An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Brian McAllister
Wichita State University

Arthur Allen
University of Nebraska - Lincoln

Abstract: The purpose of this study is to examine the effect of founding family influence on private foundation performance. Foundation performance is measured using accounting measures for three categories of performance: administrative performance, investment performance, and grant performance. Using the largest 200 private foundations in the U.S. from 2001 through 2003, founding family influence is determined to improve administrative and investment performance, but does not result in an increase or decrease of grant performance. Family foundations having founder participation enjoy the strongest administrative and investment performance levels, suggesting that foundations controlled by the original benefactor are most likely to achieve the philanthropic goals of a foundation. Finally, administrative performance improves when there are fewer board members and both administrative and investment performance deteriorates with higher levels of CEO compensation.

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