Summer 2008
Voices in Philanthropy
Principles for Grantmakers in Action:
A Guide to Good Governance
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Dan Johnson |
This article describes the practical application of the Minnesota Council on
Foundations' updated Principles for Grantmakers at a locally-based, Fortune 20 corporation and its foundation's board of directors.
Written by Daniel Johnson & Jeanette Pfotenhauer, United Health Foundation.
Foundations and corporate giving programs manage private wealth for the public good. High ethical standards, strong governance principles and effective performance are critical in retaining the trust and respect of grantees, donors, government officials, employees and the general public.
Under Minnesota law, directors of a nonprofit corporation — including private foundations — are responsible for the business affairs of the corporation. As pressures have intensified to demonstrate accountability and effectiveness to givers, the scope of board oversight should focus not just on following the law, but on governance practices that maximize the corporation's effectiveness in its role as a steward for the public good.
Membership Has Its Privileges
Minnesota philanthropy has a long history of ethical and highly principled practices. The exemplary behavior of leading foundations and giving programs, coupled with MCF's original and recently updated Principles for Grantmakers, has helped our state further this reputation. As stated in an Aug. 27, 2007, Minneapolis Star Tribune editorial, "MCF should be commended for its leadership in providing thoughtful, updated guidance to those who give."
Subscribing to the updated principles is a condition of MCF membership. During the first year of membership, the board of the member organization is required to review and make a formal commitment to the principles. While the eight principles encompass a number of areas, one is paramount to effective board governance and accountability: "To achieve effective governance by ensuring performance in the areas of stewardship of assets, donor intent, fiduciary responsibility and sound decision-making."
Principles in Action
For UnitedHealth Group and the United Health Foundation, the Principles provide a practical guidepost for our work. Our mission as a company is to help people live healthier lives. Entrusted with important resources and responsibilities, we are involved in decision-making that has life-changing consequences for the more than 70 million individuals we serve. As such, our actions are motivated by and spring from this position of trust and accountability.
To advance this mission, UnitedHealth Group is committed to constructively participating in the development of health care policy, good corporate citizenship and improving the health and quality of the life of the communities we serve. To fulfill these responsibilities, the UnitedHealth Group board of directors established a Public Policy Strategies and Responsibility Committee to oversee the company's public policy, government relations and social responsibility activities.
This committee recently reviewed an inaugural UnitedHealth Social Responsibility Dashboard. The dashboard reports progress toward achieving corporate and community goals across a number of metrics, including employee engagement, ethics and integrity, environmental impact, volunteerism and philanthropic giving. The dashboard and our annual Social Responsibility Report are consistent with the spirit of the updated MCF Transparency Principle.
Another example of the principles in action was UnitedHealth Group's action in 2006 to elect new directors to the foundation board, including two people of color and an external director to serve as board chairperson. While foundations are increasingly encouraged to build board diversity, few corporate foundations include external directors. The foundation's board composition is driven in part by the MCF Diversity Principle: "To reflect and engage the diversity of the communities we serve in our varying roles as grantmakers, boards and employers, economic entities and civic participants."
A third example is the United Health Foundation board's assessment of its own governance practices in the context of the new MCF Practice Options for Philanthropic Organizations. This side-by-side analysis served as a useful learning exercise for directors and staff. As a result of the assessment, the foundation board recently adopted a set of guiding values and a new board performance process. While neither is required by law, the board recognized the benefit of adopting these two voluntary practices in the sprit of continuous governance improvement.
The United Health Foundation has found MCF's Principles for Grantmakers & Practice Options for Philanthropic Organizations to be a powerful tool to help our board assure compliance, strengthen governance and ultimately improve our capacity to create healthier communities.
Daniel Johnson is president of the United Health Foundation and vice president of community affairs for UnitedHealth Group. Johnson is also past chair of the MCF board of directors and former chair of its Public Trust Task Force. Jeanette Pfotenhauer is secretary of the United Health Foundation and associate general counsel for UnitedHealth Group. To view or download the UnitedHealth Group Social Responsibility Report, go to www.unitedforhealthiercommunities.com.
© Copyright 2008 Minnesota Council on Foundations
Reproduction in any form without the written permission of the publisher
is prohibited.
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