PHASE III MOVING FORWARD LOOKING BACK GOVERNANCE REPORT. promoting leadership & personal development. supporting chapter housing

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1 promoting leadership & personal development PHI KAPPA PSI FOUNDATION GOVERNANCE REPORT MOVING FORWARD LOOKING BACK PHASE III supporting chapter housing impacting scholastic achievement

2 PHI KAPPA PSI FOUNDATION JULY 2018 GOVERNANCE REVIEW COMMITTEE REPORT table of contents Letter from James C. Denny, Vice Chairman of the Board 3 Background 4 Focus 5 Report, Findings and Recommendations Letter to the Brotherhood 8 Scope of Work 9 Governance Structure and Processes 9-12 Committee Structure and Membership Committee Charter Overview 14 Appendix Primary Documents Reviewed 15 2

3 Dear Brothers, The work of the Governance Review Committee (the Committee ) continues to be important as the Foundation positions itself to earn our brothers continued support and confidence when considering their charitable and philanthropic priorities. The purpose of the Committee s work has not changed since its formation in 2015 identify areas of potential risk or opportunity that warrant action by the Foundation s Board of Trustees (the Board ) and management, as it relates to operations, accountability, general governance and fiscal responsibility. Established not for a one-time task but rather as a standing/long-term component of the Foundation s governance strategy; the Foundation s Board of Trustees has adopted the Committee as a standing committee via an approved charter. This Phase III Report builds on the work and results contained within the Committee s Phase I and II Reports and serves as the final report of the initial three-phased review. I invite you to review this Report, which focuses primarily on the Foundation s governance structure and processes. Questions or comments regarding this Report, prior reports or the Committee itself, are welcomed. Thank you for your involvement and commitment to the brotherhood and to standing alongside the Foundation as we invest in the lives of our undergraduate brothers. In the bond, James C. Denny W & J 68 Vice Chairman 3

4 BACKGROUND In late 2015, the Board of Trustees commissioned the Governance Review Committee. This Committee, composed of past national presidents of the Phi Kappa Psi Fraternity, was formed in an effort to foster continued donor confidence, ensure effective compliance with applicable laws and regulations, institutionalize an ethical culture, provide Fraternity membership insight, and, to demonstrate a continuous commitment to fiscal accountability, organizational transparency and governance best practices. The Committee was instructed to review, recommend and report their findings to the Board of Trustees and broader donor community. An undertaking of this magnitude could become overwhelming in its need for time and resources. To obtain the best possible results, it was determined that the review should be accomplished over a three-year period. The first year would include a review of legal and fiduciary compliance, as well as transparency; the second year would focus on internal management issues; and the third year would be reserved for any additional issues that may arise and to make certain any and all opportunities to better improve operational, governance or fiduciary practices were implemented. As a result of the insistence of a few members of Phi Kappa Psi, just prior to the commencement of the Committee s Phase II work, the Foundation determined that it would alter the Phase II focus and adopt a new focus, giving ample attention and consideration to fielding and vetting issues initiated by said individual members. Thus, items originally slated to be addressed in Phase II were addressed in Phase III. The Committee s work has been structured such that the process itself is cyclical in nature. Thus, as year three is completed and the organization moves into year four, the process/review will be initiated again. In order for the Committee to accomplish its work, it was provided full access to all organizational governance, financial and grant making audits/reviews, financial statements, records related to actions and meetings of the Board as well as the organization s standing committees. Members of the Committee were selected after consideration of each individual s professional background as well as their continued support of Phi Kappa Psi and understanding and expertise in nonprofit and organizational management. Members of the Committee include past National Presidents James R. Blazer Ohio State 79, J. Tryon Hubbard Jr. Alabama 64, George W. Humphries Oregon 50 and Steven E. Nieslawski Illinois 79. Foundation Trustee and Vice Chairman, James C. Denny W & J 68, as well as past Trustee and past National President, David L. Woodrum West Virginia 61, serve as liaisons to the Committee. The first phase of the Committee s work was completed in July 2016 and specifically included a review of: Transparency, Accountability and Financial Management; Grant-making Policies and Procedures; PKP McMahan Finance Engine LLC; Chapter Designated Funds; and Compliance with State and Federal Regulations and Laws. The second phase of the Committee s work was completed in November 2017 and included a review of questions, accusations and observations made by senior Fraternity leadership. The complete Phase I and II Reports of the Governance Review Committee can be viewed on the Foundation s website ( on its Transparency page ( 4

5 FOCUS The Committee s work, which entails a complete rolling review of all aspects of the Foundation s operations, necessitates a phased approach. It is the intent of the Board of Trustees and the Committee for the entire process to be cyclical and once all phases are complete they will begin again, akin to an annual or bi-annual financial audit. In some cases, each phase requires the Committee to review and evaluate general practices or processes, and in other cases a particular phase focuses the Committee s attention on a specific program, project or initiative. ORIGINAL SCOPE OF WORK: PHASE I Transparency, Accountability and Financial Management Grant-making Policies and Procedures PKP McMahan Finance Engine LLC Chapter Designated Funds Compliance with State and Federal Regulations and Laws PHASE II Governance Election of Board of Trustees Committee Structure Personnel Practices/Human Resources Specific Areas of Focus that Arise from Prior Work PHASE III Implementation of Prior Recommendations Specific Areas of Focus that Arise from Prior Work REVISED SCOPE OF WORK: PHASE I Transparency, Accountability and Financial Management Grant-making Policies and Procedures PKP McMahan Finance Engine LLC Chapter Designated Funds Compliance with State and Federal Regulations and Laws PHASE II Address Fraternity Leadership Inquiries PHASE III Governance Election of Board of Trustees Committee Structure Specific Areas of Focus that Arise from Prior Work 5

6 MEMBERSHIP Committee membership was selected taking into consideration an individual s understanding and appreciation for the role of the Foundation and its support of Phi Kappa Psi including chapters, house corporations, alumni associations, the national headquarters as well as the general undergraduate and alumni membership. James R. Blazer Ohio State 79 Ohio Delta Supervisory Committee Member (2011-Present) Ohio Nu House Corporation President ( ) Ohio Nu Chapter Advisor ( ) National President ( ) National Vice President ( ) Order of the S.C. Member (2000-Present) Coordinator of House Corporations ( ) Ohio Delta House Corporation President ( ) Director of Strategic Planning ( ) Host Institutions and Community Relations Coordinator ( ) Ohio Delta Chapter Advisor ( ) George W. Humphries Oregon 50 National President ( ) National Vice President ( ) Order of the S.C. Member (1978-Present) Area Alumni Advisor ( ) Southern California Alumni Association President ( ) J. Tryon Hubbard Jr. Alabama 64 Alabama Gamma Fraternity Education Advisor (2016-Present) Alabama Gamma Advisory Committee Member ( ) District IV District Ambassador (2014-Present) Campaign for Alabama Alpha Honorary Co-Chairman (2012-Present) National President ( ) National Vice President ( ) Speakers Bureau Speaker ( ) Huntsville Alumni Association President ( ) National Treasurer ( ) Florida Panhandle Alumni Association Secretary ( ) National Secretary ( ) Director of Alumni Relations and Associations ( ) Steven E. Nieslawski Illinois 79 Illinois Delta House Corporation Member (2015-Present) Canonsburg Trustee (2010-Present) Project 2025 Housing Resource Group ( ) Speakers Bureau Speaker ( ) Illinois Delta Advisory Committee Member (2004-Present) NIC Delegate ( ) Illinois Theta Colony Advisory Committee Member ( ) National President ( ) National Vice President ( ) Order of the S.C. Member (1998-Present) FRMT Executive Committee Member ( ) FRMT Representative ( ) Attorney General ( ) Illinois Zeta Colony/Chapter Advisor ( ) Deputy Attorney General and GAC Parliamentarian ( ) Illinois Delta House Corporation President ( ) Illinois Beta Colony/Chapter Advisor ( ) Area Director ( ) 6

7 GOVERNANCE REVIEW COMMITTEE REPORT TO THE BROTHERHOOD A REPORT EXAMINING THE FOUNDATION S ACCOUNTABILITY, FIDUCIARY, TRANSPARENCY AND GOVERNANCE PRACTICES PHASE III

8 LETTER to the Brotherhood BROTHERS: We take great pride in our volunteer role as members of the Governance Review Committee. Our work has been rewarding, revealing and has resulted in both an affirmation of the Foundation s excellent business, fundraising and fiduciary practices as well as a number of opportunities for the Foundation to grow and improve. Ultimately, we feel that our work has allowed the Foundation to move the bar to new and higher standards within the Greek foundation community, as well as the charitable foundation community writ large. Our Phase III Report is a continuation of the work we completed during Phase I and II, which should be referenced as those reports offer additional stage-setting context and include prior findings and recommendations. During this phase, we reviewed a myriad of updated as well as new reports and documents. We also had correspondence with industry experts. We ve included a partial list of the main items relied upon during our analysis. In our perspective, while we recognize our work is in addition to the normal or traditional work by similar nonprofit organizations to ensure transparency and accountability, we believe it is a true testimony to the Foundation s commitment to the brotherhood. We have and continue to be appreciative of the ability to have such unfettered access and look forward to continuing to work with the Executive Committee and the Board of Trustees in the future. The outside, nonpartisan window into the governance and management of the Fraternity members financial assets, created by the Foundation s Trustees, is important for the future viability and integrity of the Phi Kappa Psi enterprise. Fraternally, James R. Blazer Ohio State 79 J. Tryon Hubbard Jr. Alabama 64 George W. Humphries Oregon 50 Steven E. Nieslawski Illinois 79 8

9 REPORT to the Brotherhood SCOPE OF WORK The Governance Review Committee was charged, during the first six months of 2018, the third phase of its work, to review and analyze the Foundation s: Governance structure and process Committees and the process by which the attendant committee charters are approved by the Board of Trustees; Election process for the Board of Trustees and; Personnel Practices/Human Resources After conferring with the Foundation s Chairman and because of the size and scope of the work within the current phase, the Committee agreed to move the review function of the personnel practices/human resources to Phase IV to be initiated in At the 2016 Grand Arch Council in New York City, the Foundation s Board of Trustees and the Fraternity s Executive Council agreed to a facilitation process to settle differences that arose in the immediate preceding biennium. The facilitation process was ongoing during the first half of 2018 while the Committee performed its work, agreed to recommendations, and wrote this Report for the Board. The Committee attempted to incorporate the results of the facilitation process as they were known to us at the time, but recognize that some final outcomes of the facilitation may have an impact on this Report. Where there may be differences between the final facilitation agreement and this Committee report, the Committee will re-visit any discrepancies during its next review cycle. The Committee met telephonically on January 19, February 15, March 21, April 18, May 16, June 6, and June 15, 2018, to discuss the various issues. In between the teleconferences, documents were reviewed and discussions were held with Foundation Trustees, management, the Fraternity/Foundation facilitator, and the CEFEX surveyor, amongst others. Also, many discussions occurred among Committee members between Committee meetings to advance their assigned duties and committee work. Based on the Committee s work, a large amount of data has been reviewed, condensed, organized and presented in this report. The structure of the report is presented based on the Committee s charge, as outlined. GOVERNANCE STRUCTURE AND PROCESSES After reviewing the Foundation s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, the Committee analyzed and discussed, amongst other similar data sets, a compilation of 42-Greek organizations by membership size, total assets, number and qualifications of foundation board members and number of in-person meetings per year. Also, a select review was made of current governance best-practices literature for not-for-profit organizations. The By-laws outline the specifics regarding Trustee elections, Board size and Board terms of office in Article II, Section 1: Section 1. Trustees. The affairs of the Corporation shall be managed, controlled, and under the supervision of the Board of Trustees, subject to the provisions of the Amended and Restated Articles of Incorporation (the Articles of Incorporation ) and these Amended and Restated Bylaws (the Bylaws ). The Board of Trustees shall have the number of members, no less than ten (10), as designated by resolution of the Board of Trustees from time to time. In any situation where the number of trustees is less than ten (10), the Board of Trustees shall be obligated to elect enough trustees to bring the total number of trustees to ten (10). Each trustee must be a member of Phi Kappa Psi Fraternity (the Fraternity ). Each of the trustees of the Corporation shall be elected by the Board of Trustees at the regular meeting of the Board of Trustees immediately preceding the expiration of the term of any such trustee, or at a special meeting of the Board of Trustees of the Corporation to serve for a term of six (6) years. Any trustee who is elected to fill a vacancy caused by reason of an individual who ceases to be a trustee prior to the expiration of his term shall serve for the period of such unexpired term. Board members are elected by a majority vote of the Board of Trustees. 9

10 REPORT to the Brotherhood After thoroughly reviewing all pertinent documents, the Committee expressed the following OPINIONS regarding the operation of the Board: Board Size: The Foundation s Bylaws require a minimum of 10 members. The current size of the Board is 16 members. The Committee felt, from a best practices point-of-view, that a maximum Board size of members was acceptable. This is reinforced by the fact that the Foundation has an Executive Committee that serves as the governance function in the periods between Board meetings. The Executive Committee s actions are reviewed by the Board of Trustees at the Board s next regularly-scheduled meeting. The facilitation process between the Fraternity and the Foundation mentioned that members were an appropriate size. Board Membership Composition: The Bylaws referenced above stipulate that members of the Board must be Fraternity members. Of the Greek organizations reviewed, only Gamma Phi Beta allowed a non-member to be a member of the Foundation board. Number of In-Person and Virtual Meetings per Year: Of the Greek organizations surveyed (including Phi Kappa Psi), the following number of inperson and virtual meetings were conducted annually. Conference Calls/Virtual Meetings per Year Number of Organizations 4 6 (including the Phi Psi Foundation) As Needed 5 Other 1 The Committee OPINED that the Board s current meeting schedule (inperson and virtual) was reasonable when taking into consideration non-profit industry best practices. Quorum and Voting: The Bylaws, Article II, Section 2 state in part, Onehalf (1/2) of the trustees in office immediately before a meeting begins shall constitute a quorum for the transaction of any business properly to come before the Board of Trustees. The act of a majority of the trustees present at a meeting at which a quorum exists shall be the act of the Board of Trustees 10 In-person Meetings per Year Number of Organizations Four 1 Three 10 (including the Phi Psi Foundation) Two 27 One 4 Board meetings are hosted in various locations throughout the United States to expose Fraternity members to the Foundation and its Trustees. Members of the Board are geographically disbursed and, therefore, it is impractical to expect 100-percent physical attendance at all meetings. The Board does allow Trustees to attend meetings via telephone. Also, given the demanding schedule of Trustees, absences will occur. Thus, a compromise of less than 100-percent attendance to constitute a quorum is prudent. The Committee OPINED that the Bylaw referenced above is a reasonable requirement.

11 REPORT to the Brotherhood Term Limits: The Committee met with Trustee Dr. Marc S. Persson F&M 97, the Board s appointed representative, to formulate a recommendation on this subject (based on the facilitation document). After a thorough discussion, it was the SENSE of the Committee that Dr. Persson should recommend the following: New Board members should receive a two-year initial term that would serve as a period of examination for both the Board and the new member. If both parties agree, the Board member would be eligible for up to an additional two, six-year, consecutive terms after which the Board member would have to leave the Board as a member. After a two-year hiatus, the member would be eligible to become a Board member again although foregoing the initial two-year term. Existing Board members would serve their current terms, which have been purposefully staggered to assure a smooth transition and to preserve institutional knowledge. The existing Board members would forego the initial two-year term and upon expiration of their current terms would then be eligible for two, additional consecutive, six-year terms after which the existing Board member would have to leave the Board. After a two-year hiatus, the member would be eligible to become a Board member again although foregoing the initial two-year term. It is understood by the Committee that the Trustees must elect, by a majority vote, an individual to each of his single terms on the Board. Legal advice was obtained subsequently which opined that any tie between two corporations could serve as an enterprise connection in the event of a law suit. The attorney cautioned that each such dual role should be examined annually by the Board either directly or through a standing committee. The Committee further OPINED that in addition to examining individual roles annually, the Board should also consider the aggregate effect of all such roles in order to evaluate the enterprise risk of too much overlap. Therefore, the Committee RECOMMENDS to the Executive Committee that the form currently used to identify potential dualities of interest be revised to include a query if such dual roles exist for Board members, corporate committee members or staff employees. The Committee RECOMMENDS that the duality of interest process be extended to include corporate committee members. In those situations where a dual role exists, the Board should evaluate annually, on a case-by-case basis and in the aggregate, the extent of the perceived liability and whether-or-not the duality of interest rises to such a level that it should be remediated. Review of the Articles of Incorporation and Bylaws: It was not deemed necessary by the Committee to do a complete review of the Foundation s Articles of Incorporation and Bylaws. However, a review of the process by which these governing documents could be amended was conducted. The continuation of Article II, Section 2 of the Bylaws previously referenced in this Report states: Duality of Interest: During the Committee s work a question arose as to whether or not a perceived Foundation liability would be created if a Trustee, corporate committee member or staff employee were to have a dual corporate role, such as serving as an officer or director of a chapter house corporation, a chapter advisor or a member of a chapter advisory board. provided, however, that: (a) The amendment of the Articles of Incorporation shall require the affirmative vote of the greater of (i) five (5) trustees or (ii) two-thirds (2/3) of the trustees then in office; provided, however, that any pro posed amendment to Article II of the Corporation s Articles of 11

12 REPORT to the Brotherhood 12 Incorporation shall be (i) unanimously approved by the Board of Trustees, (ii) published in full in each issue of The Shield of Phi Kappa Psi for the period of one (1) year following the date of approval by the Board of Trustees, and then (iii) approved by a three-fourths (3/4) vote of all organizations present and represented by duly accredited delegates at the next succeeding Grand Arch Council of Phi Kappa Psi Fraternity. (b) The alteration, amendment, or repeal of the Bylaws (other than the amendment of article II, Section 1, of the Bylaws) shall require the affirmative vote of the greater of (i) five (5) trustees or (ii) two-thirds (2/3) of the trustees then in office; and (c) The following actions shall require the affirmative vote of all the trustees then in office: i. the dissolution of the Corporation; ii. the transfer of all, or substantially all, of the assets of the Corporation; and iii. the amendment of Article II, Section 1, of the Bylaws. The Foundation s Amended and Restated Articles of Incorporation were approved by the Board of Trustees and, subsequently unanimously approved by the 2006 Grand Arch Council. Article II of the Foundation s Articles of Incorporation, as also referenced in the Foundation s Bylaws, does require advance notice to the membership which is one of the essential requirements of Roberts Rules of Order to amend a bylaw. The requirement of a one-year s notice appears excessive, whereas a notice of one month would suffice. The problem with the amendment provision related to Article II of the Articles of Incorporation as well as Article II Section 2, of the Bylaws is that these provisions impose such a high bar for amendment or revision that it would be almost impossible to accomplish an amendment or revision even if there is an overwhelming need to do so. In Roberts Rules regarding amendments, it is noted that the requirement governing amendments is to protect BOTH the majority and the minority voter. The minority can defeat the majority with one-third of the voting members plus one additional vote under Roberts Rules. The Foundation s Bylaw is different, since a 100-percent vote protects even one lone dissenter. It is the OPINION of the Committee that the vote of one person should never be absolute, because that defeats the rights of the majority and the overwhelming will of the membership (including the two-thirds [2/3] super-majority recommended by Roberts Rules to amend). The requirement of the three-fourths (3/4) vote at the succeeding GAC related to the Article is excessive. It is the OPINION of the Committee that a 2/3 super-majority is the most appropriate measure for passage of amendments. The Committee RECOMMENDS that Article II of the Foundation s Articles of Incorporation and Bylaws be re-visited from time to time to ascertain if the restrictive nature of the provision continues to meet the contemporary needs of the Foundation. COMMITTEE STRUCTURE AND MEMBERSHIP Based on the Foundation s total assets, size of staff, and current scope of work, the Committee determined that the Foundation committee structure of nine committees was currently appropriate and had no recommendations to streamline or add to the structure. The size of the membership of each committee was not analyzed. Committee Membership: The Committee reviewed the membership qualifications (i.e., expectations, who may serve, etc.) of each Foundation committee. The Committee determined the following would be appropriate from a governance perspective: Committee members should only be Trustees - Audit and Executive Committees; Committee members could be both Trustees and Fraternity members - Development, Finance, Investment, Laurel Hall, Nominating and Program Committees; Committee members could be non-members - Investment, Laurel Hall, Development and Program Committees; Committee members could be women - Any committee in which non- members are allowed;

13 REPORT to the Brotherhood Governance Review Committee - Currently, membership is composed of past Fraternity National Presidents who have never been a member of the Foundation s Board of Trustees. At the March 11, 2018, Board meeting, the Governance Review Committee was made a standing committee. The Committee is to report to the Board at least biennially at the Board meeting scheduled for each Grand Arch Council. The Board did not express a concern regarding term limits for Committee members, but asked the Committee to consider the subject and present a recommendation to the Executive Committee of the Foundation. The challenge with creating term limits for the Committee is that the criteria for membership are limiting and thus the pool of potential members is very small. The intent of the Board in creating this Committee was to have an independent group of Fraternity members review, on an ongoing basis, the governance and management processes and practices of the Foundation from an evidence-based, best-practices point-of-view. The idea of limiting the Committee s membership to past National Presidents was to commission individuals who had an insider s view of the workings of the Fraternity. In an attempt to expand the pool of potential Committee members, the Committee RECOMMENDS to the Executive Committee of the Foundation that the pool of potential members of the Committee be expanded broadening the membership to include both past National Presidents and other officers of the Fraternity s Executive Board who have not been in office for at least two years prior to being considered eligible to serve on the Committee. It is further suggested that those considered for Committee membership who may have served on the Foundation s Board and also have been a Fraternity Executive Board member would be eligible only after a two-year hiatus from their Trustee position. Committee Purpose: The Committee FOUND that the following committees stated purposes and committee membership were appropriate: Audit, Development, Executive, Finance, Governance Review, Investment, Laurel Hall, Nominating and Program. Investment Policy Statement (IPS): As revised March 1, 2014, and revised again by the Board based on the recently completed CEFEX audit, the Foundation s IPS was DEEMED APPROPRIATE from a governance perspective. It is noted that the CEFEX audit also recommended a separate IPS for the PKP McMahan Finance Engine LLC, which is currently being drafted for review and approval. During the construction of the revised IPS, the Foundation s Investment Committee and Board took into consideration the current national policy debate regarding the Fiduciary Rule. The Investment Committee included in their work the current strict federal definition of the Fiduciary Rule which is that the client s interest comes before that of the Financial Advisory firm s interest. Since the Phi Kappa Psi Fraternity is a personal membership organization and the Foundation receives and invests money from Fraternity members, the Committee AGREES that the Investment s Committee s definition is correct. Nominating Committee Charter: The Committee reviewed the newly adopted Nominating Committee Charter which expanded the Committee s membership base. It is the OPINION of the Committee that the charter was acceptable from a governance perspective. These recommendations were incorporated into the Committee s Charter which is included with this Report. Committee Charter Review: The Committee RECOMMENDS that a statement be added to each committee s charter, if not already present, that 13

14 REPORT to the Brotherhood the charter will be reviewed at least annually by the chartered committee to make certain that the committee charter is still relevant to the Foundation s current scope of work. Any recommendations for change should be presented to the Executive Committee and/or Board for appropriate action. Summary/Directory of Committees: The Foundation has developed an overview document which provides insight into each of the standing committees along with details on any current task-forces. The Committee noted the Laurel Hall and Governance Review Committee briefs were excluded from this document and therefore RECOMMENDS that the Laurel Hall Committee s and Governance Review Committee s purposes and committee membership listings be added. COMMITTEE CHARTER OVERVIEW OVERVIEW The Phi Kappa Psi Foundation Board of Trustees, in an effort to foster continued donor confidence; ensure effective compliance with applicable laws and regulations; institutionalize an ethical culture; provide Fraternity membership insight; and to demonstrate a continuous commitment to fiscal accountability; organizational transparency; and governance best practices, authorized a committee to routinely examine the Foundation s accountability; fiduciary; transparency and governance practices. The Governance Review Committee (the Committee ), was formed in September 2015 under a formal charge, which instructed the Committee to review, recommend and report their findings to the Board and broader donor community. In 2018, the Board established the Committee as a standing committee of the Board via this Charter. The Committee shall have all authority necessary to fulfill the duties and responsibilities assigned to the Committee in this Charter or otherwise assigned to it by resolution of the Board. This Charter shall be reviewed annually by the Committee and updated/re-ratified as necessary by resolution of the Board. COMMITTEE PURPOSE The Committee s work is meant to identify areas of potential risk or opportunity and formulate opinions or make recommendations that warrant action by the Board and management as it relates to operations, accountability, general governance and fiscal responsibility. The Committee s work is in addition to the traditional due diligence performed and completed as a means to exceed the normal or traditional work by similar nonprofit organizations in an effort to operate within a bestpractices environment. COMMITTEE MEMBERSHIP The Committee shall consist of a minimum of two members, as outlined in the Foundation s Bylaws, with a target of three to five members. General committee membership shall be composed of past Executive Council officers who have been out of office for at least two years. If any such individuals had served on the Board, their service must have ended two years prior to their service on the Committee. The Committee Chairman may be either a general Committee member or a member of the Board. The members of the Committee and the Committee Chairman shall be appointed by the Chairman of the Board annually or as necessary, to fill vacancies for the remainder of an annual term of service. 14 COMMITTEE ROLES AND RESPONSIBILITIES The Committee is responsible for presenting a report every two years, or upon request of the Board, regarding the Foundation s governance, legal and fiduciary compliance, as well as transparency and internal-management issues. The Committee s role includes reviewing reports, documents, contracts and records as well as conducting personal research and participating in interviews with individuals and companies who have and continue to work for the Foundation. Such interviews include independent service providers to the Foundation as a means to access their specific areas of expertise and to have the providers opine on the Foundation s compliance to those specific practices.

15 APPENDIX Governance Report APPENDIX - PRIMARY DOCUMENTS REVIEWED Although not exhaustive the following is a listing of the primary documents reviewed and referenced as part of the Committee s Phase III work. These documents are in addition to those that were and continue to be referenced as outlined in the Committee s Phase I and II Reports. Amended and Restated Articles of Incorporation Amended and Restated Articles of Incorporation (with seal) Amended and Restated Bylaws Audit Committee Charter BoardEffect Publications and Resources BoardSource Publications and Resources Committee Purpose Statements Directory/Overview Committee Membership Roster Conflict of Interest Policy Conflict of Interest Disclosure Form Employee Conflict of Interest Disclosure Form Trustee Development Committee Charter Finance Committee Charter Foundation Contact Directory Fraternity Executive Association (FEA) Surveys Governance Institute Publications and Resources Governance Review Committee Charge(s) Investment Policy Statements Laurel Hall Committee Charter Meeting Minutes National Council of Nonprofits Publications and Resources Nominating Committee Charter NonProfit Times Publications and Resources North-American Interfraternity Conference Foundation (NICF) Foundations Industry Surveys Program Committee Charter Roberts Rules of Order, Newly Revised (11th ed.) 15

16 TOGETHER, WE ARE FOCUSED ON OUR BROTHERS. Invest Today. Change Tomorrow.