The Change Mariner

New Standard For Philanthropies

San Jose Mercury News:

In the past year, the world of philanthropic foundations has faced intense scrutiny from the media and Congress.

News stories across the nation have spotlighted instances of questionable spending practices and conflicts of interest. Congress considered a proposal that would have forbidden administrative costs from being counted as part of foundations' required annual payout of 5 percent of assets.

Now, a new report reflects increasing interest among foundation leaders themselves in tightening internal standards -- something that was not being discussed until recently.

"It's possible to argue that things have changed pretty dramatically in the last year,'' said Phil Buchanan, executive director of the Center for Effective Philanthropy (www.effectivephilanthropy.com).

The Cambridge, Mass., organization recently published "Foundation Governance: The CEO Viewpoint.'' Nearly three-quarters of the 129 organizations surveyed said they are considering changes to their operations, while a third have already instituted new procedures.

Many changes considered

Foundation leaders are looking at changing committee structures or adding audit committees; requiring board review or chief executive and chief financial officer sign-offs of tax returns; and adopting conflict of interest policies.

A growing number of foundations want to be "out in front of this issue rather than be in a reactive mode,'' Buchanan said. They want to establish standards that go beyond minimum requirements, he said.