Who is in charge in a foundation?

The director of a small nonprofit organization receives a rejection letter for her project from a grant-making foundation. Slightly disappointed, she decides to request a further explanation. She is sent from pillar to post. To prevent non-responsibility in perpetuity, foundations need to create an active governance structure.

In her disappointment, the director of the nonprofit calls the foundation office.

“Who is in charge in this foundation”, she asks.

“I am just doing the administration and sending the letters out”, answers the clerk on the phone. “You might ask the program officer!”

“Oh, I loved your project”, answered the program officer in the next call. “But I only take a first look and separate the promising projects from the insufficient ones. I will forward your request to the head of division.”

The next day, she receives an email from the head of division. “I really regret the rejection, but I am only making suggestions to the management of the foundation. They are responsible for everything here in the foundation.”

The nonprofit director writes an email to the managing director and receives a similar answer: “Thank you for your email, but we only decide based on the strategic guidelines of the board. They have the final call.”

The week after, she happens to speak to the foundation board chairman at a reception.

“You have to understand: the board can only decide based on the will of the founder. He died ten years ago. We just keep up his legacy!”

In her dreams, the nonprofit director reaches the dead founder.

“My legacy!”, he exclaims. “What they are doing in the foundation goes far beyond of what I had ever thought. But what can I do from below the earth?”

The nonprofit director awakes puzzled. As it seems, a foundation can remain in a status of non-responsibility in perpetuity!

Foundation governance needs leadership

Grant-making foundations actually bear the risk that all people involved are bystanders and layaway by annual budgets and continued project funding. In order to prevent this situation, board and management have to actively clarify, who is in charge of strategic alignment in the foundation. Some foundations have a board-dominated governance structure with an active and influential board. Others have a CEO-dominated structure, in which the board serves as a sounding board. Finally, a shared governance structure might also work, in which board and CEO develop and implement strategic decisions together.

Irrespective of the chosen model, taking responsibility in a foundation needs much more self-commitment than in other organizational forms, because there is a lack of external pressure. Hence, either board or CEO have to take up the issue and remind themselves of their responsibility.

More on the governance of foundations:

von Schnurbein, G. (2021). " The governance of foundations". In Research Handbook on Nonprofit Governance. Cheltenham, UK: Edward Elgar Publishing. 236-257 https://www.elgaronline.com/view/edcoll/9781788114905/9781788114905.00023.xml

Sprecher, Th.; Egger, Ph.; von Schnurbein, G. (2021). Swiss Foundation Code. Zurich: Schulthess. https://www.swissfoundations.ch/wp-content/uploads/2021/06/9783727206849.pdf (free download)