A board of trustees is similar to a board of directors; in fact, they are so similar that the terms are often used interchangeably. Private organizations are more likely than public corporations to use the term board of trustees. A board of trustees may also be called by other names, especially as the term pertains to financial and educational institutions.
Boards of trustees are responsible for holding funds and other assets, including property “in trust.” Boards of trustees have a fiduciary responsibility to protect all assets, which means that they must place the interests of the organization above their own. It also means that they must make decisions for the organization in the same way that an ordinary, prudent person would.
Banks, credit unions, colleges and universities often have boards of trustees. Art museums and other types of associations may have them as well.
What Is a Board of Trustees for a Mutual Savings Bank or Credit Union?
Mutual savings banks and credit unions have boards of trustees that govern their institutions. Boards of trustees for financial institutions are responsible for properly governing the institution and ensuring that the borrowers, depositors and members of the community’s interests are protected. The board of trustees works to make safe investments of customers’ money and to protect the security of their deposits. Trustees must make sure that they pay interest to their depositors according to their policies and make sure that customers can access their principal upon request.
What Is a Board of Trustees for a University or Other Educational Institution?
There are over 4,000 colleges and universities in the United States. Each higher educational institution boasts its own unique mission. The names of the governing bodies reflect the tradition, history and regional differences of each school. The term board of trustees is a widely used and accepted term to reflect the fact that reliable citizens govern the institution, rather than a governmental body or some other entity.
Colleges and universities may use any of the following terms to name their governing bodies:
- Board of Regents: Institutions of higher learning in 39 states govern or coordinate multicampus systems using a Board of Regents.
- Board of Governors: Since the board is the governing authority of the school, some institutions, such as the University of North Carolina, Rutgers University, the University of New Haven and McGill University in Montreal, have chosen to call their boards the Board of Governors.
- Board of Visitors: Some colleges and universities refer to their boards as the Board of Visitors because it reflects the fact that the board doesn’t reside on the campus. Harvard University, Boston University, Tufts University, the University of Louisville, the University of Pennsylvania School of Dental Medicine, and Weill Medical College and Graduate School of Medical Sciences are examples of schools that have a Board of Visitors.
- Board of Curators: A curator is one who manages or oversees protecting items or issues that are often connected with a cultural heritage institution. The governing bodies of the University of Missouri and that state’s Lincoln University are called the Board of Curators.
- Board of Supervisors: This term is used almost exclusively by institutions of higher education in the state of Louisiana.
- Board of Fellows: The term “fellows” has often been related to faculty members, and these boards may be used as fundraising boards or as specialized advisory boards, rather than governing boards. Norwich University in Vermont, Santa Clara University and the University of Tampa all have Boards of Fellows.
- College Councils: The State University of New York uses these councils as advisory boards for presidents and trustees.
What Is a Board of Trustees for a University Endowment?
An endowment is a sum of money that one party bequeaths to another party. University alumni sometimes donate large sums of money to their alma maters as an honorarium. Some universities appoint a special board of trustees to oversee and manage the investment of the endowment funds, so they grow and prosper. The university may use one or more institutional managers to manage the assets and appoint a board of trustees with fiduciary duties to oversee the endowment portfolio and approve investment decisions.
What Is a Board of Trustees by Definition?
A board of trustees is a group of individually appointed or elected individuals that has overall responsibility for governing and managing an organization. A board of trustees makes decisions taking into consideration the best interests of all stakeholders.
Trustees are usually key individuals who are involved with the management or have a past history of involvement with the organization. Trustees may be appointed or elected.
Good governance principles suggest that boards of trustees have a mix of internal and external trustees. Current trends indicate that boards of trustees should consider diversity, gender and areas of expertise when forming a well-rounded, quality board. Regulatory bodies support boards of trustees having the same level of accountability as corporate boards. This is a new trend, which is moving boards of trustees farther away from solely being advisors and figureheads to functioning as fully operational boards similar to those in other types of industries.
Boards of trustees are being held accountable for such governance issues as compliance, data information security, safety issues in the workplace or on campuses, and many other high-level issues. Boards of trustees will benefit from using an electronic board management system to make sure that they’re working efficiently while protecting the organization and themselves from unexpected liability. Trustees can take advantage of total Enterprise Governance Management with Diligent’s Governance Cloud to manage all aspect of governance and compliance, including agendas, minutes and D&O evaluations, with no worries about cybersecurity matters.
What Is a Board of Trustees’ Framework?
Trustees will find their duties and responsibilities outlined in state, federal or local laws, as well as in their organization’s bylaws. Boards of trustees may range from three to 20 members. Much like other types of boards, boards of trustees may form subcommittees to help delegate duties or tasks. Committees do research and bring a summary of the committee’s work back to the board, often with recommendations for board voting issues.