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Good governance is at the core of an effective board, no matter the size or complexity of the grantmaking foundation. Sound governance practices help board members be responsible stewards of the assets they oversee and establish a strategic decision-making and administrative framework.
Best Practices for Boards
Board members are fiduciaries who owe duties of care, loyalty and obedience to the foundations they serve. With this in mind, there are common requirements and best practices board members should review annually. Because foundations are as varied as the donors who fund them, requirements may vary. Consult with an attorney or tax professional if appropriate.
Board Governance
The board should play an active role in guiding the foundation. This starts with developing and periodically updating policies and documents that describe the foundation’s mission and vision, long- and short-term goals, responsibilities and metrics to measure success. These documents should include but are not limited to:
- Annual calendar of board meetings
- Board membership criteria
- Board responsibilities
- Conflict of interest policy
- Gift acceptance policy
- Investment policy statement
- Perpetuity or sunset
- Travel and expense reimbursement
- Trustee compensation
To ensure continuity and avoid disruptions, there should be a plan in place for board members’ succession. Formal policies should anticipate both planned and unplanned turnover at the board and, if applicable, executive leadership levels. Consider engaging prospective board members in foundation business as committee or junior board members to get them acclimated.
Since every director and officer (D&O) has meaningful exposure to personal liability, determine if D&O liability insurance is needed. D&O insurance protects the organization, its directors, officers, employees and volunteers against “wrongful acts” in governing and managing the organization. Wrongful acts include allegations of breach of duty, errors and omissions, and other acts that cause harm to the organization or its members. If purchasing D&O insurance, review and understand coverage limits and policy terms.
Read the full article about boards and governance from Glenmede at Exponent Philanthropy.