Should foundation chiefs serve on corporate boards?

Rick Cohen
Rick Cohen

Rick Cohen

With rampant conflicts of interest in the corporate and political worlds, the acceptance by nonprofit leaders of high-profile positions on corporate boards warrants serious scrutiny.

Does the high compensation for corporate service lead nonprofit leaders to pay less attention to their nonprofit jobs and priorities, to turn a blind eye to big business problems and excesses, and to flunk full transparency on their compensation and perks?

A cursory review of information available from Forbes finds many leaders of tax-exempt foundations serving on corporate boards — and receiving substantial levels of compensation for their service:

  • Judith Rodin, Rockefeller Foundation — Comcast ($321,000 director compensation in 2008), Citigroup ($240,000 in 2009), and AMR Corporation.
  • Alberto Ibarguen, John S. and James L. Knight Foundation — AMR Corporation/American Airlines ($75,000) and PepsiCo ($277,000 in cash, stock, and stock options, 2008).
  • Martha Lamkin — Citizens Energy Group (Citizens Gas & Coke) and Meridian Mutual Insurance Company while CEO of Lumina Foundation for Education
  • Joan Spero, Doris Duke Charitable Foundation — Delta Airlines, IBM ($200,000 in compensation), and ING Groep N.V., Netherlands-based life insurer.
  • Mary Bitterman, Bernard Osher Foundation and previously James Irvine Foundation — Bank of Hawaii Corporation ($110,000).
  • Vartan Gregorian, Carnegie Corporation – Cell Therapeutics ($191,000 in cash, stock, and options).
  • Ralph Smith, Annie E. Casey Foundation — Nobel Learning Communities ($30,000 in cash compensation, $30,000 in stock).
  • Zoe Baird, Markle Foundation — Chubb Corporation ($223,000 in 2008), Boston Properties ($147,791), Convergys Corporation ($169,658).

Casey, Carnegie, Rockefeller and Knight exemplify big national institutional foundations, but many CEOs of local community foundations also serve on powerful corporate boards.

  • Donald Stewart was on the board of Sotheby’s before he retired as CEO of the Chicago Community Trust.
  • Lori Slutsky at the New York Community Trust made $137,500 in stock, stock options, and cash for her service as a director at AllianceBernstein Holding, a global investment management company. The foundation’s website also identifies Slutsky as a board member of AXA Financial, parent company of AllianceBernstein.
  • Kelvin Taketa at the Hawaii Community Foundation takes in $114,640 for his service on the board of Hawaiian Electric Industries.

There’s no question some of these positions might be justified as being involved in socially responsible business or in business activities related to the foundations’ mission.

Nobel Learning, for example, is a network of private schools, certainly related to the Annie E. Casey Foundation’s focus on youth development.

Cell Therapeutics is a biopharmaceutical company developing personalized cancer therapies, probably not inconsistent with the broad mission of the Carnegie Corporation.

The recruitment motivation of the corporations in question is easy to discern.

Foundation people add a level of respect to corporate boards that corporations may want and need, for public relations and other purposes.

But foundation people have to be concerned about giving the impression they might be too cozy with big corporations or could fall into embarrassing conflicts of interest.

How, for example, did nonprofit and foundation members of the board deal with the specific charges of gender and race bias at AllianceBernstein in a wrongful termination suit filed by the firm’s fired vice president for human resources?

Nothing is illegal about serving on a corporate board, but most people inside the nonprofit and foundation sectors have little knowledge about which of their peers serve on corporate boards and receive six-figure compensation in the form of cash, stock, and stock options.

Even if foundation executives donate their corporate board fees to charity, they still benefit, and filings with the U.S. Securities and Exchange Commission show several still holding thousands of shares of stock in these corporations.

In the wake of economic freefall in the U.S. driven by the excesses of Wall Street and the corporate sector, the image of top foundation leaders on corporate boards is not good.

It is an image that suggests many of the highest-profile foundation leaders may fit too comfortably in the world of big corporations.

Rick Cohen is national correspondent for The Nonprofit Quarterly.

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