Video Transcript

Family philanthropy serves two purposes: engaging families, and making a social impact. Effective governance ensures the success of both.

Family governance is the way in which your family guides its collective efforts toward its goal. At its most basic, governance answers two questions: who makes the decisions and how?

The 4 Ps of Effective Governance

A governance framework breaks those two questions into The 4 Ps of effective governance:

• people
• principles
• policies
• and practices

People

Let’s start with People. A governance body is a group of people who guide the direction of an organization. This could be a board of directors or trustees, a committee or a task force, or an advisory council. Family members often serve as board members or other decision-makers in family philanthropy. However, governance bodies are increasingly becoming more diverse and inclusive.

To harness the power of diverse perspectives, enlist the help of family members, trusted allies, experts, community voices, and individuals with lived experience to help make decisions.

Use your people power!

For each governing body, document:

• who you hope will participate, now and in the future
• what roles you hope they play
• how those roles are structured
• and what criteria you’ll use for eligibility and selection.

Principles

Next are Principles. Governing principles are agreements that guide how a group makes decisions and manages operations. They formally describe how decision-makers put their values into action, so that families aren’t relying on handed-down traditions or informal rules. Governance principles can be statements about ethics, transparency, leadership, or stewardship.

Policies

Then there are Policies, which are the rules, guidelines, and parameters for using your principles to tackle common issues. Policies can turn informal family decision-making into structured governance.

Legal and Regulatory Policies are created by government agencies or financial institutions. Organizational Policies are created by a governing body, and include documents like articles of incorporation, bylaws, or a donor intent statement.

Practices

Finally, there are Practices. Practices are the procedures that fulfill the objectives stated in your policies. They’re a way of putting your values and principles into action. There are:

• Governance Practices—that create clear decision-making processes
• Operating Practices—which guide how you implement your social impact strategy
• and Administrative Procedures—that help you run your philanthropy effectively.

Family Dynamics

A governance framework is influenced by family dynamics, which are the patterns of interactions among relatives.

As you think about how to create your governance framework, ask yourself:

• Whose voices are or should be included in making decisions?
• Are you creating a governance framework that serves the broader philanthropy, and not individual family members?
• How are you thinking about accountability within this framework?

To nurture productive patterns of interaction, find ways to:

• support both the individual and the group
• nurture family culture
• strive for resiliency in the face of challenges
• plan for disagreement and conflict
• and recruit help in the form of mediators or advisors.

Your governance framework gives everyone involved a clearer roadmap for meaningful, effective participation in your philanthropy.

For additional resources on the topics in this guide, visit The National Center for Family Philanthropy.

Dive deeper into Strengthening Governance and Family Dynamics