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Founding family control, board of trustee compensation, and private foundation performance

Brian Patrick McAllister, University of Nebraska - Lincoln


This dissertation examines the impact of trustee compensation and founding family control on foundation performance for the largest private foundations in the U.S. for the years 2001 and 2002. Competing arguments suggest trustee compensation and founding family control potentially improve or diminish foundation performance. Foundation performance is measured using four different accounting-based measures of performance: endowment performance, grant performance, and two measures of administrative efficiency. ^ Based on the accounting-based measures of performance, private foundations that pay trustee compensation do not perform significantly better or worse than foundations that do not pay trustee compensation. There is limited evidence that trustee compensation reduces administrative efficiency within private foundations, although this finding is sensitive to model specification. Contrary to the lack of substantial findings for trustee compensation, the results show family foundations perform better than independent foundations. In particular, family foundations distribute a larger percentage of their assets in grants and are more efficient. These results are especially robust for family foundations with active founder participation. ^ This study also explores the relation between trustee compensation, founding family control and various foundation governance mechanisms. Trustee compensation policies significantly relate to more time spent on foundation business, shorter trustee tenure, larger boards, higher CEO compensation, and CEO duality. The board of trustees for family foundations is smaller with members spending less time on foundation business and having longer tenures. Family foundations also pay less CEO compensation with higher levels of CEO duality in comparison to independent foundations. Family foundations are also less likely to compensate foundation trustees. ^

Subject Area

Business Administration, Accounting

Recommended Citation

McAllister, Brian Patrick, "Founding family control, board of trustee compensation, and private foundation performance" (2005). ETD collection for University of Nebraska - Lincoln. AAI3180805.