When I started this blog last fall, an old friend who had been out of touch for a few years e-mailed me to share his thoughts about what needs to change before we will see widespread improvement in the effectiveness of nonprofit boards.
My friend is a very savvy retired chief executive with decades of experience working with boards, so I respect his opinion, which is that boards are never going to improve significantly unless, in his words, “foundations demand it.”
Foundations are a smaller player in the nonprofit world than most people realize (and than those of us who work at foundations are sometimes willing to admit). Grants from foundations represent only a small fraction—just 13 percent in 2009—of total charitable giving to nonprofits. That may sound substantial, but private contributions are also only a fraction of all nonprofit income.
For many organizations, government grants and contracts, contributions from individual donors, and fees and other “earned” income are much more significant revenue sources than foundation grants.
This raises questions about whether foundations by themselves have enough financial leverage to demand large-scale change.
Beyond the math, foundations already have a reputation for occasionally being unreasonable or overbearing in what we require of grantees, and I hesitate to call for anything that would make us even more so.
However, I also recognize that foundations have a voice and a leadership role that go beyond the value of the grants we make. And many foundations have the flexibility to define their own priorities and set their own requirements, along with the ability to dedicate financial and human resources to address the issues they deem critical.
I’m not yet convinced, but I did promise that I would raise the question to readers, and I’m eager to hear your responses.
Should foundations do more to strengthen nonprofits boards? And if so, what?