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Understanding Stewardship


When trustees assume duties of obedience to, loyalty to, and care for the foundation, they accept the responsibility to manage the foundation’s investments in the service of the foundation’s charitable purpose. This has two important implications. First, assets are not necessarily managed to maximize their value but to serve the foundation’s mission. For example, if the foundation’s mission is perhaps better served by making large grants right away, investments may need to be handled differently. Discuss how mission and the question of perpetuity might inform and affect your investment strategy. Second, foundations are governed by very important self-dealing rules that prevent disqualified persons from illegally benefiting from their philanthropic roles.

While others may handle the details, all board members should be familiar with the foundation’s investment philosophy and policy and be equipped to evaluate the advice of financial, investment, and tax professionals.

Related Reading

Avoiding Conflicts of Interest and Self-Dealing

1999
Trustees must ensure that their family fund or foundation adheres to federal law on conflicts of interest and self-dealing. These rules, discussed in detail in this chapter, prohibit the trustees themselves, certain family members, managers, and other 'disqualified persons' from benefiting from the philanthropic activities.
[POE5d]

Understanding Trustee Responsibilities and Duties

1999
What are the formal duties and responsibilities trustees have with regard to endowment management? How, and by whom, can those responsibilities be met? And, how will the full board know if the endowment is being managed to the optimal benefit of the foundation? These and other related topics are the subject of this chapter.
[POE5b]