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As new trustees participate in onboarding and orientation processes this month, I want to underscore the importance of fiduciary duty as the foundation of effective governance. New and existing trustees must have a clear understanding of the core responsibility they are required to uphold to ensure institutional integrity and success. Fiduciary duty is not only a legal standard; it is a commitment to ethical stewardship that defines a trustee’s role both inside and outside the boardroom.
Fiduciary Duty: A Core Tenet of Effective Board Leadership
Every trustee is entrusted with the mission, resources, and future of their institution. That trust brings with it three essential duties:
Duty of Care
- Trustees must govern with diligence and courage.
- This means preparing for meetings, asking thoughtful questions, assessing risks and opportunities, and making decisions in the best interests of the institution, even when those decisions are difficult.
Duty of Loyalty
- Board members must act with unwavering integrity and independence.
- Loyalty requires putting the institution first, disclosing potential conflicts of interest, and resisting external pressures, including politically motivated attempts to influence governance for ideological purposes.
Duty of Obedience
- Trustees must ensure their institutions remain faithful to their mission, values, and legal obligations.
- The institution’s mission should be a constant guide for board deliberations, helping boards remain focused on long-term student success.
Go Deeper
Leverage these AGB member resources to support your board’s understanding of fiduciary duty and prepare for the year ahead:
- Video: Fiduciary Duties in Action: What Every Board Member Should Know—A 10-minute overview of fiduciary duties to help trustees understand and embrace their responsibilities in everyday service. Play this video at an upcoming board meeting and include it with orientation materials.
- Self-Paced Course: Board Member Orientation—An indispensable introductory or refresher program on higher education governance, essential board responsibilities, fiduciary duties, and boardroom culture.
- Book: Higher Education Governing Boards: An Introductory Guide for Members of College, University, and System Boards—A detailed overview of the essential responsibilities of governing boards—public and independent—and the fiduciary duties of board members.
- Book: Principles of Trusteeship: How to Become a Highly Effective Board Member for Colleges, Universities, and Foundations—This guide defines the attitudes and actions of highly effective board members and provides insight into three fundamental functions of trusteeship.
- Article: “When Boards Fail, Higher Ed Fails”—My recent opinion piece for Inside Higher Ed notes that growing misinformation about the role of trustees emphasizes the critical need for them to understand their fiduciary duty and recognize and reject external influences.
- FAQs: Fiduciary Duties for Institutional Board Members—Questions and answers regarding fiduciary principles and duties that are fundamental to good governance.
Duty over Division
In today’s polarized and fractured environment, a comprehensive understanding of fiduciary duty serves as an anchor for guiding actions that are in the best interest of the institution and its mission. Principled leadership is not only a legal responsibility but an essential obligation to protect the future of our institutions and the integrity of higher education itself.
AGB is here to help you ensure your board members fully understand their fiduciary duty and authority so they can safeguard institutional autonomy, uphold mission fidelity, and confidently meet the challenges and responsibilities entrusted to them.
