Whether you are in the early stages of creating a private foundation, or have been running a foundation for some time, having the right board of directors can be critical to the achievement of your philanthropic objectives.

Board Composition

An active, well-balanced board can share management responsibilities, bring valuable perspectives to your grantmaking, provide technical advice, and enhance the enjoyment and satisfaction that you receive from your foundation. Your foundation by-laws, usually established at the creation of the foundation, provide a road map for the board. The by-laws can determine the structure and responsibilities of the board, including the number of board members, the way they are elected, and their qualifications to serve.

Because many foundations have a family-driven mission, family members are often considered as first choices for board members. While family members are one subset to consider, the circle of potential board member candidates can be cast more broadly.

• Family Members — Family members are common choices for the family foundation's board, typically involving the founding donor and spouse as board members. Over time, children and other family members may be asked to join. Board terms can be for a term of years, although family board members sometimes serve lifetime appointments.
• Advisors — A trusted advisor, such as the family attorney, may be asked to serve on the foundation's board. Having a professional advisor on the board can help the foundation comply with legal and regulatory requirements including various reporting obligations and also assist the foundation in understanding and structuring foundation transactions to avoid regulatory issues such as "self-dealing" — the prohibited use of your foundation to benefit family members and relations.
• Outside Directors — Individuals from outside the family may also be invited to serve on the foundation's board, usually because of certain special expertise they possess — such as knowledge of the field(s) where your grants are made — or sometimes just to add balanced judgment and a different perspective. Professional contacts, or individuals with expertise in the charitable purpose on which the foundation focuses, are some of the potential sources of outside directors.

Board Size

The size of your board, and whether it should include outside members as well as family members, will depend in large part on how the foundation is set up through its Articles of Incorporation and by-laws, and in the future, on the flexibility these documents have established for change. Establishing the initial board composition or changing the original composition at a later date may be necessitated by the level of foundation assets and the nature of your grantmaking.

In addition, the size of your family or the level of family involvement you seek may influence the size of the board. Large families often consider rotating either the terms of service or the roles of family board members.

Remember, even if your board has already been formed, you may still be able to make changes to board member composition by amending your by-laws. In most cases, you can change the number of members, selection process, term of board service, meeting frequency, and the qualifications for board membership, as the needs of the foundation change over time.

With a relatively small asset base and small grants, you and your family may feel quite comfortable making grant decisions on your own. If your foundation has more assets and/or you need to handle a larger number of grant requests, the involvement of a greater number of board members may be helpful.

Board Member Characteristics

Certain characteristics are desirable when deciding who will sit on your board. You may wish to look for board members with the following attributes:

• Commitment to philanthropy, the foundation and its fields of interest
• Ability to work well within a group
• Objectivity and impartiality
• Interest in philanthropy and sensitivity to community needs
• Experience in management, investments, budgets, or the law
• Enthusiasm and willingness to participate

Effectively Utilizing Your Board

Typically, a well-functioning foundation board is one that is composed of individual board members each with specific and meaningful responsibilities.

Consider assigning each board member to specific tasks, and structuring the board with overlapping terms of office to ensure continuity in decision-making. Then, as board vacancies occur, select new board members with qualities, skills and expertise suited to the particular task of the vacancy. Among family members, look beyond the founders and encourage succeeding generations to participate. Families with large numbers of younger individuals might consider creating a "junior board" with special responsibilities and monitored decision-making capabilities.

For smaller and mid-sized foundations, an active board may obviate the need to hire individuals to assist the foundation. If your foundation employs staff, then board members can be assigned to serve on specific committees to oversee these various staff functions.

If you decide to add outside board members, you should think through all of the implications beforehand.

• Will current board members be ready to share authority, particularly regarding grantmaking?
• How long should outside board member terms be?
• What are the foundation's options if an outside board member doesn't work out?
• Defining the processes for answering these questions up front can make it easier to manage the board on an ongoing basis. Any changes in foundation governance need to be carefully analyzed from a legal perspective including whether documents such as the by-laws need adjustment, before they are implemented.

Creating Boards for the Long-Term

Finally, when setting up your foundation, you might wish to consider what type of board structure your foundation will need as it evolves.

If your foundation may eventually employ staff or if there may be a time when family members are no longer directly involved, make sure that you document the type of oversight that you desire, i.e., surrounding family control.

Carefully considering the selection of board members and writing clear foundation by-laws outlining board responsibilities can ensure that your private foundation is well run while you are in charge and, if established in perpetuity, will continue to fulfill its mission for generations to come.

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