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You are viewing the Institutionally Related Foundation version of this CEO Update. An Institution and Systems version is also available.
As new board members participate in onboarding and orientation this month, I want to underscore the central importance of fiduciary duty as the foundation of effective governance. Both new and long-serving board members need a clear understanding of the primacy of fiduciary responsibilities in ensuring your foundation’s integrity, independence, and long-term impact in support of higher education.
Fiduciary Duty: A Core Tenet of Foundation Board Leadership
As stewards of philanthropic assets entrusted to advance the mission of your partner institution, board members hold a position of profound trust and accountability. That trust requires diligent attention to three essential fiduciary duties:
Duty of Care
Foundation board members must govern with diligence and foresight. This means preparing for meetings, asking thoughtful questions, assessing financial management and investment performance, and making decisions that support both prudent stewardship and long-term benefit to the institution.
Duty of Loyalty
Board members must act with unwavering integrity and independence. This requires putting the foundation’s mission first, avoiding conflicts of interest, ensuring transparency, and safeguarding the foundation’s autonomy—even in the face of external pressures or political considerations.
Duty of Obedience
Board members must ensure the foundation adheres to its mission, governing documents, and applicable laws and regulations. A focus on mission fidelity helps foundations remain aligned with donor intent and supports the long-term sustainability of the colleges and universities they serve.
Go Deeper
AGB offers resources to help your foundation board understand and embrace its fiduciary responsibilities
- Video: Fiduciary Duties in Action: What Every Board Member Should Know—A 10-minute overview of fiduciary duties designed to help all board members fulfill their responsibilities with confidence. Ideal for your next board meeting or orientation materials.
- Self-Paced Course: Board Member Orientation – An essential introduction or refresher on higher education governance, fiduciary duties, and boardroom culture.
- Trusteeship Article: The Five Characteristics of Great Foundation Board Members—This article offers ideas on what makes a great foundation leader.
- Book: Principles of Trusteeship: How to Become a Highly Effective Board Member for Colleges, Universities, and Foundations—This guide offers clear guidance on the mindsets and practices of effective board members, specifically for those serving affiliated foundations.
- Book: Institutionally Related Foundation Boards: An Introductory Guide for Board Members—This book provides a detailed overview of the essential responsibilities of foundation boards and identifies key characteristics of effective institution-foundation partnerships.
Duty over Division
In today’s polarized environment, a comprehensive understanding of fiduciary duty provides a strong foundation for principled leadership. Your board’s commitment to upholding these duties protects the independence of your foundation, preserves donor trust, and ensures the foundation’s ability to advance institutional mission and student success.
AGB is here to help your foundation board deepen its understanding of fiduciary responsibility and exercise sound governance as you navigate the opportunities and challenges ahead.
