Unless I'm missing something, sitting on a foundation board sounds like a swell gig.
The seat comes with some power, in that you're helping decide how grants are made. It comes with status, because obviously you must be a wise person if you're being asked to serve, and all the more so if you're on the board of a name-brand foundation. It comes with perks, such as hobnobbing with other wise people in places like New York City or the Bay Area. To be sure, being on a foundation board involves real work, but it's interesting and meaningful work for a good cause.
Oh, and here's another great thing: You'll never find yourself on that 11 p.m. emergency conference call because the place you help oversee has run out of money and can't meet payroll.
Meanwhile, I think we can all agree that being a board member at ordinary nonprofits that aren't foundations isn't exactly a cushy deal. Typically, these board members not only don't get paid, they make donations as a condition for sitting on the board. And often, they're expected to help raise money beyond that. As well, they can end up pitching in to fill gaps in management or financial expertise at nonprofits with limited resources. And board membership can become quite stressful if the organization hits a funding rough patch or has big personnel problems.
A quick recap, then: Foundation board members get paid to wield power and status, with scant worries of a financial crisis and no fundraising pressures. Nonprofit board board members pay for board seats that come with fewer upsides and more downsides.
What's wrong with this picture?
A lot, especially when you consider that board fees often go to trustees who don't need the money—certainly not compared to the people that foundations are trying to help.
Granted, we're not talking about a huge amount of money. In 2013, for example, most trustees of the Ford Foundation each received $33,000 for their service; MacArthur trustees got around $28,000. According to a 2014 report by the Council on Foundations, just over 20 percent of all foundations pay board members, and the median total compensation per organization was $71,438. For the largest foundations, with assets in the range of $1 billion to $2 billion, it was $290,500. One caveat here is that there are some notable outliers—foundations that pay fees that are excessive—and there has been controversy surrounding board fees. But the overall picture looks a lot better than it did over a decade ago, when the National Committee for Responsive Philanthropy published a hard-hitting report exposing high board fees called "Foundation Alms for the Rich?" Many foundations named in that report have since cut their board fees.
It's not hard to grasp the case for paying for board fees: It's always easier to get people to do stuff if you give them money, especially busy and important people who might already have too much going on. What's more, you could make the argument that the relatively small investment in board fees is money well spent, since better board members will result in a better use of grantmaking dollars—so you're actually saving money. Then there's this point: That people who devote time to an institution should be compensated where possible.
But is any of this really true? I can't imagine that service on foundation boards is such a hard sell, for all the reasons mentioned earlier. How many people would say no to serving on Ford's board if it dropped that $33,000 fee? Maybe a few, but there'd be plenty of others happy to take their place—although recruitment is surely harder for lower profile funders. As for compensation for time spent, I don't see the case for treating nonprofit service to foundations differently than to non-funders. Both kinds of institutions aim to help society, and both should put every dollar they can toward their mission. The kind of people who serve on foundation boards are seldom hurting for money, with past research showing that the majority are white men over the age of 50—the most financially secure group in America.
But the biggest problem with board fees is that they send the wrong message, one at odds with the idea that foundations exist to serve the greater good and should put such service above anything that might seem to feather their own nests. These are not pots of money for elites to play with; they're desperately needed resources to improve society.
Finally, consider this thought experiment: You're at a foundation pitching your organization, and talk turns to your board, and how it contributes to advancing your group's goals. At what point do you reveal that not only don't your board members raise money, they all get paid?
How do you think that would go over?