A company-sponsored foundation has many benefits; it allows companies to positively impact the communities in which their employees and customers live and work, helps to build a favorable brand and can attract and retain talent. Similar to managing a company, managing a foundation requires sound processes and procedures; however, unlike most companies, many corporate foundations do not have a large number of full-time staff dedicated to managing these operations. Therefore, it is essential for the board to regularly assess the organization’s operational and governance practices and implement up-to-date policies and procedures to remain mission-aligned and within the requirements mandated by law.

While there is no one-size-fits-all approach to governing company-sponsored foundations, there are standard practices to incorporate into foundation oversight activities. An organized, structured approach is essential to effectively manage your foundation, avoid legal or financial penalties, and advance your mission.

The following checklist is designed to help you identify and incorporate strong governance practices into your foundation management. While not an exhaustive list, it provides a starting point for your assessment.

Governance

Yes

No

N/A

Do you consult with legal counsel and/or a tax professional annually to confirm you are in compliance with state or federal law?

 

 

 

Does the foundation have a dedicated board of directors or trustees responsible for the oversight of the foundation?

 

 

 

Are the foundation’s mission and goals clearly established and articulated?

 

 

 

Does the board review the foundation’s mission on a regular basis and evaluate whether activities and grant-making align with this charitable purpose? If any material changes have been made, have you updated required filings and other materials to reflect this change?

 

 

 

Are the governing documents such as articles of incorporation, declaration of trust, bylaws, policies and procedures reviewed at least annually?

 

 

 

Are any amendments to governing documents or current activities necessary? Is so, are they appropriately documented?

 

 

 

Does the board have a succession plan?

 

 

 

Does the board and staff participate in periodic education or training that helps them perform their duties, serve the community and/or advance your mission?

 

 

 

Are the roles, responsibilities and expectations of officers, trustees and board members defined, communicated and agreed upon?

 

 

 

Does the foundation have a written conflict-of-interest policy that is acknowledged by trustees, officers and directors?

 

 

 

Is the board aware of the IRS's limitations on private inurement and does it regularly assess whether there have been any violations? Is there a policy in place to avoid such violations?

 

 

 

Are board meetings held regularly as required by the foundation’s governing documents? Are meeting minutes maintained and reviewed by the board?

 

 

 

Does the foundation have a strategic plan that is reviewed at least annually?

 

 

 

Does the foundation periodically review its insurance coverage, including directors’ and officers’ liability insurance, for sufficiency of coverage?

 

 

 

Does the foundation have any other contracts/agreements, such as with consultants or accountants? If so, are the contracts reviewed closely on a periodic basis?

 

 

 

Are employment policies and procedures clearly articulated and communicated to staff?

 

 

 

 

Finance and investments

Yes

No

N/A

Is the budget approved annually by the board?

 

 

 

Is the organization on track to satisfy its required annual minimum distribution by year-end? Did it satisfy this requirement in the previous year?

 

 

 

Is the board aware of private foundation rules regarding investment assets such as IRS guidelines on jeopardizing investments?

 

 

 

Does the board annually review and approve the investment policy statement?

 

 

 

Is there is a process in place to monitor investment performance on an ongoing basis?

 

 

 

Is investment performance discussed at least annually with investment managers?

 

 

 

If audited, does the board review the annual audit report?

 

 

 

 

Taxes

Yes

No

N/A

Are the applications for federal tax exemption (form 1023) and state registration filed with all attachments, schedules and IRS correspondence relating to the exemption approval?

 

 

 

Is the IRS determination letter on file and readily accessible?

 

 

 

Is any communication from the IRS and state registration agency, such as private letter rulings, shared with the board and retained on file?

 

 

 

Are all required estimated tax payments calculated and paid in a timely manner including any estimated excise tax payments, penalties due for failure to meet minimum distribution requirements or Unrelated Business Income Tax?

 

 

 

Does the board review the 990PF tax return before it is signed and filed?

 

 

 

Is the foundation tax return publicly available when requested according to IRS guidelines?

 

 

 

 

Grants

Yes

No

N/A

Do you review grant guidelines annually to verify they continue to be in line with the foundation’s mission?

 

 

 

Are your grant application and grant-making processes regularly assessed to determine whether appropriate due diligence is conducted in choosing grant recipients, including confirming the tax-exempt status of each intended recipient and confirming grants are not made to disqualified persons or in support of lobbying efforts or political campaigns?

 

 

 

Do you periodically review your grant-making process to find opportunities to improve or streamline the process making it less of an administrative burden for both the foundation staff as well as grantees?

 

 

 

If applicable, do you have your IRS approval of grant-making procedures on file (required for some programs such as scholarships)?

 

 

 

Have you reviewed your grant application and reporting requirements to ensure they request only pertinent information and do not put undue burden on your grantees?