The question of donor intent should be in the front of your mind when choosing a board. But donor intent is only part of the equation. Your board will need to take on other duties: managing investments, complying with laws and codes, and potentially overseeing professional staff, to name a few.
What’s more, your philanthropic focus areas could be well served by choosing board members who are experts in certain fields such as medicine, public policy, or education reform. Will such expert board members honor your intent?
Some donors have approached this issue by structuring their foundations with multi-tiered boards, with separate responsibilities assigned to each tier. This article explores several examples and shares guidelines for choosing this option.
Searle: Three distinct tiers
One example of a tiered board can be found at the Searle Freedom Trust, which has three distinct tiers, each with its own duties and level of responsibility:
Tier 1: Charged with stewarding the foundation’s funds, including investment decisions. According to president Kim Dennis, this division of labor has proved invaluable because it allows the other two tiers of the board to focus on what they do best—giving money away in line with Searle’s donor intent—without becoming distracted by the investment side of the equation.
Tier 2: Consists of four grant advisers, chosen by Dan Searle himself, who are experts in the public-policy world and well versed in the subject areas of the foundation’s grantmaking. These advisers are primarily public intellectuals with academic, policy, and think-tank management experience. They share Searle’s general philosophical outlook—a commitment to individual freedom, economic liberty, personal responsibility, and traditional American values—and each worked closely with Searle during his lifetime. “They really know the ins and outs of the organizations we’re funding,” notes Dennis. These grant advisers, with the assistance of the professional staff, make the actual decisions about where and how the foundation will direct its funding.
Tier 3: Consists of advisers who are direct descendants of Dan Searle. They are required to meet at least once annually with the grant advisers to review grants. They have the power, on a unanimous basis, to overturn the grant advisers’ decisions. “Their role really comes into play when they insinuate something about Dan’s intent,” explains Dennis. “Sometimes, we’ll be going back and forth over a grant decision and debating whether it’s a good idea, whether it will be effective, and one of the family advisers will say flatly, ‘Dan just wouldn’t have supported this.’ The family members are really helpful in that way.”
The strength of Searle’s approach
None of these tiers has absolute control over the affairs of the foundation. This is the strength of the tiered approach—it separates board powers and responsibilities and delegates them to those best suited to perform them. But to work well, this option still demands that you have the right people in place, and that they are, as Dennis notes, “committed to staying in their lanes.”
Other examples
Other founders have also established tiered structures to safeguard donor intent. The John Templeton Foundation, for instance, is governed by both members and a board. The members—who include family representatives, Templeton Prize winners, and others—elect the board, where one-fourth of the trustees must be drawn from the Templeton family. Similarly, at the Earhart Foundation (which sunsetted in 2015) governance was divided between an all-family group of members and a non-family board of trustees. The former elected the latter, and that was their only role.
You might also consider creating a tier of trusted “members” who alone are authorized to amend bylaws or approve board compensation. In considering any such changes to standard corporate structure, you should first consult your philanthropy’s attorneys.
Tiered boards: A complement to safeguards, not a replacement
Of course, simply creating a tiered structure is no guarantee that your donor intent will be honored, or that “members” and “trustees” will automatically conform. It may even create resentment and power struggles. The tiered board structure is a complement to your other donor-intent safeguards, not a replacement for them. Whether you should follow this course of action is contingent, in part, on your foundation’s size, mission, areas of giving, timeframe, and level of family involvement.