Foundation governance: effective foundation management

What is Foundation Governance?

The concept of foundation governance is closely related to that of non-profit governance and relates to the management and control of foundations. It sets out basic structures, principles, processes and rules for foundation administration and management in order to ensure that the foundation’s purpose is fulfilled and to resolve any conflicts of interest. In this article, you can find out which principles of foundation governance currently apply in specialist circles and which guidelines, tools and knowledge resources are available on the subject.

The particular challenge with foundation management is the low level of external control. Swiss foundations enjoy a high degree of creative freedom; they own and monitor themselves. For grant-making foundations with large endowments, the most important external control mechanisms are reputation within the non-profit sector and social legitimacy pressure. Both of these factors are difficult to grasp. When negative feedback becomes apparent, it is often already too late to make adequate adjustments. The establishment of strong management principles and internal monitoring mechanisms is therefore particularly important for foundations. The principles of good foundation governance can be applied to the establishment, management, funding and financial management of foundations.

The Swiss Foundation Code 2021 – Guidelines for Good Foundation Governance

In 2005, the SwissFoundations association published the first version of the Swiss Foundation Code. The fourth completely revised edition was published in 2021 and can be downloaded free of charge from the association’s website. The Swiss Foundation Code is intended to serve Swiss foundations as a guide and benchmark for best practice in foundation government. Four principles and 28 recommendations form an orientation framework for good foundation governance for all types and sizes of foundation. The Swiss Foundation Code is available in German, English, French and Italian and is now one of the leading guidelines for governance in foundations.

Foundation Governance Best Practices: Principles for good foundation governance

The Swiss Foundation Code measures good foundation governance against the four principles of effectiveness, checks and balances, transparency and social responsibility. In addition, there are other aspects that should be clearly regulated in the governance of a foundation.

• Effectiveness: The foundation and its actions follow the foundation’s purpose and contribute to making the implementation of the founder’s will as effective and efficient as possible.
• Checks and balances: The Board of Trustees is responsible for setting up suitable control mechanisms that counteract the lack of separation of powers and monitor management and decisions.
• Transparency: Foundations intervene in social life with their activities. They therefore have an obligation to the public to make their principles, activities, finances and structures transparent.
• Social responsibility: All applicable laws as well as new regulations and obligations must be complied with. In addition, the foundation adapts its actions and the implementation of its purpose to social developments and incorporates new requirements and issues, such as climate protection, migration and equal rights, into its activities.
• Organizational structure: The structure of the Board of Directors and the positions within the foundation have been established and processes for management succession and the appointment of management personnel have been defined.
• Financial management: Budgeting, accounting and financial reporting and their monitoring are regulated by governance.
• Ethics and values: Fundamental values and ethical principles are formulated and, together with the foundation’s purpose, are omnipresent guidelines for the foundation’s actions – both internally and externally.

Tools & knowledge for successful foundation governance

Efficient work aids and tools, up-to-date information on the charitable sector as well as trends and findings from research and practice: as Switzerland’s largest digital philanthropy community, Spheriq is a useful and innovative support for foundations that want to practice good foundation governance. The Spheriq tools make research, networking and application management simple and efficient. In the foundation directory, funding organizations can create their own profile, present their own offers and networks and define funding activities in order to be found by suitable fundraisers and projects. Spheriq also provides an extensive knowledge hub with expertise, publications and articles that reflect what is currently important in the world of philanthropy.