I have heard it said that large funders often ask for a seat on the Board of charities they fund. I’ve never actually heard of a concrete example of this, but I’m happy to take it on faith.
It is definitely the case that large investors in startups often take board seats, to help oversee the company, make sure their investment is being spent wisely, and gather information to help decide on subsequent investments. Indeed, I would consider this to be a best practice, and if a >50% investor didn’t take a board seat it would be worth asking why not!
Similarly, rather than causing a problem for OpenPhil, I think of Claire’s joining the CEA board as being an action she took on behalf of OpenPhil.
Yes indeed—I do know of many examples of this. But I don’t know of any in the charitable sector. Do you? Every time I have asked people for an example of this, they have used the same example you have from the private sector.
I think this is worth investigating for two reasons. First, I think it may be one of those things that everybody knows is true, except it isn’t. I’ve worked in nonprofits for 12 years and have submitted at least 200 funding bids and won funding from at least 50 unique grantmakers and I have never come across this. (Btw, if it exists, I think it may be a US thing, where most of my experience with grantors has been in the UK.)
Second, I think it would be useful to see how the inherent conflict of interest is handled when this happens (if it does happen). Because, for example, it seems a very simple way to negate the conflict of interest would be for one person from the grantmaker to sit on the Board, and another to assess that charity’s future grant applications. I wonder if that is common, or if it more common to have someone sit on both sides of the transaction, because their extra understanding outweighs the CoI.
It is definitely the case that large investors in startups often take board seats, to help oversee the company, make sure their investment is being spent wisely, and gather information to help decide on subsequent investments. Indeed, I would consider this to be a best practice, and if a >50% investor didn’t take a board seat it would be worth asking why not!
Similarly, rather than causing a problem for OpenPhil, I think of Claire’s joining the CEA board as being an action she took on behalf of OpenPhil.
Hi Larks,
Yes indeed—I do know of many examples of this. But I don’t know of any in the charitable sector. Do you? Every time I have asked people for an example of this, they have used the same example you have from the private sector.
I think this is worth investigating for two reasons. First, I think it may be one of those things that everybody knows is true, except it isn’t. I’ve worked in nonprofits for 12 years and have submitted at least 200 funding bids and won funding from at least 50 unique grantmakers and I have never come across this. (Btw, if it exists, I think it may be a US thing, where most of my experience with grantors has been in the UK.)
Second, I think it would be useful to see how the inherent conflict of interest is handled when this happens (if it does happen). Because, for example, it seems a very simple way to negate the conflict of interest would be for one person from the grantmaker to sit on the Board, and another to assess that charity’s future grant applications. I wonder if that is common, or if it more common to have someone sit on both sides of the transaction, because their extra understanding outweighs the CoI.
I’m afraid I’m much more familiar with how the private sector works than the non-EA charitable sector so can’t directly answer that question, sorry.