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CONSULTING: Creating Good Governance
Policies
A $12 million family foundation based in New York came to
Philanthropy Advisors with only a skeletal governing structure.
It lacked two policies needed to help manage the philanthropic
commitments of family members in the context of the Foundation:
a conflict of interest policy and a duration of funding policy.
Without these policies, each grant was a potential minefield
for family dynamics, and continuous grant renewals threatened
the Foundation’s goal to support innovative projects.
Conflict of Interest Policy
Many members of the several generations who served on the
Foundation’s board were involved with nonprofits locally,
nationally, and internationally, serving on boards or as volunteers.
The family viewed this service as beneficial and informative
to the Foundation’s work and as training ground for
participation in the work of the Foundation. Nonetheless,
the relationships between individuals and particular nonprofits
raised concerns about possible conflicts of interest when
the family reviewed grant proposals from organizations with
which its members were involved.
Philanthropy Advisors researched the kinds of policies employed
by other foundations to address these issues. In close collaboration
with the Foundation’s lawyer, staff crafted a conflict
of interest policy that enabled the board to benefit from
what it saw as valuable insights from family members involved
with recipient organizations while also ensuring that this
involvement did not unduly influence board decisions. Adoption
of this policy helped the family successfully navigate the
challenges of members continuing their active involvement
in the nonprofit sector and serving on the Foundation board.
Duration of Funding Guidelines
The Foundation, like many, received far more proposals than
it could fund. The board struggled with the question of how
to maintain relationships with long-term grantees, recognizing
the value of long-term funding to organizational effectiveness,
while also supporting innovation and developing new relationships
with other organizations working towards its goals.
Drawing on its experience advising other foundations, as
well as discussions with other grantmakers, Philanthropy Advisors
developed guidelines that set the presumptive duration of
funding at a maximum of five years. At the five-year point,
the board could determine to continue its support of a given
organization, but only on a case-by-case basis. Adoption of
this policy enabled the Foundation to maintain respectful
and productive relationships with its grantees and diminished
conflict within the family.
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