Trusteeship Articles By Topic: Institutionally Related Foundations

As public institutions across the country face increasing cuts in state appropriations per student, many are turning to institutionally related foundations for support. The fund-raising work of foundation boards is becoming more vital than ever.

I was the CEO of a software company in Silicon Valley and now sit on the boards of two publicy traded companies, as well as consulting at a private equity firm. I spend an equal amount of time, if not slightly more, as the board chair for California Polytechnic State University Foundation as the leader of a Federal Emergency Managment Agency urban search-and-rescue task force. What I have found: It's incredibly difficult to be a volunteer. And it's very hard to be a donor.

The context in which boards are making endowment spending decisions has changed remarkably in the past year. In January 2008, Senators Max Baucus (D-MT) and Charles Grassley (R-IA), chair and ranking minority member, respectively, of the Senate Finance Committee, cited "explosive college endowment growth" as evidence that college and university boards should review their endowment-payout polices to make sure they reflected "best practices." The senators' implication was that best practice would dictate higher spending rates to offset tuition increases. A year later, endowments have imploded, and many of the wealthiest institutions in the country are implementing budget reductions, layoffs, increased borrowing, and tuition increases to offset decreased endowment revenue.

In demographic terms, institutionally related foundation boards closely resemble the governing boards of both public and private colleges and universities.