What Is a Board of Trustees?

Board of Trustees

A board of trustees is an appointed group of individuals responsible for managing an organisation’s assets and strategic direction. Trustees are appointed or elected to act in the best interest of the beneficiaries concerning key management decisions.

Which organisations might use a board of trustees?

A board of trustees commonly presides over public organisations and charitable foundations, including:

  • Hospitals

As a governing body, a board of trustees is responsible for creating and reviewing the hospital’s mission and strategic planning.

  • Local government

Trustees serve as the legislative branch of the local government. They are entrusted with budget management and forming local laws and regulations.

  • Educational establishments

Universities and university endowments typically have a board of trustees to handle the oversight and management of all assets and resources.

  • Nonprofits

Public charities, religious institutions and other nonprofits are governed by a board of trustees who serve a fiduciary duty to the beneficiaries.

Functions of a board of trustees

Trustees are expected to fulfil the following board responsibilities:

  • Provide leadership

They have a legal responsibility to oversee the management of their organisation and provide leadership to the directors.

  • Guide strategic direction

Trustees are responsible for establishing and reviewing the organisation’s mission and vision statements. They must actively participate in all strategic planning processes.

  • Liaise between leadership and donors

They act as liaisons between the organisation’s leadership and its donors.

  • Financial governance

A board of trustees has to ensure that the organisation’s assets are protected and managed responsibly. They work in partnership with the chief financial officer to finalise the budget, review all financial records and ensure proper management of funds.

  • Hiring management

Trustees can often appoint third parties to assume certain management responsibilities, such as handling specific assets.

Differences between a board of directors and a board of trustees

The key differences between a board of directors and a board of trustees are:

  • Trustees typically govern public institutions, nonprofits and charitable organisations while directors govern public corporations and private companies.
  • Trustees have an advisory role and leave the final decisions to the board of directors.
  • A board of directors often has stock in their company while trustees do not.
  • Trustees have to abide by the prevailing charitable trust laws and are therefore held to a different set of standards from company directors. 

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