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Establishing board polices that reinforce donor intent is essential to institutionalizing your philanthropic legacy. Having defined and memorialized your mission in your philanthropy’s originating documents, it is now necessary to think about how these legal documents will become functional. Legal papers that codify your charitable intentions are a necessary but, unfortunately, not sufficient step in securing your philanthropic mission. Your mission must be made operational.
How, practically speaking, will your heirs, board members, and directors come to know your intentions? What steps can be taken to ensure that these documents are not ignored, that they instead become the operational framework that guides day-to-day grantmaking? How will your intent shape the culture at the entity you create?
A culture that honors your intent begins with your board, for they are the ones who are legally and morally bound to uphold your mission as it is established in your foundational documents. Taking steps to institute policies that will assist them in understanding, defending, and implementing your intentions, especially after you are gone, will help them to secure your charitable purpose. There are numerous board policies that can be adopted—from a simple reading of bylaws and mission statement prior to each directors’ meeting to annual donor-intent reviews—to help make your philanthropic intentions operational.
Reviewing Your Mission at Board Meetings
The first step in institutionalizing your mission is to ensure that those who are charged with carrying it out know and understand what it is. To this end, some foundations have adopted the practice of reading and discussing their originating documents at their annual meeting. Others do it at each and every meeting of their board of directors.
Reading the foundation’s mission statement reminds directors of their founder’s original purpose and, through discussion, gives them the opportunity to ask how they are measuring up to their donor’s intent. Furthermore, it gives board members the proper lens through which to view the business of the foundation before them at each meeting.
You may also consider having legacy statements printed at the top of their meeting agenda or in the front of their board book. This helps to constantly remind the directors of the founder’s charitable purpose. Unless time is set aside in the agenda to discuss the entity’s mission, however, it may go unread. Some foundations schedule a portion of each meeting, or at least each annual meeting or annual retreat, to review and discuss founding documents and other relevant materials authored by, or pertaining to, the donor, including legacy statements, interviews, or letters. Others invite past board chairs and senior family members to their meetings to discuss the grantmaking history of the foundation and its founder.
At the Daniels Fund, most of the directors have been video-recorded discussing their relationship with the founder, Bill Daniels, and how they understand his donor intent. Their bylaws require that time is set aside at each annual meeting to reflect on Daniels and his philosophy of giving, and each year a director is asked to prepare a presentation discussing Daniels’ intentions. Other foundations begin each board meeting by sharing a story, correspondence, or testimonial about a grant that is manifestly advancing the foundation’s mission.
The aim of these exercises goes beyond merely transmitting the words of the founder to current and future generations. The object is to create a culture that honors donor intent within the organization. When staff and grantees see that your board takes time from their busy schedule to review, to understand in light of changing circumstances, and to honor your intentions, it resonates. Such practices instill and reinforce a sense that the founder’s intent should guide every important decision that the organization makes. This kind of culture within the organization is transmitted outside the organization to grantees and potential grantees. When this happens, those who seek support from your philanthropy will not waste their time, or yours, if they think that their work lies outside of your mission. In this way, securing donor intent can become a self-reinforcing activity.
“Read the Entire Indenture, Out Loud, Once a Year”
Our founder, James B. Duke, required his trustees to read the entire indenture, out loud, once a year. We do it every February at our board meeting. It takes about 45 minutes, and it’s a wonderful way for the board and senior management to hear his voice and to focus on his wishes.
—Eugene W. Cochrane Jr.
President, Duke Endowment
Cultivating Fidelity to Your Intent
In addition to repeatedly referencing a foundation’s mission at board meetings, there are other ways to encourage board members to adhere to and to honor donor intent. Recruitment, training, and evaluation of board members are junctures at which members can reflect on their ability to advance a foundation’s mission.
Requiring board members to sign a statement. Your board, for example, may simply adopt a code of ethics that stipulates that members honor donor intent. Prospective board members may be required to participate in an orientation regarding the foundation’s giving values, and then subscribe in writing to the foundation’s mission. The Daniels Fund requires its board members to sign a Statement of Commitment and Understanding. After reviewing a detailed set of documents that describes the life, values, character, and intentions of the founder, directors are asked to sign a statement that reads, in part: “Signing this document affirms your commitment to preserve Bill Daniels’ donor intent and his personal style of conducting business (as described in this document). You agree to set aside your personal views or preferences when acting on behalf of the Daniels Fund. It is the Board’s responsibility to ensure that the Daniels Fund most effectively fulfills Bill Daniels’ intentions and remains true to his ideals. You also acknowledge that you have read this document and understand its importance in guiding the efforts of the Daniels Fund.”
Instituting trustee apprenticeships. The Samuel Roberts Noble Foundation in Ardmore, Oklahoma, has adopted the practice of having apprentices or “advisory-trustees.” These apprentices to the board attend regular trustees’ meetings and receive the same compensation as other board members. They stay abreast of all the activities of the board, rotating off after a one-year period. Some—but not all—apprentice trustees go on to become actual board members. Being an advisor-trustee does not guarantee that one will become a board member. Developing a mechanism for cultivating new trustees or directors through an apprenticeship program is an excellent way to evaluate and identify new board members. Such a mechanism should be a part of any succession planning, especially for perpetual foundations.
Enacting peer review among board members. It is worth considering a process for evaluating and retaining board members based on their commitment to fulfilling your intent. One way to do so is to create a review process that assesses how the individual director respected donor intent in carrying out his duties. Other director or trustee assessments might evaluate whether the candidate is knowledgeable concerning the foundation’s mission and active in carrying it out; whether the candidate devotes ample time, thought, and resources to achieve the mission; whether he has the necessary skills to meet the foundation’s mission; and whether he has the necessary relationships with persons and organizations to advance the foundation’s mission as the donor intended. Here it is important that your bylaws include provisions for selective turnover of board members, or at least a requirement that each member be “re-elected” to the board after a period of time. A re-election process can compel board members to reflect on their performance and the performance of others, and to be more conscientious in carrying out activities consistent with your intentions.
Creating board member removal powers. Annual reviews are not the only mechanisms, of course, for removing board members who are not faithful to your intent from your board. You might give a supermajority of the board the power to remove any individual director, or you could vest that power in a family member, a family advisor, an independent individual, or an existing entity, such as a public charity with which you wish the foundation to have a close relationship. The Roe Foundation, for example, has given the Mont Pelerin Society and the Philadelphia Society—two organizations in which founding benefactor Thomas A. Roe was involved and that share his philosophical outlook—standing to sue the foundation’s board members if they depart from his intent. Be advised, however, that such “watchdog” entities can also take a direction that veers from your intent. (Please see Chapter 7 for further details.)
Grantmaking and Your Intent
Of course, the optimal outcome is to develop a culture that instinctively honors donor intent, one that informs the work not only of your board but also that of your executive director and staff as they go about their day-to-day grantmaking. Nevertheless, it is important as well to take measures to ensure that individual grants fulfill donor intent. It is important, for example, to develop grantmaking guidelines that are in concert with your intent and that clearly communicate the founder’s intentions to potential grantees. Such documents also provide meaningful guidance for program officers and others within your organization, illustrating for them how donor intent becomes operational in the grantmaking process.
The same attention to donor intent should take place in evaluating the performance of grants. At the Arthur N. Rupe Foundation, for example, grant evaluations written by the program officer include a section on how the grant advanced the foundation’s mission. These evaluations are reviewed by the board to ensure that the foundation’s grantmaking is in line with the founder’s intentions.
Board members can also act as important communicators of your charitable intentions to the charitable organizations that your philanthropy supports. In fact at some small and family foundations, board members, rather than staff, cultivate the principal relationships between the foundation and the grantees. In some cases, board members are under considerable pressure from organizations to advance their application for approval with their board, even when it does not fit precisely within the parameters of the donor’s intent. This is an unavoidable fact of the philanthropic world. Having clearly articulated donor-intent guidelines makes it much easier for director or trustees simply to say, “I’m sorry, it just doesn’t fit what we fund.”
Some foundations, in an effort to compensate their trustees and directors for their commitment and to remove the temptation of bringing proposals for pet projects or other proposals that do not align precisely with the foundation’s mission to the board, give their directors discretionary grantmaking authority of a pre-determined amount. The John M. Olin Foundation, for example, had a policy of giving its directors what are sometimes called “board” or “chairman” grants, as do many other foundations. At the Olin Foundation, each board member was allowed to make grants of up to $25,000 (eventually the figure became $100,000).
Some foundations restrict board discretionary grants to the mission of their foundation. Some leave them open-ended. The argument for board discretionary grants is sometimes advanced based on the pragmatic argument that creating an outlet for modest, discretionary board grantmaking removes the temptation to bring such grants to the full consideration of the board, possibly distracting or even diluting the mission. It also recognizes that board members are often badgered with requests for money, even from organizations that have nothing to do with the charitable purpose of the foundation they serve. As a policy intended to help secure donor intent, board discretionary grants serve the purpose of making sure that such requests do not intrude on the principal business of the foundation.
Trust in the Future
There are many steps you can take to protect donor intent among your directors or trustees. All come with a caveat. Board policies that are intended to encourage loyalty should not be so excessive or overly detailed that they stifle engagement. Trustees must have a sense of what their title suggests—that you have some faith in their judgment. Board members who do not believe their contributions are valued may invest time on your board, but they will not invest much effort or imagination, nor will they in fact develop an allegiance to your mission. When possible, therefore, create and adopt policies that inspire and guide board members but that do not call into question their abilities or intentions.
More Donor Intent Resources from The Philanthropy Roundtable
Protecting Donor Intent by Jeffrey J. Cain
- Get an electronic or print version of this practical guidebook.
- The Philanthropy Roundtable website’s special Donor Intent section where you can find our most recent articles and resources related to protecting donor intent.
Donor Intent Resource Library
- This extensive resource library will direct you to the best articles, books, and discussions on the topic of donor intent.