When should a foundations board seek expert advice regarding investment decisions and payout policies?
The governing board of a foundation has a legal obligation to manage the assets and income of the foundation prudently. If a foundation is not a “pass-through” foundation but instead holds assets that it invests to produce income for grantmaking or operational purposes, the board members have a fiduciary obligation to establish and monitor prudent investment policies and oversight functions. The board can rely either on internal board or staff expertise, or it can obtain outside expert advice, depending on the foundation’s size, complexity and internal resources. A board member is entitled to rely upon information, opinions and reports from staff, board committees, and outside professionals and experts the board member reasonably believes to be reliable and competent.
