The founder ran the foundation as her personal charitable checkbook for many years, but she died unexpectedly and the board must now work together to run the foundation.
How does a foundation transition to a group decision-making process?
The transition from individual leadership to a foundation managed by a group of board members can be the most challenging period of a foundation’s life. The founder typically knows what he or she wants to do, and does it. If a board is in place, its members are pleased to support the founder’s leadership because it is he or she who created the wealth. But after the passing of the founder, the board is typically faced with a significant change in the method by which it operates. The danger is that the foundation can be pulled in multiple directions, fueled by the individual interests of the board.
In this case study, the founder’s unexpected passing left the foundation with no direction: no mission statement, no statement of values, no grantmaking guidelines, and no application procedures. To complicate matters, the foundation had a required payout that year of $50 million. The board of directors was composed of a small group of family members and friends, none of whom had any experience in philanthropy. Further, there were strong differences among the board of directors regarding the direction of the foundation. The board was served by an excellent team of attorneys, but relying on the lawyers to lead the foundation forward wasn’t practical and would have been expensive, given the hourly rates. The board members were stymied; they weren’t sure how to move forward, especially with a large payout hovering over them.
Our firm was interviewed by the board of directors and charged with putting in place the necessary building blocks for the foundation to move forward. Seeking to establish unanimity and harmony, we interviewed each board member to establish:
- The goals for the foundation
- The values of the family
- The charitable interests of the founder and the family, and
- Potential grantmaking areas of interest.
The purpose of this exercise wasn’t only to gather this information, but also to ensure that the views of all board members were heard and considered. Despite their differences, there were shared interests and values among the board members, and there was a shared desire to honor the interests of the founder. As a result of this interview process, we were able to create both a mission statement and a values statement for the foundation.
With a mission statement in place, the decision-making process of the board was considerably eased and shortened. Some projects fit the mission well, and others did not. As a result, the board was able to meet its $50 million payout requirement that year, with unanimous approval of every grant. Having agreed on a common purpose for the foundation, the board members were able to put their many differences behind them.
Despite little direction from the founder, new mission and values statements allowed the board to put its differences aside and unanimously approve a large number of grants.