How to Set Up Your Foundation Board

One of the great things about having a private foundation is that you get to choose your board structure and decide who initially sits on it. The board is the ultimate decision-making body, providing overall direction of the foundation.

A private foundation’s board’s responsibilities include:

• Determining mission and purpose
• Approving and monitoring grantmaking
• Providing fiscal oversight
• Ensuring adherence to federal and state regulations
• Planning for board succession and continuity

Depending on whether the foundation is structured as a corporation or a trust, board members may be known as directors or trustees respectively. Although there are differences between the two, in both cases, the board is responsible for overseeing the management, policies and direction of the foundation.

With corporations, the board of directors elects officers who manage the various day-to-day operations of the corporation.

No matter what you call them or what title they might have, all board members are bound by the duty of care and the duty of loyalty.

Duty of care: requires each director and officer to act in good faith, reasonably and with prudence.

Duty of loyalty: requires each director and officer to act with the strictest good faith in governing the foundation. Directors and officers are prohibited from unfairly profiting, directly or indirectly, from the foundation.