In this paper I conduct the first empirical analysis of the relationship between director compensation and private foundation performance. Using compensation data for over 17,000 private foundations across the period 1993 to 2017 I find that private foundations which choose to compensate their directors make smaller charitable distributions each year, and are also more likely to minimize their charitable distributions to the legal minimum over time. I also examine the association between compensated directors and foundation investment returns and find no relationship. Finally, I find that foundation director compensation is not a substitute for either employee compensation or outside professional fees.
