The current Board of Trustees have implemented a priority initiative of donor accountability. When a donor gives to the Foundation for a stated purpose, the Foundation must honor that purpose. Unless the Foundation steers the programs it supports toward this goal, these words are mere window dressing. So, how have the Trustees gone about implementing a stronger donor accountability program?
The Trustees first sought to identify any weaknesses that could undermine donor accountability. The most glaring weakness was the relationship of the Foundation to DeMolay International. The organizations are in fact two separate and distinct entities, each having its own governing boards selected independently of each other. To the extent the organizations share resources to achieve efficiency, they do so under a shared services agreement - a contract frequently used in business to share resources. The Foundation pays DI an agreed sum for services, like secretarial, mailing, and photocopying. DI pays the Foundation an agreed fair market rental rate for lease of the headquarters building.
Yet, these safeguards do not fully address donor accountability. The missing item is program control. While program control has long been an issue from DI's perspective, it is a common feature (or, perhaps, a common missing feature) of the way foundations do business across the United States. Some foundations are independent of any other organization. Others, like the DeMolay Foundation, stand to serve a primary beneficiary, in this case, DeMolay International. Regardless of whether a foundation is independent or linked, the foundation is not the institution that implements programs. Instead, the foundation is a funding entity, soliciting financial support, developing mechanisms to strengthen alumni relations, and providing necessary support by way of grants.
All of these points funnel into the primary weakness. While the Foundation must be able to account to the donors for effective use of their donations, it cannot control whether in fact the beneficiary (in this case, DI) does efficiently spend the money.
So how does the Foundation tackle this weakness? This is where the 2020 Foundation Trustees have worked with DI to improve the process, and to improve donor accountability. We have moved toward a more formal grant process in which the proposed program is described along with reporting milestones. These milestones are something like a project management tool. DI sets its own calendar pace and funds are distributed in accordance with the milestones. Should DI find additional time or steps are required, there are ways to modify under the grants.
This process allows the Foundation to answer questions whenever the donors calls in for a status report. And more importantly, it enables the Foundation to publish, via Facebook and this website, DI's interim reports. And this pushes the Foundation's donor accountability to the forefront. At the same time, this transparency builds donor confidence in DI leadership.