Family foundations often begin with a singular vision—a passion passed down through generations, or an individual’s desire to make a lasting difference that extends beyond their life. As these foundations grow, however, their governance needs can become more complex.
Governance refers to the systems, structures, and processes used to ensure a foundation is effectively managed, operates ethically, and fulfills its mission responsibly.
One of the strategies shown to be most effective for improving the governance and impact of family foundations is bringing independent (AKA not family) directors onto the board. I’ve walked with several family foundation clients through this process, and it is easier said than done! And yet, it’s worth the work. The inclusion of individuals from outside the family not only broadens the foundation’s perspective but can also improve decision-making, balance family dynamics, and ensure professional oversight.
Why Independent Directors Matter
There’s a wide range of compelling reasons for seeking independent board members. First and foremost, they bring new expertise to the table. Independent directors often have experience in critical fields, such as nonprofit management, philanthropy, specific issues and communities, legal matters, or financial oversight, which can elevate the foundation’s base operations. For family foundations, an independent board member can also act as a trusted advisor, especially when the founder is still actively involved in the foundation. Their outsider status helps them remain objective, offering independent counsel that balances family dynamics and adds a fresh perspective into the mix.
Moreover, independent directors can help ensure that a foundation’s operations are professional and aligned with its mission. In many cases, as family members retire or become less involved, the foundation board may face a lack of capacity, technical expertise, or interest. Independent board members can step in to fill these gaps, serving as a mentor and resource for rising generations and ensuring that the foundation remains vibrant and effective while committed to its core values.
Additionally, bringing in independent members can enhance the foundation’s diversity, infusing it with new perspectives based on age, race, gender, or lived experiences that may not be represented within the family. This is especially important for foundations working on issues related to equity and justice, where diverse viewpoints are essential to making informed decisions and driving meaningful change.
Assessing Internal Readiness
Before embarking on the search for independent directors, it’s important for a family foundation to pause and internally assess its readiness. This means understanding the current state of the board, its values, and its capacity to work with non-family members. One of the first steps is assessing whether there is willingness within the board to candidly assess the foundation’s strengths and weaknesses. This type of self-reflection helps identify what skills and expertise are needed in an independent director. Additionally, a culture of trust and openness is crucial—if a foundation is to succeed with an independent board member, the family members and existing directors must be open to embracing new perspectives and approaches.
An important consideration is whether the board is willing to adapt its roles and norms to accommodate an independent director. This may require revisiting the structure of board meetings, setting clear expectations around the roles and responsibilities of family and non-family members, and ensuring there is space for independent directors to contribute meaningfully. For example, establishing clear terms for independent directors, with opportunities for renewal but no lifetime appointments, ensures flexibility and adaptability as the foundation evolves. Board members should also consider how potential compensation will be addressed and how the new member will be integrated into—and able to contribute to—the foundation’s culture.
Finding the Best Fit
The process of selecting an independent director is both art and science. It starts by identifying the skills, qualities, and experiences that will complement the existing board. A strong candidate may have professional experience in areas like law, finance, or nonprofit leadership, but soft skills such as communication, diplomacy, and conflict management are just as crucial. Board members should prioritize candidates who bring integrity, humility, and curiosity to the table. It’s also important to think about diversity—not just in terms of demographics but also in terms of lived experiences and perspectives. Candidates with backgrounds that align with or could advance a foundation’s goals can strengthen a board’s ability to navigate through uncertainty—societally, politically, and globally—in the future.
Recruitment strategies can vary. While some foundations may look to their networks for recommendations, others may choose a more formal approach, such as posting a job description or working with a board placement intermediary or search firm. Regardless of the method, it’s essential that the selection process is inclusive and transparent to avoid any perceptions of favoritism. The goal is to find someone who aligns with the foundation’s mission and supplements its skillsets while also helping it think in new ways – rather than a simply agreeable candidate.
Onboarding an Independent Director
Once an independent director is selected, the onboarding process is crucial for ensuring their success. A well-structured onboarding plan can make all the difference in how quickly and effectively a new board member becomes integrated. This should include familiarizing the new director with the foundation’s history, strategy, and key documents, such as its bylaws and past grant lists. It’s also beneficial to schedule one-on-one meetings between the new director and family members or other board members to build rapport and trust.
One of the most critical components of the first few meetings is setting the right tone. Foundation board members should seek to embrace curiosity, openness, and humility in discussions, encouraging a healthy exchange of ideas and acknowledging that it’s okay to disagree as long as it’s done respectfully. Additionally, it’s important to recognize that an independent director may experience “imposter syndrome,” especially if they are new to philanthropy or the nonprofit sector. Creating an environment that is welcoming and supportive of diverse perspectives helps build a foundation for success.
Building Stronger Foundations with Independent Leadership
Bringing independent directors onto family foundation boards is not just a governance strategy—it’s an investment in the foundation’s long-term impact. By integrating diverse perspectives, expertise, and lived experiences, family foundations can navigate complex challenges more effectively, whether they’re tackling social justice issues, mitigating climate change, or investing in education. However, successful integration requires thoughtful planning and a culture of openness, which TPI’s team can help you map out and build. By ensuring that both family and independent directors are aligned in their goals, foundations can create a more dynamic, accountable, and impactful organization that will have a stronger impact on the issues, places and communities they care about.
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This blog coincides with a presentation that Lisa Spalding, TPI Senior Partner, shared on November 14, 2024, at the 2024 Exponent Philanthropy Annual Conference in Austin, TX. If you have any questions about this topic or would like to engage TPI for consulting support around family foundation governance, please contact Lisa at LSpalding@tpi.org.
