I’ve been re-evaluating how I run my family foundation and I recently re-read my foundation bylaws. In an effort to live up to my social justice mission, I’ve been working to involve community members and grantees in my granting decisions. One squidgy issue has been ethical concerns about having members of grantees actually on my board. Because board members are prohibited from benefiting personally from grant money, we need to draw careful policy lines about who votes on what to make sure that no one can be accused of directing dollars into their own pocket. This has always seemed like a perfectly rational ethical line, but it tends to reinforce the “have”/”have not” divide – the haves decide to how much and when to give to the have-nots. Letting the advisory board make recommendations with separate board approval is a reasonable way to handle this, unless you’re seeking actual empowerment. But empowerment potentially opens the door to corruption to have folks empowered to direct dollars to their own pet projects.
It was with some interest, however, that I noted a specific clause in my largely boilerplate bylaws that allows board members to earn consulting fees from the foundation for performing whatever work they might normally perform professionally. I suppose that means if one of my board members were a laywer, perhaps I’d want to just use them to draft an expenditure responsibility contract, because I already trust them and know them to be competent, since they’re on my board. The Robin Hood foundation was recently criticized for doing just this sort of thing: that financial advisors who were on the board were earning fees for managing funds where Robin Hood had invested. I thought that was unethical, an investing friend thought it would be fine but of course they should have waived their fees (but they didn’t). There was a mix of opinion in the news as to whether or not this was unethical, so we have a prevailing social norm that maybe directing business to yourself is merely being prudent, not corrupt. The Robin Hood foundation did change the investments, however.
The Robin Hood example leaves us with a choice on the ethics of paying fees to board members for additional services (a foundation expense), but the law is fairly clear that paying grant monies to a board member via employment at a grantee (a foundation grant) is not ethical. Yet I perceive the latter example to have more distance, and thus less self-interest in the payment. Most interesting to me is that both foundation expenses and foundation grants count equally to the foundation’s annual 5% payout for tax purposes.
So why is there a clause in my boilerplate bylaws explicitly endorsing one of these behaviors? I can only assume it’s historical, from a perspective that there are those who are experienced and knowledgeable and not in need of grants, who of course do lots of internal cross-business, and there are those who need charity, destined to remain excluded from decision-making power.
This to me is an excellent example of institutionalized discrimination (to be very technical and specific, classism). My institution, reasonably following the examples of what’s been done before, has embedded within it default language that reinforces imbalanced power structures. To not take advantage of that language based on prevailing social norms is a weak correction; a strong commitment to undoing the institutionalized discrimination of the past means I need to actively question default power distribution, discover the institutional props behind it, and change them so equity is not about a prevailing social mood, but institutional structure. In this case, changing the structure would mean at least deleting the endorsement of fees to board members from my bylaws.
The baby boomers can claim civil rights marches and anti Vietnam demonstrations. For Gen X to lay a claim to history worth keeping, we need to take those grand visions and institutionalize them.