That said, we have already seen many meaningful changes in our boardroom.

We were inspired to review the governance of our Foundation for two reasons. First, our Board had recently been through a significant turnover: 21 of the 25 board members were newly appointed within about a four-month period. The other reason we embarked on this review was that, once appointed, the new Board members, and our CEO, came to an early agreement on the importance of good governance.  We shared a belief that good governance demands constant reflection…and this process is certainly reflective – and demanding and, quite honestly, exciting. 

So for us, tackling governance as our first priority was a huge opportunity to take stock of the foundation and what we as a board could contribute to making a great organization even greater.  A good part of getting governance right was evaluating our model in the context of what other foundation and not-for-profit boards were doing.  Participation in the Center’s Governance Research was a great opportunity for us to learn about ourselves by learning about other organizations and by becoming, not just an observer of, but a part of that research process. 

Today we will walk you through our governance changes, and the role of the Center’s Comparative Board Report in that process …what we have learned and how we are changing as a result. Before we do that, perhaps we should back up a bit, and explain exactly who we are and what we do.

I’m going to turn now to Robin Cardozo, who will provide you with some background on the Ontario Trillium Foundation, as an understanding of our mandate and our structure are germane to our remarks today.

Robin Cardozo

Thank you, Helen. The Ontario Trillium Foundation, or OTF, is somewhat unique in the world of Foundations. We haven’t encountered many organizations that are similar – something that can be both a blessing and a handicap.

We are an agency of the provincial government of Ontario. As such, we receive a significant annual allocation – currently $100 million – from the government, representing a portion of the government’s net revenue from the province’s casino program. Our mission is to use those $100 million each year, to build healthy and vibrant communities throughout our province, by strengthening the capacity of the voluntary sector. We achieve that by investing in a wide range of large and small community-based initiatives.

I should mention here that Ontario is Canada’s largest province, with a population of about 13 million. Our communities are hugely diverse – from modern urban centres like Toronto and Ottawa, to remote Artic communities in the far north that can only be reached by small aircraft. The province has thriving communities growing through the financial sector, high-tech industries, communications and tourism, but we also have forestry and mill towns that are languishing. Ontario is a magnet for the majority of immigrants and refugees arriving in Canada every year – variously bringing with them the excitement of a diverse culture in a global economy, or the despair of civil war in their homelands.

At OTF, we carry out our role of building healthy and vibrant communities through support for organizations in four sectors: arts and culture, the environment, sports and recreation, and human and social services. We’re a high-volume grant-maker, making approximately 1,500 grants each year, and managing between 3,500 and 4,000 active grants at any point in time. We take pride in our grassroots approach in local communities – our regional structure includes 16 local offices across the province, and the tiny staff contingent in each region works with a local volunteer Grant Review Committee.

Our volunteers play an integral role in how we operate. We have 25 dedicated community leaders on our Board of Directors, and some 320 hard-working Grant Review Team volunteers in 16 regional teams

Many foundations elect or appoint their board of directors. In our case, the provincial government does the appointing. While the Foundation can certainly recommend individuals or candidate profiles – and those recommendations are welcomed – the final decision resides with the government of the day. While this constrains us somewhat in terms of achieving an optimal range of skills among members, in fact it’s not that different from those family foundations that populate their boards with family members. The family is not likely to have the perfect mix of lawyers, accountants and human resource experts to form the ideal board – so you learn to work with the skills that do exist  – and we are most fortunate to have had Board appointments of individuals who bring a range of skills, and are strongly committed to their communities and to the success of the Foundation.

That tells you a bit about who we are. Now I’ll turn it back to Helen, to talk about the Board’s approach to its review of governance at the Foundation.

Helen Burstyn

As Robin mentioned, Board members at the Foundation are appointed by the Government of Ontario. The political appointment process does not always allow for smoothly staged transitions, and we found ourselves, in early 2005, with a largely new Board and a lot of uncertainty about our role and responsibilities.  On the plus side, however, my Board colleagues and I joined the organization with a healthy respect for its track record, and a commitment to continuous improvement.  We were new to the Foundation, but the Foundation was not entirely new to us. 

We quickly came to a realization that, although the core business of the Foundation was grant-making, the chief responsibility of the board of directors was governance, and that’s where we really had to focus.  We wanted to use our time more effectively and more strategically than discussing the merits of individual grant applications or getting overly involved in the operations of the Foundation.  So governance became our main agenda item. 

Our governance review, led by the Governance Committee, was already well underway and we were already starting to make some changes (which I will expand upon in a moment) when we decided that participation in the Center’s survey of Foundation Trustees would be a healthy way of putting our efforts in the broader context of what other boards were doing and thinking. 
On both sides of our shared border, there has been a surge of interest in and activity connected with organizational accountability and good governance. In Canada, the federal government has introduced an Accountability Act, and here in the US, you have the Sarbanes-Oxley legislation for public companies. 

The Center’s survey process appealed to us because it relies on a more scientific, quantifiable method for measuring what is often intangible.  And that approach is supported by qualitative information – making it a really solid combination of the empirical and the anecdotal.  We knew that with the Comparative Board Report on effective governance, we would be able to compare our results with the results of some 60 other Foundations that had already participated in the process, allowing us to zero-in on areas for improvement. 

From its research to date, the Center has isolated five key characteristics as the most important predictors of Board Effectiveness:
One… Board Composition and Capabilities
Two… Engagement in strategy development
Three…Focus of discussion on important topics
Four…: Positive Relationship with the CEO
Five… Board Dynamics

Our board members participated enthusiastically in the survey. Once the results had been compiled, Phil Buchanan, executive director of the Center for Effective Philanthropy, joined us for a day-long Board session in Toronto, to debrief us on the results and to discuss the implications of those findings.

In terms of overall board characteristics, the most notable variance between OTF and the other Foundations in the study related to Board size. The median number in the survey was 11 Board members, and we have more than twice that. But with many other aspects of Board structure and activity – including the median number of meetings, their length, and terms in office, and the Board committee structure – we are fairly similar to other foundation boards.

Of the five key characteristics mentioned a moment ago, the survey helped us see that we needed to focus on two areas we believed would make an appreciable difference for our organization:
First – Engagement in Strategy Development; and
Second – Board dynamics.

The other areas were deemed to be either beyond our control, or were not overly problematic. For example, as we said earlier, because our board is appointed by the Government, we can influence but not control the mix of capabilities.  And all of us – Robin in particular – were pleased that our Board gave very positive feedback about their relationship with the CEO.

Pointed in the right direction by the survey results, we began the journey to make meaningful change in our boardroom.  The results really motivated us to roll up our sleeves and get working on being an effective board with a good governance structure. Let me tell you about some of the governance-related enhancements at the Ontario Trillium Foundation in the past two years. Some began before we engaged in the Center’s Board survey, and some after.

First, we decided to delegate most of the grant approvals to the CEO, who has been authorized to approve local community grants – 80% of our total granting – based upon recommendations from our regional Grant Review Teams.  The Board used to receive a one or two page report for every grant.  Do the math… for the 1,500 grants we approve each year, that was about 3,000 pages to read!  Clearly this was not the best use of a Board member’s time. 

Today, the CEO, with the support of the senior staff team, confirms approval, and provides the Board with a Grants Summary Report at the end of each granting cycle. This summary report focuses on the accountability numbers, and on trends, policy considerations, and potential concerns. This allows us, as a Board, to take a broader strategic view, rather than focus on individual grants.
In keeping with our philosophy that the Board should steer the boat, not row it, we feel confident that these changes give our Board the freedom to focus on the bigger strategic picture.

Our second change was a review of the Board Committee structure. The committee structure we inherited had been put in place some years earlier, and we felt that the organization had matured significantly in the meantime. We streamlined the structure by eliminating three committees, and sharpening the terms of reference of the others.  In particular, the Finance & Audit Committee, and the Granting Policy Committee were given stronger and clearer mandates.  

Third, we developed a written Framework for Board Governance – in effect, the Board’s job description. This document has helped to clarify our individual and joint responsibilities as members of the Board.