Stewardship Principles for Family Foundations
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- Charlotte Bryan
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1 We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. We pla for family leadership cotiuity. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. We pla for family leadership cotiuity. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. We pla for family leadership cotiuity. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. We pla for family leadership cotiuity. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. We pla for family leadership cotiuity. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. We cosider multiple strategies to further our missio. Our goverig board exercises active fiscal oversight. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. We welcome public iterest ad commuicate opely. Our goverig board respects door itet ad later geeratios iterests while Stewardship Priciples for Family Foudatios
2 The Coucil o Foudatios wishes to ackowledge those who supported the developmet of these priciples. Advisory Group for Family Foudatio ad Corporate Gratmakig Priciples Kathlee Ode Chair, Committee o Family Foudatios Executive Director, Dea & Margaret Lesher Foudatio Christie Park Chair, Committee o Corporate Gratmakig Lucet Techologies Foudatio Carolie D. Avery The Durfee Foudatio Marti C. Lehfeldt Southeaster Coucil o Foudatios Bruce Maza Executive Director C.E. & S. Foudatio, Ic. Joel Orosz Distiguished Professor, Philathropic Studies Dorothy A. Johso Ceter for Philathropy ad Noprofit Leadership Grad Valley State Uiversity M. Gregory Catori Executive Director Mario I. & Hery J. Kott Foudatio Virgiia Esposito Natioal Ceter for Family Philathropy Jae Gallagher Vice ad Geeral Cousel Coucil o Foudatios Pey Hut Vice, Commuity Affairs The Medtroic Foudatio Daiel K. Jeriga Coordiator, Corporate Commuity Egagemet ChevroTexaco Corporatio Graham Phaup Executive Director Istitute for Global Ethics Laurie Regelbrugge Maager Uocal Foudatio Steve Rochli Director, Research & Policy Developmet The Ceter for Corporate Citizeship at Bosto College Mary Beth Salero America Express Foudatio America Express Compay Sarah Straaha Trustee The Needmor Fud Kare Gree Maagig Director, Family Foudatio Services Coucil o Foudatios Project Maagers Fra Eato Fiacial ad I-Kid Support Maagig Director, Corporate Services Coucil o Foudatios The Dyso Foudatio Samuel N. ad Mary Castle Foudatio Charles D. Jacobus Family Foudatio The Hamilto-White Foudatio The Aie E. Casey Foudatio C.E. & S. Foudatio Dea & Margaret Lesher Foudatio The Leighty Foudatio The Boeig Compay IBM Corporatio JPMorga Chase Levi Strauss & Compay Price Charitable Trusts Special thaks to Committee o Family Foudatios members for their ogoig guidace.
3 Stewardship Priciples for Family Foudatios Through their philathropy, families aspire to achieve a lastig ad positive impact o society. Families resources exted well beyod moey to iclude leadership ad reputatio, time ad talet, passio ad commitmet. Families strive to be resposible stewards of their foudatio resources, to uphold the public trust ad to practice their philathropy i ways that reflect fudametal values, icludig hoesty, itegrity, fairess ad trust. As private etities operatig for public purposes, family foudatios must comply with federal, state ad local law but most go further. These Stewardship Priciples ad Practice Optios to Stregthe Performace describe how family foudatios ca reflect these fudametal values i their board goverace, maagemet ad gratmakig. For help with implemetig the Stewardship Priciples for Family Foudatios, visit our database where you will fid tools, iterviews ad sample documets cotributed by your peers i other family foudatios: If you have specific questios, cotact the Family Foudatio Services Departmet at family@cof.org or 202/
4 Family philathropy is a uifyig ad eoblig odyssey for families with the meas ad the determiatio to make a differece i the world aroud them. Paul N. Ylvisaker ( ), Professor ad Family Foudatio Board Member How to Use the Priciples The Stewardship Priciples ad the Practice Optios to Stregthe Performace are goals toward which to strive. They correspod to a array of philosophical ad practical issues faced by all family foudatios. With this documet as a framework, family foudatio boards ad staff ca discuss issues before they arise, eablig them to proactively develop thoughtful policy ad practice that improve over time. Family foudatios ca take may forms. Thus, the Practice Optios to Stregthe Performace are ot checklists. The degree to which a foudatio ca adopt idividual Practice Optios will deped o the followig: Where it is i its life cycle The requiremets ad restrictios i its goverig documets Its asset size Whether it is staffed or ustaffed Cost effectiveess Whether the board is composed etirely of family members or icludes others. This is ot a static udertakig. As the foudatio evolves, so too should the choice of Practice Optios to Stregthe Performace. The most sigificat, ogoig reward will accrue to those foudatios that employ these priciples with cosideratio, thoughtfuless ad commitmet, ad with cosistet evaluatio ad appropriate revisio. Adopted by the Committee o Family Foudatios September 2004
5 Goverace I. We have a goverig board that establishes the missio, guides the operatios, oversees the effectiveess ad esures the ethical coduct of the foudatio. Practice Optios A. Develop ad periodically review the foudatio s values ad missio statemet, strategies, program areas ad guidelies, goals, aual ad multiyear objectives ad geographic focus. B. Dedicate sufficiet huma, fiacial ad techological resources to advace the missio. C. Pla for leadership cotiuity. D. Assess the relevace ad effectiveess of the foudatio s gratmakig, board goverace, maagemet ad ivestmets. II. Authority is vested i the goverig board as a whole, ad each member is equipped to advace the foudatio s missio. Practice Optios A. Idetify the desired characteristics of the goverig board, icludig size, compositio ad member skills ad experiece; cosider diversity ad the perspective offered by represetatives from outside the family. B. Develop bylaws that specify the term legth of goverig board members; the umber of cosecutive ad/or total terms members may serve; miimum ad maximum ages; roles, resposibilities ad fiduciary duties; ad selectio ad removal processes. C. Coduct busiess regularly to esure meaigful iteractio, icludig at least oe aual i-perso meetig (goverig board ad staff if ay). D. Stay o missio; all grats are made withi gratmakig guidelies. Exceptios are reviewed by the etire board ad do ot exceed a maximum dollar cap or percetage of total givig. E. Provide comprehesive orietatio ad traiig for goverig board members. F. Provide cotiuig educatio o all aspects of foudatio goverace, icludig legal, fiduciary ad gratmakig issues. III. We cosider multiple strategies to further our missio. Practice Optios A. Lear best practice models ad compare practices agaist others i the field. B. Cosider a rage of fiacial support optios that could iclude geeral operatig, project, capital, research, scholarship, edowmet, multiyear ad challege grats, ad fuds to respod to emergecy or other uaticipated eeds. C. Use program ad grat evaluatio to improve outcomes. D. Share successes, failures ad lessos leared from grat ad program evaluatios iterally ad exterally, as appropriate. E. Collaborate with others who fud similar work. F. Esure that staff (if ay) is well-qualified ad receives ogoig professioal developmet. G. Promote foudatio board ad staff persoal givig ad voluteerism (bearig i mid potetial coflicts of iterest). H. Provide techical assistace to gratees ad other oprofits. I. Ivest i ways that further the missio (e.g., programrelated ivestmets, microcredit loas, socially resposible ivestig, ad proxy votig/shareholder resolutios). J. Covee commuity leaders, oprofits ad/or other fuders doig similar work. K. Egage i public policy advocacy as permitted by law. IV. Our goverig board exercises active fiscal oversight. Practice Optios A. Kow ad esure compliace with fiduciary duties. B. Esure that expeses are reasoable ad i proportio to amouts spet o grats ad techical assistace. C. Expect board members to serve the foudatio without compesatio, recogizig 1. that reimbursemet of reasoable expeses directly related to board service does ot costitute compesatio
6 2. that board members who perform staff fuctios may be compesated as staff. Like all staff, these idividuals should be reasoably compesated, documet time spet, ad have a job descriptio, performace objectives ad evaluatios. D. Cofirm that proper due diligece is performed to esure gratees fiscal ad orgaizatioal viability ad that grats are used for charitable purposes. E. Esure that the foudatio has a writte ivestmet policy adequate for its size ad complexity that icludes ivestmet objectives, asset allocatio strategy, spedig ad/or payout policy, ad ratioale for selectig ad evaluatig ivestmet maagers advisors. F. Establish effective iteral cotrols, systems of checks ad balaces, ad formalized record keepig. G. Approve a aual budget ad assess the foudatio s fiacial performace relative to the approved budget. H. Coduct a iteral review of foudatio compliace with legal, regulatory ad fiacial reportig requiremets ad provide a summary of the review to board members. I. Obtai a exteral review of the orgaizatio s fiaces (i accordace with asset size) by coductig a fiacial review, periodic audit or aual audit (for larger foudatios). J. Establish a audit committee to oversee accoutig, fiacial reportig, compesatio practices ad the exteral audit of the foudatio. Ethics ad Accoutablility V. We recogize ad act upo our obligatios to multiple stakeholders: the door ad the door s family, gratees ad gratseekers, the public ad govermetal bodies. Practice Optios A. Keep abreast of the self-dealig laws; avoid selfdealig ad eve the appearace of self-dealig. B. Educate the goverig board ad staff (if ay) as to what costitutes coflict of iterest: 1. Documet the affiliatios or ivolvemet of board members, gratmakig staff ad their families with potetial gratees, eve if the affiliatio creates o fiacial coflict of iterest.. Establish ad sig aually a writte coflict of iterest policy that idetifies types of coduct or trasactios that raise cocers ad describes how coflicts or perceived coflicts of iterest are resolved. C. Icorporate diverse people, perspectives, kowledge ad experiece ito the work: 1. Access pertiet data, e.g., cesuses, regioal idicators, ad studies. 2. Iclude subject matter experts or commuity represetatives as speakers at board meetigs, o committees or o advisory groups. 3. Appoit board members ad employ staff who demostrate the capacity to uderstad issues ad commuicate skillfully across cultural, socioecoomic ad other boudaries. 4. Ecourage board ad staff to be actively ivolved i the commuity (bearig i mid potetial coflicts of iterest) ad to brig ew or uderrepreseted perspectives back to the foudatio. 5. Establish goverace policies ad operatioal ad gratmakig practices. 6. Develop traiig resources that promote iclusio ad reduce discrimiatio. D. Idetify ad practice the elemets of ethical coduct. E. Develop a policy to hadle good-faith complaits about violatios of foudatio policy or the coduct of foudatio board ad staff. VI. We respect our oprofit parters missios ad expertise ad strive for relatioships based o cador, uderstadig ad fairess. Practice Optios A. Develop trasparet grats maagemet processes: 1. Create clear ad complete program guidelies ad applicatio procedures (if usolicited applicatios are accepted); cosider acceptig commo grat applicatios. 2. Request oly iformatio (pre- ad post-grat) that will actually be used i decisiomakig ad correspods appropriately to the size or purpose of the grat. 3. Specify the steps ad timig of the review process. 4. Ackowledge gratseeker iquiries ad submissios promptly.
7 5. Use grat agreemet letters to outlie mutual expectatios. 6. Explai ratioale for declied grats ad give costructive feedback whe appropriate. B. Coduct site visits whe appropriate, guided by the size ad purpose of the grat ad the impact o the gratee. C. Ackowledge ad miimize the effects of the imbalace of power i gratee/grator relatioships. D. Seek feedback (icludig aoymous) o foudatio performace from curret ad former gratees ad deied applicats. E. Respod to ad act promptly o complaits. VII. We welcome public iterest ad commuicate opely. Practice Optios A. Make public (olie ad/or i prit) the foudatio s board of directors, missio, guidelies, grat process (icludig whether usolicited proposals are accepted), fiaces, procedures, timetable, gratee list with amouts ad purpose, etc. B. Idetify ad make public a poit of cotact for the foudatio. C. Respod to requests for iformatio promptly ad i o more tha 30 days. D. Prepare ad distribute (olie or prit) a aual report (or letter for small foudatios). E. Trai board ad staff o how to respod to the media, legislators ad other audieces. F. Develop a strategy for reachig out to the media, legislators ad other audieces. Family Legacy VIII. Our goverig board respects door itet ad later geeratios iterests while also cosiderig the demads of a chagig world. Practice Optios B. Preserve the foudatio s evolutio by compilig board dockets ad grats made. C. Ivite seior family members to speak to the board. D. Collect persoal recollectios of the foudatio through iterviews with door(s) ad/or seior board members (audio, video ad/or writte). E. Coduct activities that provide subsequet geeratios the opportuity to coect with the family foudatio history. F. Review foudig documets ad door itet or prefereces periodically to assess their cotiued efficacy. Recogizig Later Geeratios Iterests G. Ecourage board members with iterests outside the program or geographic guidelies to support them through persoal givig. H. If ot couter-idicated i the establishig documets (e.g., trusts), cosider explicitly addig the flexibility to adapt focus areas. I. If competig iterests hider the foudatio s missio or the family s ties, egage a skilled facilitator to fid commo groud. IX. We pla for family leadership cotiuity. Practice Optios A. Develop ad implemet a successio pla (with iput from the family s tees ad youg adults) to idetify, educate ad prepare the ext geeratio of family members for future board service. B. Iform the broader family of the foudatio s work. C. Provide aveues for youger family members to lear about ad participate i the work of the foudatio (or other foudatios ad/or the oprofit sector) prior to servig o the board. D. Revisit periodically the iteded life spa of the foudatio (perpetual or time-limited). E. Employ alterative goverace structures or givig vehicles whe family leadership is o loger viable or o loger desired. Hoorig Itet A. Ecourage livig doors to documet their itetios, while takig ito accout the flexibility succeedig geeratios may eed to gover the foudatio. 5
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