Having people of different economic swaths and cultural and race and gender and all that stuff just makes everything work better.” However, by definition, foundation boards without term limits lack diversity and therefore limit the the foundation’s effectiveness.

7. Next Generation Disengagement

The lack of term limits for board members means trustees can continue serving into their 90s. In the meantime, there are likely many “next generation” family members – adult children and grandchildren – who would like to get involved but see no opportunity or path to board service. It could be decades before current trustees leave the board. They will naturally lose interest in the family foundation. They don’t have the opportunity to learn from or be mentored by elder family members about how to lead the foundation. This results in significant sustainability challenges for family foundations.

Of course, quality board service should not be cut short arbitrarily. Thoughtful succession planning can ease transitions from term limits for board members while retaining institutional knowledge. Approaches like staggered terms, structured reappointment reviews, and emeritus advisory positions bring accountability through natural turnover.

Term limits alone will not guarantee effective foundation boards and strategies. But constructed thoughtfully, they provide essential catalysts for accountability, responsiveness, and catalytic thinking that lifetime trustee tenures undermine.

The communities and nonprofits foundations seek to serve deserve no less. The world changes too swiftly for institutional philanthropy not to embrace overdue reforms like term limits for board members. They offer a valuable starting point to help boards continuously improve towards mission and community impact in our rapidly changing world.

If you need guidance on creating a philanthropic strategy that will guide your organization toward success, or if you’re unsure where to start, I would love to chat with you — click the button below to schedule a call with me!

Kris is a sought after philanthropy advisor, expert and award-winning author. She has helped over 90 foundations and philanthropists strategically allocate and assess over half a billion dollars in grants and gifts.

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