A family foundation I'm working with had been focusing a significant portion of its philanthropic efforts on one initiative for years. After guiding them through an organizational assessment, the board decided to scale, grow and expand the program to drive deeper impact.
Needless to say, it’s an exciting time at the foundation. But it’s also requiring the foundation's board (which had primarily been responsible for grant-making and governance) to think, act and structure itself differently. In short, it needed to become a working board.
To accomplish this, board members rolled up their sleeves and did the work of restructuring the organization to support the new program. This included making changes in operations, personnel and the financial function. Although one family member took on the leading role, every board member pitched in, each leveraging their personal skill sets and expertise.
Now, with the new infrastructure largely in place, the board has been able to take breather from managing operational details. However, their role going forward has changed. Specifically, they will remain a working board, overseeing program staff, making investments in technology and infrastructure and ensuring a robust marketing strategy.
YOUR ACTION STEPS
As a foundation, how do you evaluate whether or not to make a transition? And, if you do, how do you determine what response or adjustments are needed to support the change?
Here are a few tips to help you answer these questions for your foundation:
Examine Donor Intent
Your foundation's board has a duty to respect the original intent of the donor who endowed the foundation. Therefore, when the board is contemplating any change or transition the first question always is:
“Does our proposed plan adhere to and align with donor intent?”
Sometimes donor intent is very narrow and specific, leaving the board with very little wiggle room for change. Sometimes donor intent is broader, giving the board the freedom to think expansively. In the case of my client above, donor intent was broad and all board members agreed that increasing support for the program was strongly aligned with the founder’s wishes.
Agree on Grant-Making
One of the responsibilities of your foundation's board is to determine if the foundation can change its grant-making parameters without impacting the grants it already makes. To do this, your board needs to project the foundation's assets over time, as well as the annual distribution its required to make by law in order to determine the level of support that will be required. However, these activities only reveal the financial feasibility of a grant-making change. An equally important consideration is the values of the foundation. My client had traditionally spent on direct service rather than operational support and, thus, the board took the time they needed to debate whether or not the founder would have agreed to take on additional operating expenses if doing so would result in greater impact and more students served.
Assess Impact
Increasingly, foundations are stating their expectations of their grantees. These may include setting performance standards, tracking how grant money is spent and measuring results. More than ever before, foundations want to receive reports, make site visits and understand the positive impact their grants are having. A transition is an ideal time to assess the impact your foundation's grant-making is having and to work with your grantees to collect and discuss performance and impact metrics. My client was sensitive about assessing impact because of the increased investment the foundation was making in infrastructure to support the expanded program. They overcame their concerns by working closely with the program's administrators to set realistic expectations and metrics, and ensure everyone was aligned.
