SIMPSON THACHER & BARTLETT LLP

STB DRAFT 12/3/11

PRIVILEGED, PERSONAL AND CONFIDENTIAL
December 3, 2011

GOVERNANCE RECOMMENDATIONS CHECKLIST

Board Size
1.

Recommendation: We recommend reinvigorating the Board by adding new,

experienced directors and expanding the number to at least 8 directors. We recommend that the
Board seek directors with varying skill sets (e.g., financial management, strategic planning,
fundraising). If the Board chooses not to expand, we recommend that the Board at least appoint
an Advisory Board comprised of members with varying skill sets.
Audit Committee
2.

Recommendation:

We recommend that the Board appoint an Audit Committee

consisting of independent directors with strong financial know-how.

3.

Recommendation: We recommend that the Audit Committee be responsible for

retaining and terminating the independent auditor; periodically reviewing the terms of the
auditors engagement; overseeing the auditors performance; reviewing the annual audit report;
reviewing the adoption and implementation of internal controls; reviewing any whistleblower
complaints involving financial matters; and reviewing any conflict-of-interest transactions. We
recommend that the Audit Committee report back to the Board two times a year, first after the
audit plan is approved and second after the audit report is received.

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Board Chair
4.

Recommendation: We recommend that the Board appoint a Chair. We

recommend that the Chair work with the CEO and COO to plan and set the agenda for Board
meetings.
Board Meetings
5.

Recommendation: We recommend that the Board meet on at least a quarterly

basis. We recommend that Board decisions taken by resolution be clearly recorded in Board
meeting minutes, separate and apart from Board discussions. We also recommend that the Board
meeting minutes record any follow-up to items discussed by the Board at prior meetings and
whether actions were taken by the Board on previously-discussed items.
6.

Recommendation: We recommend that one meeting be designated the Annual

Meeting, and we recommend that the Board annually elect directors and officers at this meeting.
7.

Recommendation: We recommend that the Board review and approve an annual

budget prior to or at the beginning of each calendar year and that the Board periodically compare
actual to budgeted revenues and expenses. We recommend that the Board devote time at each
meeting to the presentation of financial reports and information and that the discussion of this
information be recorded in more detail in the Board meeting minutes.
Strategic Planning
8.

Recommendations: We recommend that the Board, together with the

Foundations management, engage in a strategic planning process. We recommend that the

Board be presented with information regarding and pre-approve all major new program
initiatives and any material changes to existing programs of the Foundation. We recommend

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that the Board periodically evaluate the effectiveness of existing programs and initiatives and
consider transferring or phasing out programs that do not advance the current mission.
9.

Recommendation: We recommend that the Board engage in succession

planning.
Oversight of CEO
10.

Recommendation: We recommend that the Board annually review the

performance of the CEO. Because we believe it is a good governance practice and consistent
with the rebuttable presumption of reasonableness rules of Code section 4958, we recommend
that (a) the Board (or a committee) set the compensation annually of the Foundations CEO, (b)
in doing so, the Board (or committee) obtain and review comparability data showing the
compensation paid by similarly-situated public charities to individuals holding similar positions,
and (c) document the Boards or the committees decision in the minutes.
Conflicts of Interest
11.

Recommendation: We recommend that the appropriate officer educate the

Board and staff as to proper and timely disclosure of conflicts of interest. Officers and managers
need to educate staff as to provisions of the Employee Conflicts Policy and how to raise conflicts
with managers as conflicts arise. The Board (or its Audit Committee) and management need to
timely address conflicts in accordance with the conflict-of-interest policies. The Board should
keep contemporaneous records of actions taken with respect to actual or potential conflicts. In
addition, we recommend that the Board Conflict Policy be amended to cover all those who have
substantial influence over the Foundation, not just directors, officers, and those receiving
compensation of more than $150,000 from the Foundation.

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12.

Recommendation: We recommend that the Foundation establish a gift

acceptance policy and procedures to ensure that all donors are properly vetted and that no
inappropriate quid pro quos are offered to donors in return for contributions.
CGI
13.

Recommendation: We recommend that all comp Memberships be vetted by

CGI Management to ensure that all such Membership offers are appropriate in that they advance
the interests of CGI rather than the personal or business interests of any individual.
Outside Employment
14.

Recommendation: We recommend that the Board set tone at the top by

encouraging a culture of compliance. We recommend that the CEO direct the Director of
Human Resources to conduct regular training sessions regarding Foundation policies in
furtherance of the culture of compliance. We recommend that the Board direct Foundation
management to ensure that staff is aware of reporting lines and that managers at all levels are
aware of their responsibility to enforce policies.
Management
15.

Recommendation: We recommend that the Foundation hire and empower a

strong Chief Operating Officer based in New York on a full-time basis. (We also note that the
President title is available, if the Board determines this is appropriate.) We recommend that the
Board, the CEO, and the Director of Human Resources work to define the role of the new COO
(e.g., should the COO be responsible for operations and administration, for strategy, for all
internal functions) and determine the proper relationship between the CEO and the COO. We
also recommend that the COO job description make clear that the COO is accountable for
ensuring compliance with all Foundation policies and creating a culture of compliance.

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16.

Recommendation: We recommend that the new COO and the Director of

Human Resources work to develop clear reporting lines for all Foundation employees.
17.

Recommendation: We recommend that the new COO and the Director of

Human Resources develop and conduct regular staff meetings as well as management training
for all managers. We recommend that the COO communicate that managers are responsible for
compliance with all Foundation policies and that managers performance will be evaluated on
this basis. We recommend that the Board hold the CEO and the COO accountable for improving
management.
Internal Controls
18.

Recommendation: We recommend that the new COO work with the CFO and

the Foundations auditor to review and propose to the Audit Committee improved internal
controls. We recommend that the Audit Committee present those recommendations to the full
Board for approval.
19.

Recommendation: We recommend that the CFO or his designees review all

expenses to ensure that they comply with the Foundations policies. We recommend that the
COO work with the Director of Human Resources to educate staff as to the Foundations
expense policies. We encourage training of all employees as to expense reimbursement
procedures.
20.

Recommendation: We recommend that the Board adopt a policy prohibiting

spousal or companion travel, unless there is a business purpose for such persons travel. We note
that the provision or reimbursement of travel expenses for spouses or companions of directors,
officers, and other key employees, if not treated as compensation, is an automatic excess benefit
for the person receiving the benefit, and such person will be subject to penalties.

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21.

Recommendation: The recommendations above apply equally to each of CGI,

CHAI, and the Alliance.

VBB
JIR
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we
inform you that any tax advice contained in this communication (including any enclosures) was
not intended or written to be used, and cannot be used, for the purposes of (i) avoiding taxrelated penalties under federal, state or local tax law or (ii) promoting, marketing or
recommending to another party any transaction or matter addressed herein.

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