posted on: Monday, November 23, 2009

By Kevin Laskowski



Philanthropy has exploded in the past two decades. There are more foundations, funds, ways to give, and dollars being given than ever before, but is the sector growing too fast?

A new survey of 185 family foundations from the National Center for Family Philanthropy reveals a “troubling” statistic:

Only about half of all responding foundations (53 percent) have [a conflict-of-interest policy]. Having such a policy indicates the board has discussed the issue and has awareness and explicit expectations of board members regarding potential conflicts of interest. Twenty-six percent reported having a written code of ethics, and only 18 percent have a formal process to review legal compliance issues. Forty-six percent of the foundations said they currently do not have any of these (see Figure 4). (emphasis added)

This finding is an important barometer for the sector as a whole. Family foundations comprise more than half of the foundation field at large. They account for roughly half of all giving, assets, and new gifts and bequests from donors among independent foundations. According to the Foundation Center, both the number and giving of family foundations has doubled since the 1990s.

The Association of Small Foundations discovered similar statistics among its members in its 2008-2009 Foundation Operations and Management Report. In that survey, 58 percent of respondents reported having a conflict of interest policy.

Looking at this new survey from NCFP, it seems that a significant number of family foundations take their obligations to the public trust seriously. One way that foundations and other charitable organizations can signal that they take seriously the need for accountability and transparency in their operations is to adopt and implement policies that support ethical behavior. These include policies on conflict of interest, whistleblowers, and executive compensation. However, the number of foundations that haven’t adopted these hallmarks of well-governed organizations is of concern, especially when conflict of interest policies and codes of ethics are so readily available.

Despite the best efforts of the field’s grantmaker associations, it would seem that many philanthropies just don’t know that this information is available or how important these policies are. NCFP surveyed a random sample of family foundations—not its members or the more accessible members of regional or national associations. Eighty-four percent of respondents were members of the donor family, and few respondents reported board members attending conferences and making use of association events and resources.

NCFP President Virginia Esposito contends that, since family members volunteered this information, it’s unlikely that the lack of certain policies is an intentional oversight.

“Given how many families took the time to fill this out with care and candor, we don’t believe that this is anything other than a lack of awareness about what these policies are and how they can enhance grantmaking process,” she says. “It’s more the product of a field that has grown so fast it has outpaced our ability to regulate or socialize it.”

Read more about ways that foundations can be more accountable and transparent in Chapter 3 of Criteria for Philanthropy at Its Best.

What do you think? Given how the field of family philanthropy has grown so large, so quickly in recent years, what can be done to spread the word regarding the need to adopt policies and practices that promote ethical behavior within organizations?



Kevin Laskowski is a Field Associate with the National Committee for Responsive Philanthropy. Kevin previously served as Program Coordinator at the National Center for Family Philanthropy and assisted in developing the survey mentioned here.

posted on: Thursday, July 30, 2009

Gary Snyder

I guess I am confused.

The ink is hardly dry on the Principles for Good Governance and Ethical Practice Workbook issued this month and now Independent Sector is seeking to strengthen charities with its StrategicLab Conference in Colorado Springs.

The Principles were not without controversy. It cost the IS and its contributors hundreds of thousands of dollars to turn out. IS president, Diana Aviv, readily acknowledged to the Chronicle of Philanthropy that the implementation of the changes in the Principles could cost the government hundreds of millions of dollars.

Also, there is still some question as to any systemic positive change that has resulted as an outgrowth of the document. Some have concerns about the lack of follow through on the Principles before embarking on other important issues. What is the status of the IS Advisory Committee on Self-Regulation of the Charitable Sector that was an outgrowth of the Principles? What ever happened to self-regulation and taking advantage of well-developed infrastructure currently existing within the sector?

The Principles have had some effect, however. Compromising on its call for self-regulation, the document cried out for government intervention into the sector. As a result, small and medium sized agencies are choking on Internal Revenue Service mandates. Furthermore, IS has called for increased federal government involvement by seeking an agency similar to the Small Business Administration. Obviously the call for such an agency must have been without insight because the SBA is considered to be one of the least respected agencies in the federal government and replete with incompetence.

So here we are at another forum that IS has convened. The StrategicLab meeting is contentious also. The Internet is replete with criticism that there are few Generation Y leaders asked to join in the deliberations. This is similar to the call for more diversity in the development of the Principles. Some then questioned the outcomes given the lack of diversity of viewpoints and now others are suggesting that The StrategicLab is another meeting at which an exclusive group is deliberating on behalf of the entire sector.

Should we be afraid of the consequences or that this is another false start?


Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

posted on: Monday, June 29, 2009

By Yna C. Moore

Bernard Madoff received a 150-year sentence from a federal court in New York today. He was given the maximum sentence, but for many individuals and organizations that have lost an estimated of more than $13 billion to his Ponzi scheme, this brings little consolation.

Among Madoff’s victims were nearly 150 foundations, 105 of which lost between 30 to 100 percent of their assets to Madoff. What can other foundations learn from their mistakes and hopefully avoid being scammed by the next slick operator?

In today’s The Huffington Post, Aaron Dorfman summarizes the findings of Learning from Madoff: Lessons for Foundation Boards. He noted that more than 80 percent of those foundations that showed poor judgment by investing heavily on Madoff had four or fewer individuals serving on their boards. There was also a marked homogeneity among the trustees.

The results of the study puts into question the ability of these small, homogenous groups to make the best decisions for their organizations.

According to Aaron and the study, foundations need to have at least five trustees with a diversity of perspectives to serve on the board. In addition, trustees must implement and maintain conflict of interest and investment policies, and disclose demographic information of the institution’s board and staff.

Were you surprised about the findings regarding board size and diversity among the foundations victimized by Madoff? What do you think about the recommendation to have a minimum of at least five individuals serving on a foundation’s board?

Yna C. Moore is communications director at the National Committee for Responsive Philanthropy.