Foundations Should Not Pay Their Trustees

To the Editor:

Investigative journalism has discovered the foundation world big time, with The Boston Globe leading the effort. We believe there were more newspaper stories concerning alleged questionable and possibly illegal behavior by foundations in 2003 than in the previous five years in toto.

Although we may worry as Peter Frumkin did in his Chronicle opinion article (“The Ironies of Foundation Regulation,” My View, February 5) over the unintended consequences of potential legislative and regulatory reactions to the documentation of unethical and law-breaking misdeeds in private foundations, we’d argue that increased public scrutiny and calls, if heeded, for heightened transparency and accountability are healthy and necessary developments. The present situation provides a serious opportunity for the philanthropic community to define, in sharp relief, key elements of the special, ethical fiduciary responsibilities expected of those who serve in this field.

Central to that point and prompted by Pablo Eisenberg’s report, “Foundation Trustee Fees: Use and Abuse” (“Majority of Private Foundations Pay Their Trustees, Survey Finds,” September 18, 2003), we offer one simple measure that ought to be a fundamental tenet of our work: pro bono service should be a basic requirement of those who act as trustees or directors of private foundations. This step requires no external force — legislative or regulatory — just the common will of those in philanthropy to establish and embrace a universal standard.

Promulgation of a standard of full pro bono service is the most straightforward, immediate statement that the funding community can make regarding how dearly we prize and need the public’s trust. It is also the clearest directional signal we can give to indicate that the field sees its role in society as a special calling and that we are taking appropriate steps to ensure the integrity of our stewardship.

Most foundations expect that the nonprofit boards of their grantees serve without compensation — and that they also contribute generously to their organizations. Not to apply the same standard to their own boards is beyond hypocritical. It seems downright cynical and can only serve to exacerbate the perception among many nonprofits that private foundations regard their own governance work as somehow more important than that of their grantees.

Further, a fad du jour in many foundations is a mania for metrics that drives nonprofits in search of evidence of short-term results, sometimes at the expense of long-run impacts. Has any of the 238 foundations that the Eisenberg report identifies as paying an annual aggregate of almost $45-million in trustee fees ever sought to measure the long-range opportunity cost to society of trustee-compensation policies? Or conversely, has any identified the value added to the foundation? Is there evidence that those foundations that compensate directors are more effective than those that choose not to pay trustees?

It may be entirely appropriate to reward corporate board members for the value they bring in advice, expertise, and skill in pursuit of increased market share and greater profitability. Foundations, on the other hand, embody the spirit of giving, not taking. Service on private foundation boards should honor that spirit. It is difficult for us to imagine how acceptance of such a core standard of service without remuneration — our community-foundation colleagues adhere to such a rule, as do all foundations in Canada — would in any way diminish the quality of governance and grant making in private foundations.

If there are trustees of U.S. private foundations who would not serve without compensation, they should resign, although we would hope the transition to pro bono service would be an easy step for most to take. We are certain there will be no problem in replacing them. In our experience we’ve come to know a host of philanthropically passionate, talented folks ready to volunteer in the honorable pursuit of public good — women and men who will be active, engaged, and effective trustees. There is ample evidence in the United States and Canada that extraordinary people do serve, in pro bono capacities, as leaders of their respective philanthropies. For those we know, it is a deeply honored opportunity to serve their communities and nurture civil society — and not in any way a burden.

Is this not a timely test of the legitimacy and leadership capacity of philanthropic institutions in our society? What could delay such a clear opportunity for reform from within?

Melinda G. Marble
Executive Director
Paul and Phyllis Fireman Charitable Foundation
West Palm Beach, Fla.

Alan Broadbent
Chairman of the Board of Directors
Maytree Foundation
Toronto

Nathan Gilbert
Executive Director
Laidlaw Foundation
Toronto

Robert Hohler
Chief Executive Officer
Melville Charitable Trust
Boston

Joe Breiteneicher
Chief Executive Officer
The Philanthropic Initiative
Boston