Fiduciary Principles and
Habits of Effective Boards
December 7, 2015
Dr. Sheila Stearns, AGB Consultant
Dr. Kevin Reilly, AGB Senior Fellow
Questions to Consider
1.
What’s special and distinctive about your institution?
What most excites and engages you as a Trustee?
2.
How can you best enhance and strengthen your
institution as a board member?
3.
What makes you proudest of your institution as a
Trustee?
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Ever present: Fiduciary Duties
of Directors and Officers
What is a Fiduciary?

someone with special responsibilities in
connection with the administration,
investment, monitoring, and distribution of
property.
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College/University Trusteeship…
The Assets– The college/university you govern,
including mission and identity, property, human
resources, educational product, endowment, and
reputation.
For Whom – The institution: students and their families
(current and future), faculty, donors, alumni.
Others?-- The community? The public? The taxpayers?
Fiduciary Duties of Governing Board Members- AGB Board July 24, 2015
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Fiduciary Duties
•Duty of Care
–Act in good faith for best interests of institution
–With that degree of diligence, care and skill which
ordinarily prudent persons would reasonably exercise
under similar circumstances in like positions.
•Duty of Loyalty
–Put interests of institution before personal interest
–Do not act from self interest; no self-dealing
–Conflicts of interest
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Fiduciary Duties
• Duty of Obedience
–Obligation to act consistently with mission
–Obligation to cause the institution to act in compliance
with law
• State law may describe or apply these standards of conduct
differently (for example, under particular rules applicable to
regents or public bodies)
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Best Practices / Traits of
High-Performing Boards
• Full board involvement/
Sense of engagement and participation
• Respect for process and a focus on results
that further the mission
• Effective partnership with the
President/Chancellor
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The Effective Trustee
• Prepares for, attends, and participates in
meetings
• Knows the institution/system
• Knows the environment/circumstances
• Asks questions
• Challenges ideas and positions, not individuals
• Knows the difference between governance and
management
• Is an ambassador for the institution/system
• Knows when to step down
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Habits of Highly
Effective Boards…
1. Create a culture of inclusion.
2. Uphold basic fiduciary principles and fundamental
responsibilities.
3. Cultivate a healthy relationship with the
president.
4. Select an effective board chair.
5. Establish an effective governance committee.
6. Delegate appropriate decision-making authority
to committees.
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Highly Effective Boards…
7. Consider strategic risk factors.
8. Provide appropriate oversight of academic
quality.
9. Develop a renewed commitment to shared
governance.
10. Focus on accountability.
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Hallmarks of an Effective Board
An effective board…
1. understands and respects the vital difference
between governing and managing, and it
nurtures and supports presidential leadership.
2. always balances the institution’s interests and
welfare with the needs and priorities of the
state.
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An Effective Board…
3. balances advocacy and oversight.
4. observes and imposes the highest ethical
standards and avoids even an appearance of
conflict of interest.
5. even when sharply divided, speaks with one
voice.
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An Effective Board…
6. listens to and learns from the institution’s
constituencies without giving any of them a
veto.
7. nurtures and enhances the legacy of the
institution.
8. recognizes its special responsibility to students
for the quality and value of their educational
experience.
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An Effective Board…
9. represents and advocates for the institution in
the larger community.
10.commits itself and the institution to due
process and academic freedom for faculty and
students.
11.commits adequate time and energy not only to
its basic tasks, but also to the enjoyment of the
board experience.
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Questions for discussion:
1. How can a board and its members most effectively
engage in a candid conversation on difficult and critical
issues – especially given open meeting and public
records, media scrutiny, and presence of observers?
2. Even when its members may be sharply divided on a
vital and contentious issue, how can a board manage to
speak with one voice without suppressing the free
speech and inquiry of those who do not share that
consensus?
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Questions for discussion:
3. How can a board most effectively balance the institution’s
interests and its welfare with the needs and priorities of
the state that provides support? Specifically, how can a
conscientious trustee maintain independence against
countervailing pressure from the governor to whom he or
she is accountable?
4. When the dictates of a board member’s professional
affiliation – for example, as attorney, engineer, etc. –
threatens to conflict with the perceived interests and goals
of the institution and other trustees, how can a potentially
conflicted trustee reconcile such tension?
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Questions for discussion:
5. When an individual trustee initially encounters a
potential conflict of interest, what steps should
he or she pursue in maintaining the highest
ethical standards in order to avoid the
appearance of a conflict?
6. How most effectively can a board (and its
individual members) learn from and listen to the
institution’s myriad constituencies without giving
any of them a veto?
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Question for discussion:
7. In what ways may an individual trustee
and the board as a whole serve as an
ambassador and advocate for the
institution in the larger community –
especially at those occasional times
when the institution is beset by political
intrusion or external influences?
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Questions?
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Suggested Publications
Available in the AGB Store
http://agb.org/store
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Upcoming AGB Events
•December 8, 2015: Webinar – Staging an Engaging Board Meeting
•January 24 – 26, 2016: Foundation Leadership Forum
•April 15 – 17, 2016: Workshop for Board Professionals
•April 17 – 19, 2016: AGB National Conference on Trusteeship
www.agb.org/events
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Thank You
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