Foundation boards bear ultimate responsibility for how philanthropic assets are used. They have legal duties to the charitable purposes for which the foundation was established, fiduciary obligations to manage assets prudently, and governance responsibilities for the decisions the foundation makes. How boards exercise this responsibility in the context of grantmaking — including how much they delegate to staff and how they manage conflicts of interest — significantly shapes both governance quality and grantmaking effectiveness.
Foundation boards vary enormously in how they engage with grantmaking — from fully engaged grant decision-makers to largely passive ratifiers of staff recommendations. Finding the right balance depends on the size of the foundation, the nature of grants, the expertise of board members, and the philosophy of the founding donors.
Direct grant decision-making
Small foundations — particularly family foundations — often make all grant decisions at the board level. Board members review applications, discuss each, and vote on funding. This model:
- Ensures close board engagement with grantmaking
- Reflects the personal philanthropic judgment of board members
- Works well for small grant volumes and board members with relevant expertise
- Becomes unwieldy as grant volumes grow
Staff recommendations with board approval
Many foundations have programme staff who review applications, conduct due diligence, and make recommendations to the board, which then approves or modifies the recommendations. This:
- Leverages staff expertise for detailed assessment
- Retains board authority for final decisions
- Works well for moderate grant volumes
- Still requires significant board time for detailed grant discussions
Delegated authority
Larger foundations and those with significant grant volumes delegate grant approval authority to staff, subject to board-approved policies and parameters. A typical framework:
- Programme staff approve grants up to a specified threshold (e.g., $25,000)
- Executive Director/CEO approves grants up to a higher threshold (e.g., $100,000)
- Board retains approval authority for large grants, multi-year commitments, and unusual circumstances
Grants committees
Some foundations establish board committees with delegated authority for grants — smaller groups of board members who review and approve grants between full board meetings, reporting to the full board. Grants committees:
- Enable faster decision-making
- Allow deeper engagement by a subset of board members
- Work well when the full board has too many members or meets infrequently
Setting strategy: The board sets the philanthropic strategy — the issues to address, the theories of change to pursue, the geographic focus, and the types of organisations to fund. Strategy provides the framework within which staff make grant decisions.
Approving grant policies: Boards approve key grant policies — eligibility criteria, grant size ranges, duration, conflict of interest procedures, and due diligence requirements. These policies govern grantmaking without requiring board involvement in every decision.
Establishing delegated authority: Boards formally delegate grant approval authority to staff, specifying the thresholds and conditions under which staff can approve grants independently.
Approving large grants: Boards retain approval authority for grants above the delegated threshold, and for unusual or controversial grants regardless of size.
Reviewing portfolio: Boards periodically review the grant portfolio — assessing alignment with strategy, geographic and organisational type distribution, and overall impact — and provide direction for adjustments.
Overseeing compliance: Boards ensure that grantmaking complies with legal requirements — including that grants are made only to eligible recipients, that due diligence is conducted, and that conflicts of interest are managed.
Conflicts of interest are common in philanthropic grantmaking — board members have relationships with potential grantees, share board seats, or have personal connections to applicant organisations. Managing these conflicts is a core governance responsibility.
Conflict of interest policy
Every foundation should have a written conflict of interest policy covering:
- Definition of conflict of interest (financial interest, close relationship, board/advisory membership)
- Declaration requirements — when to declare a conflict
- Procedure when a conflict is declared — recusal from discussion and decision
- Record-keeping requirements
Practical management
Founder and donor conflicts
Founder-controlled foundations may have grants committees that include the founder. When the founder is also a significant donor, conflicts between the foundation's grantmaking principles and the founder's personal relationships require careful navigation and clear policy.
Relevant expertise: Foundation boards benefit from members with expertise in the issue areas being funded, as well as legal, financial, and governance expertise. Actively recruit board members who bring relevant knowledge to grantmaking decisions.
Adequate meeting time: Grant decisions deserve adequate board time. Rushing through a large agenda of grant approvals — "nodding through" staff recommendations without discussion — provides inadequate oversight. Some foundations hold separate grant decision meetings or retreats for this purpose.
Site visits: Board members who visit grantees — seeing the work being done and meeting the people served — develop better judgment about grant decisions. Structured board site visits are valuable.
Honest discussion of difficult decisions: When staff recommendations are questionable, or when board members have reservations, board meetings should create space for genuine discussion. A culture of honest deliberation produces better decisions.
Succession planning for boards: Effective philanthropy requires effective boards over time. Actively recruiting and developing future board members — particularly for family foundations facing intergenerational transition — maintains governance quality.
Board education on grantmaking: Board members who are new to philanthropy benefit from education on grantmaking practice — what good grant assessment looks like, how to read applications, what site visits reveal. This investment improves the quality of board contributions.
Tahua's grants management platform supports foundation boards with the reporting and oversight tools they need — with board-level portfolio dashboards, grant decision tracking, conflict of interest recording, and governance documentation that makes board oversight effective and efficient.