Involving Non-Family Members in the Foundation
Editor’s Note: Originally posted to Exponent Philanthropy’s blog.
Many of our clients consider whether to involve non-family board members either early in the formation of their foundation or at some point during the foundation’s growth and development. This article discusses factors to consider in determining whether and how to include “outsiders”: the selection criteria of non-family members for board service; practices to ensure their effective involvement once elected; and other opportunities for non-family members to help advance the foundation’s mission and goals.
Types of outsiders that our clients often bring on to their foundations include:
- Professionals with specialized knowledge (e.g., legal and financial experts)
- Representatives from the constituencies or communities that they serve
- Nonprofit practitioners in the areas the foundation funds
- Experts in a particular sphere or field where the foundation’s work is directed (e.g., scientists, artists, futurists)
- Spokespersons or thought leaders in a particular cause or field
- Politicians and other community leaders
Benefits of Non-Family Member Involvement
As a first step in making this decision, we advise our clients to clarify their reasons for bringing on outside members. Adding non-family members may help the board:
Supplement skills, expertise, and networks: Family members may not have specialized legal, accounting, or investment management skills. They might lack ties to the community they seek to impact, mastery of the pertinent issues, or grantmaking experience. Outside professionals may contribute valuable insight and contacts to the foundation, and help it to make better informed decisions.
Augment diversity: Adding a variety of backgrounds and experiences (professional, personal, cultural, and ethnic) to the board can open it to fresh perspectives and insight.
Prevent family dynamics from derailing productivity: The presence of outsiders tends to encourage more “professional” family interactions. Also, unlike family members, non-family members are rarely influenced by family hierarchy, loyalty, and other emotional distractions. For example, whereas a younger family board member may feel compelled to side with parents or siblings, a non-family member feels no such compunction. This degree of emotional neutrality can help the foundation stay focused on its goals, rather than on personalities or generational issues of respect and deference.
Enhance the foundation’s public standing: Bringing on outsiders fosters public confidence, ensuring that the foundation adheres to standards of professionalism and fairness.
Understanding the underlying rationale for bringing on new members helps many families develop selection criteria, identifying the specific attributes and skills they wish to add to the board. Key qualifications to consider might include:
- Specific program expertise in the foundation’s areas of interest
- Specialized knowledge or skills (legal, accounting, investment management, marketing, administrative)
- Age (and whether multiple generations should be represented)
- Understanding of community or regional needs
- Local networks and connections
- Past board experience (nonprofit, foundation, corporate)
- Gender, race, geographic, or ethnic background
- Ideology or political sympathies
- Other skills and attributes that may be important to the founder or the family
It is perfectly acceptable to have selection criteria for non-family directors that might disqualify sitting family members if it were applied to them. Although families can’t choose their relatives, they can choose their board members!
Although there are numerous advantages to having outside board members, it is helpful to be aware of the potential downsides or conflicts that some families have experienced in bringing on non-family members:
- Outsiders may not be particularly focused on planning or involving the next generation. They tend to focus on the here and now rather than the legacy of the donor or family.
- Non-family members who were chosen specifically to represent the interests of their community tend to be conservative regarding the geographic focus of projects. Quite naturally, they may resist efforts to diversify granting regions or expand the scope of the foundation’s giving.
- All board members have voting rights and vote as equals with family members. As with any democratic structure, board decisions are made by a majority vote. If you bring on outsiders to the foundation’s board, it’s certainly possible that those additional votes could effectively override the founder’s and family’s wishes.
- Family members are usually more polite to non-family than they are with one another. The collective desire to maintain decorum in front of outsiders may stifle frank discussion.
- In some cases, family members might be intimidated by an outsider’s status as an expert or disinterested party. Although each board member enjoys equal voting rights, an outsider might exert undue influence.
- Once involved, non-family board members are difficult to remove. Service on a foundation board is an attractive position and some non-family board members may wear out both their welcome and utility.
We have discovered several practices that lead to a more successful integration and use of non-family board members:
- Articulate in specific terms and in writing why you seek to add non-family members to the board and outline the role you wish them to play.
- Consider alternative ways to involve non-family members in the foundation (see the section on “other ways” below).
- Elicit and welcome the different perspective non-family members bring to the board. Ask that the family members listen to, consider, and involve the non-family member to ensure their effective participation. It often helps to seek input from the non-family member between board meetings to get the full benefit of their observations, ideas, and perspectives.
- Set parameters on grantmaking policies as a board so that you agree to geographic focus and program scope as well as procedures for changing those parameters.
- Set term limits for non-family members. Although rarely set for family board members, term limits provide a structure to rotate talent and avoid burn-out among non-family board members. In addition, put in place a review process to evaluate the contributions of non-family board members that provides an option to extend that board member’s term if so desired.
Other Ways to Involve Non-Family Members
We often caution our clients to proceed slowly and deliberately before adding non-family members to the board. There are several ways you can include a diversity of viewpoints and skill sets in your foundation’s decision-making and activities without taking the bigger and more permanent step of adding members to your board. These include:
Forming an advisory board: An advisory board is typically a group of volunteers assembled to supplement the governance activities carried out by a foundation’s board or the management tasks carried out by its staff. Unlike board committees, advisory groups are usually composed of outsiders (although they might include one or two board members as well). Advisory boards perform a variety of jobs, such as assessing the need for new programs, providing an external perspective on grantmaking activities, or advising the foundation’s investment policies. Although advisory boards may have a great deal of responsibility, they have no legal responsibilities or decision-making authority. They have no vested right to serve, and no immunity from removal. This structure allows you to test the use of non-family members in an advisory capacity. You can always appoint them to the board in an official capacity later. Your bylaws or a board resolution should empower the board to establish an advisory committee and appoint or remove its members.
Inviting speakers to board meetings: Include a variety of perspectives by inviting subject matter experts, members of the community, or nonprofit leaders to present to the board or engage in a discussion about a given topic or issue.
Conducting needs assessment/community studies: Commission or participate in a community needs assessment that provides an opportunity for community members to identify areas that are priority concerns. The foundation should consider this input in developing its focus and rendering grantmaking decisions. The needs assessment might involve some combination of interviews with key informants in the community or field, surveys, focus group discussions, and meetings with community leaders.
Adding non-family members presents an opportunity to bring new voices and skill sets to the table. These diversified voices can help bring creative and fresh perspectives to the foundation, new competencies, and new focus to its mission. However, the board must carefully weigh the benefits and disadvantages of including non-family members. Ultimately, a less official role for non-family involvement at the outset may yield a more satisfactory outcome.
Sources: “Ten Ways Family Members Can Include the Viewpoints of Others,” Council on Foundations (COF). Gersick, Kelin E. Generations of Giving. Lexington Group, 2004.
Foundation Source is the nation’s largest provider of comprehensive support services for private foundations. Its complete outsourced solution includes foundation creation (as needed), administrative support, active compliance monitoring, philanthropic advisory, tax and legal expertise, and online foundation management tools.
Now in its second decade, Foundation Source provides its services to more than 1,500 family, corporate, and professionally staffed foundations, of all sizes, nationwide. Foundation Source works in partnership with wealth management firms, law firms, accounting firms, and family offices as well as directly with individuals and families. Foundation Source is headquartered in Fairfield, Connecticut.