Founding Documents: Your Roadmap to Effective Governance

by: Kyle Anderson
May 16, 2023
Signing a Document

The legal documents that govern a private foundation,including its bylaws, trust instrument, or articles of incorporation, serve asessential blueprints for operating a private foundation. These foundingdocuments outline how the foundation is governed and provide valuable guidancefor the board, addressing critical matters such as the minimum number of boardmeetings, board member term limits, voting policies, and other keyconsiderations.

However, it is unfortunately common for these documents tobe filed away and forgotten, despite trustees having a duty to understand theircontents and implications. When faced with difficult governance questions ordilemmas, board members should first turn to the foundation's foundingdocuments, which can serve as a reliable compass and oftentimes provide cleardirection.

It's important to recognize that these documents are not setin stone but should be considered living and breathing documents. Changes tothe bylaws, in particular, may be prudent and necessary, especially when anorganization experiences significant growth or undergoes shifts in itsoperational needs and strategic focus. In such cases, board members may seek torevise the bylaws to ensure alignment with the organization's current goals,programs, or operational structure. If the board decides to amend the bylaws,it's crucial to note that there is a legal requirement to inform the IRS whenfiling the organization’s annual tax return using Form 990-PF.

By giving due attention to the founding documents andadhering to the necessary protocols, the board can effectively uphold itsfiduciary responsibilities and navigate governance matters with confidence.With a deep understanding of the foundation's blueprints, the board can steerthe organization towards achieving its philanthropic goals, ensuring a lastingand meaningful impact in the world.

Seeking expert guidance? We're here to help!

At CPA KPA, we're passionate about magnifying the positive impact of family foundations. Feel free to reach out to us anytime at 888-402-1780 for a complimentary and obligation-free conversation. You can also conveniently submit your questions and inquiries through our contact page. Let's connect today and explore how we can help your foundation have a lasting and meaningful impact!

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