What is a Board of Trustees?
A board of trustees is a group of appointees responsible for providing board oversight and governance to a lead charitable trust, foundation, or endowment. It is a trust that’s established for charitable purposes. It’s an irrevocable (in other words, it can’t be reversed) arrangement for a donor to sign over assets to a third party, for the benefit of the charitable organization. Charitable foundations are similar to charitable trusts — with one key difference. Trusts involve donations from one person, whereas foundations often have contributions from multiple donors.
Finally, an endowment is a collection of assets used as investment income for organizations including universities
, nonprofits, churches, and hospitals, among others. An endowment is made up of many (sometimes hundreds or even thousands) individual donations. Generally speaking, the board of trustees is responsible for upholding the relationship between the nonprofit and its donors. The tasks that are involved vary from one organization to the next.
Some boards of trustees are solely focused on managing the assets of the entity they serve. This could include duties such as:
- Accepting contributions
- Making investment decisions
- Ensuring taxes are taken care of properly
Depending on the organization, trustees may also have other areas of responsibility, including strategic planning, oversight, and fundraising. Trustees also have fiduciary duties which typical include:
- Duty of care
- Duty of loyalty
- Duty of obedience
Trustees are bound by state trust laws. These laws and regulations are typically more stringent than those that govern a board of directors. As such, trustees are often held to higher standards when it comes to their fiduciary duties — and encounter steeper penalties for missteps. For example, in some instances, a trustee can be held liable for acts related to simple negligence. In other words, a trustee could be held personally liable for certain acts — even if they’re made in good faith.
Trustees can be either appointed, nominated, or elected to their role. The professionals who sit on the board of trustees usually have careers outside of their service on the board. Oftentimes, they serve in their role voluntarily; in other words, they receive no compensation. Further Reading
Browse More Terms and Definitions:
Select a Letter