Kelin Gersick and others have noted that philanthropic families often make the mistake of under-investing in governance. Whether it's due to an intense focus on grantmaking or a desire to keep perceived “overhead” costs low, families often neglect governance issues, limiting their own effectiveness. From your choice of board members to your decisions about how best to train and select future trustees, it is important that you spend sufficient time thinking about your options for effective governance structures.

Family dynamics, the management of philanthropic assets, and effective grantmaking depend very much on a clear, effective system of governance. In fact, NCFP Senior Fellow Alice Buhl recommends creating a governance committee to monitor the structure, leadership, and practice of your foundation, similar to the ways you monitor investments.

Clear policies regarding conflicts of interest and compensation ensure your foundation adheres to the law. Directors’ and officers’ liability insurance protects your board. Guidelines on quorum, meeting agendas, and meeting schedules promote productive practice. Clear, fair policies regarding qualifications for board membership, board member job descriptions, and nomination and removal procedures govern family expectations and ensure that the board has access to the talent and resources it needs to succeed.