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Effectiveness and Accountability

Funded by the William and Flora Hewlett Foundation, the Forum's Effectiveness and Accountability initiative sought to increase philanthropic effectiveness and fulfillment of the public trust, at the regional level. The main goals of this initiative were to:

  • Enable regional associations to provide grantmakers with the necessary educational resources to assist them in dealing with the critical issues surrounding accountability and effectiveness.
  • Help regional associations and their members to develop, adopt, and implement guiding principles for grantmakers.
  • Increase the capacity of regional associations to build and sustain relationships with state officials and policy makers who have responsibility for the oversight of the charitable sector.
  • Strengthen the ability of regional associations to communicate positive messages about philanthropy.

While the Effectiveness and Accountability initiative itself has come to an end, the tools developed during the project provided the foundation for the grantmaker education work taking place at the regional level today. 

Evaluation

FSG Social Impact Advisors, in collaboration with the Forum, released From Insight to Action: New Directions in Foundation Evaluation, a report that identifies a fundamental transition in the way foundations use evaluation.

Increasingly, foundations are moving beyond traditional third-party outcome studies toward more performance-centered approaches that provide foundations and their grantees with current information and actionable insights. FSG’s report highlights real-life examples of successful evaluation efforts from more than two dozen foundations of all sizes. What unites these examples is their simplicity, clarity of purpose, and forward-looking nature. Each involves a pragmatic effort to gather knowledge in order to improve decision-making and shape future behavior.

This report is intended to distill the learning and experience of foundations that have used evaluation effectively in order to provide clear guidance to those that are still searching for useful practices.

Self-Dealing and Conflicts of Interest

The origin of the rules against self-dealing for private foundations stems from the enactment of Section 4941 of the Internal Revenue Code as part of the Tax Reform Act of 1969. The self-dealing rules were just one of a series of prohibited actions initiated by Congress at that time to address negative activities by private foundations, and they allow the IRS to levy excise taxes on the foundation and (in some cases) on foundation managers when various prohibited activities occur.

Whether the donor to a private foundation is an individual, a family, or a for-profit company, it is important to understand that once cash or other assets are gifted (or bequeathed) to a private foundation, those assets then belong to a separate legal entity that is subject to many restrictions. Said as plainly as possible: “It’s not your money anymore.”

A conflict of interest arises whenever the “financial or personal interests” of a board member or foundation manager are, or appear to be, inconsistent or at odds with the interests of the foundation. Conflicts of Interest at Foundations: Avoiding the Bad and Managing the Good outlines the law and factors related to conflict of interest and includes examples of situations that foundations regularly encounter. Self-Dealing: A Concise Guide For Foundation Board and Staff provides an overview on the self-dealing law, including definitions, common problem areas, exceptions, penalties, and resources.

Communications

Foundations are encouraged to be transparent in your operations in order to enhance their reputation in the community and to avoid legal and regulatory scrutiny. But what does it mean to be transparent? Who are the target audiences, what should be share with them, and what communications vehicles can be used to accomplish your goals? And finally, is transparency really a step towards being a more effective grantmaker?

Communications/Disclosure Assessment is a checklist focusing on a foundation’s transparency in communicating key information about the organization to its constituents and the broader public. The Forum has also compiled a list of resources on communications and disclosure issues.

990-PF

No longer just a report to the IRS, the 990-PF is now the most commonly used data source about nonprofits. Reporters, researchers, grantseekers - and many others - look to these forms for information about an organization. This makes accurate numbers, correct entries, and properly worded descriptions more important than ever.

10 Common Errors to Avoid In Completing A Private Foundation's Form 990-PF highlights those areas most commonly completed incorrectly and provide explanations and directions for proper completion. What You Should Know Before Signing Your Organization's Form 990-PF is a resource for top officers who sign the Form 990-PF to understand the important safeguards they should undertake before signing the tax return.

Guiding Principles for Grantmakers

The Guiding Principles Communications Plan focuses on grantmaker principles and practices. This plan includes key messages that many regional associations have found to be particularly effective when communicating about grantmaker principles to key stakeholders along with tips and advice on communicating about grantmaker principles and practices.

Accountability Self-Assessment Tool for Private Foundations

This comprehensive resource helps private foundations (family, independent, or corporate) ensure that they are complying with key federal laws and regulations and assesses how well they are engaging in generally recommended good practices for being accountable to the public. There are two versions of the tool: one for unstaffed foundations and another for staffed foundations