Grantmakers Build Nonprofit Capacity by Advancing Good Governance

WASHINGTON, March 9, 2009 -- BoardSource, the nation's leading resource on nonprofit governance, and FSG Social Impact Advisors, a national nonprofit strategy, research and evaluation consulting firm, jointly announce the publication of Advancing Good Governance: How Grantmakers Invest in the Governance of Nonprofit Organizations, a revealing overview of grantmaking in the new economy. The product of grants from the W.K. Kellogg Foundation and the Evelyn and Walter Haas, Jr. Fund, Advancing Good Governance is designed to inspire grantmakers to strengthen the governance of grantees and nonprofits in their communities.

Over the past decade, growing numbers of nonprofit organizations and grantmakers have recognized the need for capacity-building in nonprofit organizations. In 2006, U.S. funding for capacity-building topped $1 billion -- a 126% increase since 2000. Leadership capacity has received particular attention, but the board of directors -- an important part of the leadership equation -- has sometimes been overlooked. Recognizing that boards are often underutilized, nonprofits and grantmakers are seeking to leverage the inherent assets of these governing groups.

Based on interviews with staff from 54 grantmaking institutions throughout the United States, Advancing Good Governance explores and examines the investments of grantmakers in nonprofit governance. Interviewees agree that nonprofit boards are essential for setting strategy, supporting the chief executive, providing financial and programmatic oversight, and championing the investments made by grantmakers and others. However, there is room for improvement in the strategic use of board members. In studies by the Urban Institute, BoardSource and others, nonprofit organizations give their boards average or below-average marks in critical areas. Subpar board performance contributes to chief-executive burnout and other organizational problems, including underdeveloped strategic focus and poor decision-making.

Many interviewees view board support as an investment in the mission of the grantee as well as that of the grantmaker. Some grantmakers see investments in governance as the most effective use of limited grant dollars. Interviewees also suggest such investments are a "risk mitigation strategy" -- i.e., strong boards help ensure grant funds support the organization and its mission.

The report suggests that grantmakers can play a key role in helping boards employ good governance. Their involvement benefits not just grantees and grantmakers, but communities that depend on the programs and services of nonprofit organizations. Grantmakers engage in governance activities in three ways: with the grantee, with the community, and with the field. These interactions complement one another, nurturing relationships between grantmakers and those they fund -- and helping to build critical capacity in nonprofit organizations.

The advisory board for Advancing Good Governance includes: Paul Connolly, TCC Group; Elizabeth H. Costas, The Frances L. & Edwin L. Cummings Memorial Fund; Kathleen P. Enright, Grantmakers for Effective Organizations; Marian A. Godfrey, The Pew Charitable Trusts; Teri A. Hansen, Gulf Coast Community Foundation of Venice; Kimberly Roberson, Charles Stewart Mott Foundation; William P. Ryan, Hauser Center for Nonprofit Organizations, Harvard University; Paul Shoemaker, Social Venture Partners; Cheryl K. Taylor, Foellinger Foundation; Daria Teutonico, formerly with the Forum of Regional Association of Grantmakers; and Linda Wood, Evelyn and Walter Haas, Jr. Fund.

Advancing Good Governance: How Grantmakers Invest in the Governance of Nonprofit Organizations is available free of charge from both BoardSource (www.boardsource.org) and FSG Social Impact Advisors (www.fsg-impact.org).