Nonprofit governance research continues to focus on organizations that depend on external funds, but has somewhat neglected grant-making foundations with ample assets and sufficient income to support third-party projects. This book presents an overview of the governance of Italian bank foundations (IBFs), a fascinating but little-studied type of nonprofit organizations (NPO) that manage huge assets for the purpose of grant making; especially in the fields of art, culture, health and social assistance.
As a result of a long legislative process of reform in the Italian banking system during the 1990s, IBFs were established as private law organizations with statutory and management autonomy, charged with the pursuit of philanthropic goals in the interest of regional communities. Thanks to effective asset management the income derived from the payout of their endowments has been exclusively committed to public benefit. IBFs are allowed neither the exercise of business activities nor the performance of credit functions, and are excluded from any form of financing, disbursement, or subsidy involving entities with a profit intent. The idiosyncratic governance characteristics of IBFs play a crucial role in influencing their welfare effect and their ability to improve the quality of life within the communities that host these foundations.
Given the limited research attention dedicated to such bank foundations, the book Board Governance in Bank Foundations – the Italian Experience aims to fill the existing research gap by refining the description and comprehension of key elements in the governance of this particular kind of NPOs. After a thorough presentation of the legal origin of these institutions, the book highlights the links between asset management – aiming to maximizing the return on investment of the assets – and grant-making activity emphasizing the maximization of value for the local community through the net income provided by asset management.
The foundations’ main organs, as well as their roles and responsibilities, are subsequently presented, with the authors underlining the features and functions of two different boards that characterize the IBFs’ governance structure: the Board of Trustees and the Board of Directors. The Board of Trustees is described as being in charge of the foundation’s direction and defining objectives, strategies and long-term programs, while the Board of Directors is described as undertaking primarily administrative functions, transcribing long-term plans into short-term programs and actions to be developed by the management. In addition to the role and responsibilities of boards, the authors further discuss how board composition can play a key role in good governance in NPOs. In particular, a multi-stakeholder approach to choosing the boards members is presented, underlining the important relationships among local stakeholders, governance stakeholders, mission stakeholders and bank foundations. An analysis of the entire sample of IBFs additionally provides an extensive empirical description of their boards’ composition, highlighting the stakeholder categories with greater influence in nominating board members and offering an interesting analysis of how stakeholders could stay “on board.” Finally, the book presents the main governance tools, focussing in particular on strategic planning, which the authors consider to be a critical component of good governance in NPOs toward achieving the organizational goals in an efficient and effective way.
The rich set of examples, mini-cases and statistics included in the book offer a helpful tool that guides the reader through the complex set of topics around the governance of IBFs. Overall, the book provides a valuable contribution to the NPO research area, describing a fascinating form of organization that is still little known among worldwide studies on third sector governance. Furthermore, the peculiarities of the governance structure and the social and economic relevance of Italian IBFs allow the provisional comparison with analogous institutions in other countries and with other typologies of NPOs. Despite the uniqueness of the Italian context, this book will likely attract the attention of academics and practitioners internationally, and will facilitate further studies on governance in NPOs. Finally, the book provides an important insight for NPO experts and governance members, by considering stakeholder engagement as a powerful tool to create more representative and responsive boards. I strongly recommend this book to all relevant stakeholders in academia, industry and the government.
