Foundation Management Survey Reveals Governance and Expenses of Foundation Boards
Findings Inform Efforts to Strengthen Leadership, Mission
ARLINGTON, VA—The Council on Foundations released its three-part 2010 Foundation Management Series, which provides a snapshot of governance practices and administrative expenses. The findings enable foundations to benchmark their practices against peer organizations in the field, which in turn informs their efforts to strengthen leadership and governance.
The Management Series comprises three reports: “Board Composition and Compensation,” “Administrative and Investment Expenses,” and “Fiscal Oversight.”
“This is a valuable resource for foundations as they examine their own leadership and governance practices to identify areas for improvement,” said Steve Gunderson, president and CEO of the Council on Foundations. “These are important considerations for foundations working to more effectively advance their mission and better serve those in need.”
More than 500 foundations provided information, when available, on their boards’ demographics, compensation and reimbursement practices, ethics and diversity policies, and fiscal and administrative activities through 2009, the most recent date for which the data is available.
- The median number of board members is 12. Community foundations indicated the most (16), and family foundations the fewest (7).
- About three-quarters of board members (74 percent) are over age 50, followed by 18 percent who are age 40 to 49. Family foundations reported the largest share of board members under age 40 (16 percent).
- Respondents indicated that the majority of board membership is male (nearly 62 percent).
A significant majority of board members are white (85 percent), with African-Americans making up 7 percent, Hispanics 4 percent, and Asian/Pacific Islanders 2 percent.
- Survey participants were asked to share, to the best of their knowledge, how many of their board members are lesbian, gay, bisexual, or transgender. Sixteen percent reported having at least one LGBT board member.
- Twenty-nine percent reported that their foundations have a written policy on board diversity.
Administrative and Investment Expenses
- Most foundations do not pay their board members (76 percent).
- Among respondents who do compensate their board members, most (65 percent) provide all board members with fixed fees, such as annual, committee-based, or per-board-meeting fees.
- The median amount of compensation paid to the board as a whole is $50,750.
- The median annual fee for board chairs is $18,000 ($10,000 for other board members), the median board meeting fee is $1,000, and the median committee meeting fee is $650.
- For other board members, the median annual fee is $10,000, and the median board meeting fee is $1,000.
These findings allow independent and family foundations to benchmark a range of expense ratios against others in the field. Community foundations can benchmark their program expenses.
Fiscal Oversight :
- Among 234 staffed independent and family foundation respondents, administrative expenses represent a median 15.8 percent share of qualifying charitable distributions. Qualifying distributions include all expenses that qualify toward meeting the IRS payout requirement for foundations.
- Larger foundations reported lower expense ratios due to economies of scale.
- Median investment expenses total 0.6 percent of net noncharitable use assets for independent and family foundations.
- For community foundation respondents, program expenses represent a median 12.4 percent share of their overall qualifying distributions.
These findings allow grantmakers to benchmark the use of independent auditors, board oversight activities, the impact of audit results, conflict of interest policies, directors and officers liability insurance, discretionary giving, and matching gifts.
- Nearly all foundations used independent accounting firms in 2009, and nearly three out of five require full board approval for the use of such firms.
- Only one-third of foundations strengthened their internal management controls in 2009 based in the findings of their 2008 audit. Most took no action or made no changes to policies and practices.
- Nearly nine out of 10 foundations provide directors and officers liability insurance.
The Foundation Management Survey included responses from independent and family, community, and public foundations of various asset and giving levels. Survey participants included Council on Foundations members and nonmembers. Media interested in obtaining a copy of the full report, including data specific to the composition and compensation of community, independent, family, and public foundations, should contact Ashley Mills at email@example.com or 703-879-0771.
The Council on Foundations (www.cof.org), formed in 1949, is a nonprofit membership association of grantmaking foundations and corporations. Members of the Council include more than 1,750 independent, operating, community, public, and company-sponsored foundations, and corporate giving programs in the United States and abroad. The Council’s mission is to provide the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance, and sustain their ability to advance the common good.
Council on Foundations