Foundation governance and grantmaking are inseparable — the board's governance responsibilities are most concretely expressed through how the foundation's grants are made. Every grant decision, every approval of a grants policy, every accountability review of grantee outcomes, is an exercise in foundation governance.
This guide covers the board's role in grantmaking — what decisions boards make directly, what they delegate, and how they maintain appropriate oversight of the grants management function.
Setting grantmaking strategy. The board is responsible for the foundation's overall strategy — including the grantmaking strategy that determines where and how the foundation's grant funds are deployed. What causes does the foundation support? In which geographies? Through what grant mechanisms? These strategic decisions belong to the board, not to management.
Approving grants policy. The grants policy is the governance document that governs how grants are made — eligibility criteria, assessment processes, delegation limits, COI procedures, accountability requirements. The board must approve the grants policy, and review and re-adopt it regularly (at least annually).
Making grant decisions within the board's delegated authority. For large grants — those above the staff delegation threshold — the board makes decisions directly. This is the most tangible expression of the board's governance role in grantmaking: trustees deliberating on and deciding individual grants.
Overseeing the grants management function. The board provides oversight of the grants management function — not managing it (that's management's job) but assuring itself that programmes are being administered appropriately, that accountability is working, and that the foundation is achieving its intended outcomes.
Reviewing programme performance. Annually (at minimum), the board should review the performance of the foundation's grant programmes — examining portfolio data, outcome evidence, and equity of reach.
Most grant decisions are delegated to management — the board can't effectively govern an organisation if it's making every $500 gaming trust decision.
Staff delegation thresholds. The grants policy should specify what grant sizes can be approved by: the CEO/ED alone, programme officers, and the full board. Common thresholds:
- Programme officer: up to $X (typically $5,000-$25,000 depending on programme scale)
- CEO/ED: up to $Y (typically 2-5x the programme officer threshold)
- Board or committee: above $Y
Committee delegation. Many foundations have a grants committee — a subcommittee of the board with delegated authority to approve grants within defined parameters. Committee members share board governance duties for grants within their remit.
Reporting and oversight of delegated decisions. The board receives regular reports on grants approved under delegated authority — summaries of what was approved, by whom, against which programme. This oversight ensures management is operating within delegated parameters.
Every trustee who participates in grant decisions carries personal governance responsibilities:
Preparation. Reading grant papers before meetings, asking clarifying questions of management, and exercising independent judgment rather than rubber-stamping recommendations.
COI declaration. Declaring conflicts of interest before participating in related decisions, and withdrawing from decisions where they have material conflicts.
Reasonable inquiry. Asking reasonable questions about grants that seem unusual — large grants to new organisations, grants that appear to depart from the foundation's strategy, grants that come with political or reputational considerations.
Dissent recording. Where a trustee disagrees with the majority decision, they may have a dissenting opinion recorded in the minutes. This protects the individual trustee's governance record.
Fiduciary duty. Acting in the best interests of the foundation's charitable purposes and its beneficiaries — not in the interests of specific applicants, donors, or political interests.
Rubber-stamping management recommendations. Boards that simply endorse management's recommendations without independent review are failing their governance function. Trustees should be willing to question, challenge, and occasionally overturn management recommendations.
Undisclosed COI. Trustees who participate in grant decisions where they have undisclosed conflicts of interest are in breach of their duties — and expose the foundation to the consequences of tainted decisions.
Strategy drift. Boards that approve individual grants without reference to strategy gradually allow programme creep — funding activities that aren't aligned with the foundation's stated purpose. Annual strategy reviews and disciplined grant approval processes prevent this.
Poor reporting to the board. Board reporting on grant programmes that is too summary (just approvals and payment totals) doesn't enable meaningful governance oversight. Reports that include outcome data, equity analysis, and compliance status enable more informed governance.
Tahua supports foundation boards with delegation enforcement, COI management, and board reporting modules that provide the oversight information trustees need to discharge their governance responsibilities effectively.