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Über dieses Buch

Bank foundations serve an important purpose in the Italian nonprofit sector. This book presents the legal grounds, areas of intervention, and basic tools involved in the asset management and grant-making activities that such organizations undertake. A special emphasis focuses on the analyses of the organizational structure of bank foundations and the relevant aspects of governance, particularly with regard to the composition, roles, and responsibilities of bank foundation boards. The general reduction in the resources to which they have access requires a new strategy that clearly defines long-term goals and the necessary procedures to achieve them. The topic of strategic planning is therefore also central to this text, which examines its peculiarities, content and governing bodies. The analysis of some case studies provides a better understanding of the manner in which foundations interpret strategic planning and reveals strengths and weaknesses that demand careful attention.



Chapter 1. Italian Bank Foundations and Governance

Italian bank foundations are a particular kind of nonprofit organization, operating in the exclusive interest of a territory, especially in the fields of art, culture, health, and social assistance. Although they share in substance the common idea of foundations, their governance structure presents some peculiarities that distinguish them from typical nonprofit organizations. Bank foundations’ governance structures comprise two different boards with different but complementary functions. The Board of Trustees is in charge of the foundation’s direction; it defines objectives, strategies, and long-term programs. The Board of Directors has more of an administrative function, translating long-term plans into short-term programs of action. Defined as such, this board structure allows the foundation to overcome the rigidity that typically characterizes the dual governance model. It acknowledges a deeper connection between the policy-making body and management and thereby ensures a closer link between strategy formulation and strategy implementation.
Chiara Leardini, Gina Rossi, Sara Moggi

Chapter 2. Outlining Italian Bank Foundations

In Italy, there are 88 bank foundations that vary widely in terms of their size. Their appearance in the Italian economic landscape has been the result of a deep legislative process of reform involving the banking system during the 1990s. As a result of this process, Italian bank foundations were set up as private legal organizations with statutory and management autonomy, charged with the pursuit of only philanthropic purposes in the interest of the territory. They are allowed neither the exercise of business activities nor the performance of credit functions and are also excluded from any form of financing, disbursement, or subsidy involving entities with a profit intent. Their business comprises two major areas of activity: asset management activity, aimed at maximizing the return on investment of the assets, and grant-making activity, focused on the maximization of value for the territory. Asset management and grant-making activity are closely linked. With regard to the former, net assets are invested to obtain the funds needed to finance interventions in favor of the local community. With regard to the latter, those funds are then used within the foundation’s chosen areas of intervention. Amounts disbursed, sectors of intervention, manner of action, and beneficiaries vary depending on size and geographic area.
Chiara Leardini, Gina Rossi, Sara Moggi

Chapter 3. Governance Roles and Responsibilities

Bank foundations’ governance structure is established by law, focused on participants, roles, and responsibilities. The law provides for separate collective bodies for direction, administration, and control and establishes a clear distinction regarding which bodies carry out which functions. Such functional separation creates a dialectic based on the distinction of roles, tasks, and responsibilities. The basic structure of governance within bank foundations identifies the Board of Trustees as the body in charge of multiannual strategic planning. Its duty is to determine long-term plans, priorities, and objectives of the foundation for both asset management and grant-making activity. The Board of Directors is the administrative body, with the task of translating the multiannual strategic plans set by the Board of Trustees into short-term programs and to communicate them to management for implementation. The basic governance provides for a control body that has the task of monitoring the proper functioning of the foundation. The importance of good governance in bank foundations is emphasized by the guidelines drawn up by the Charter of the Foundations, a voluntary but binding code of conduct common to all foundations.
Chiara Leardini, Gina Rossi, Sara Moggi

Chapter 4. Composition of the Boards

This chapter focuses on the composition of bank foundations, a key element for good governance in nonprofit organizations. We consider some main aspects regarding the number and gender diversity of members belonging to the policy-making and administrative bodies, the people who select them, and the process of designation. Then, in line with a multistakeholder approach, we propose a map of the main bank foundations’ stakeholders and explain how they are involved with governance, underscoring the important relationship among local stakeholders, governance stakeholders, mission stakeholders, and the bank foundations. In particular, we focus on the local stakeholder groups directly engaged in selecting members of the Board of Trustees. Finally, we conclude by considering some issues related to incompatibility and conflicts of interest within boards.
Chiara Leardini, Gina Rossi, Sara Moggi

Chapter 5. Governance and Strategic Planning

Good governance depends on adequate governance tools. Strategic planning is a critical component of good governance in nonprofit organizations because it helps formalize strategy through action plans, identify long-term goals, and identify the polices needed to achieve them. Strategic planning in bank foundations is affected by the particular nature of their business, which comprises both asset management and grant-making activities. In Italian bank foundations, every 3 years, the Board of Trustees identifies within the multiannual planning document the areas of intervention, describes the strategic objectives to pursue within them, and estimates the expected funds to realize such objectives. Every year, the Board of Directors prepares an annual planning document that describes for each sector of intervention the objectives to pursue during the next year and the funds that predictably will be allocated to them. Finally, the Board of Directors identifies an analytical plan for deliberations pertaining to the annual articulation of the activities planned for the next year. Favouring the proper allocation of responsibilities to the different organs that contribute to pursuing the mission, strategic planning can support the good governance of bank foundations.
Chiara Leardini, Gina Rossi, Sara Moggi

Erratum to: Board Governance in Bank Foundations

Chiara Leardini, Gina Rossi, Sara Moggi


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