Fiduciaries First and Foremost

AGB has a long history of scanning the higher education environment and developing programs and publications to support boards and board members as new issues emerge and existing situations change substantially. That is the case with the topic of undue influence and intrusion into the operations of colleges and universities. Considering recent events, AGB’s current statement on these topics, published in 2012, was judged by AGB’s Board of Directors to be out of step with today’s realities.

The board appointed a working group to draft an updated statement. AGB’s Council of Presidents reviewed the latest draft of the revised statement at its June 2023 meeting. Its deliberations were joined by two members of AGB’s Board of Directors, David Wilson and Cynthia Shapira, who are also members of the working group. In addition, David is a member of the Council of Presidents and his perspectives as a sitting president, along with Cynthia’s as a board chair, were especially instructive for our discussion.

To get quickly to the main point, during the council’s discussion of the draft statement the presidents recommended that it should begin with the ultimate goal in mind. Thus, while information about new threats and the urgency of dealing with them is valuable and should be addressed, the primary emphasis should be on supporting boards in the exercise of their fiduciary responsibilities. The key message must be about strengthening a board’s exercise of its fiduciary duties and its collaboration with the institution’s chief executive officer in doing so.

The rationale for this approach is straightforward. If boards are making decisions that are in the best long-term interest of the institution, they will be able to deal effectively with undue influence and intrusion. Focusing on the desired outcome—appropriate exercise of fiduciary duties—rather than the current environment involving undue influence and intrusion makes good sense from a governance perspective. Knowing the current environment, the council recognized that this is easier said than done.

Council members understand that the responsibility for responding to issues of undue influence and intrusion belongs to the board. They also understand that presidents and chancellors must be partners with their boards in all areas, including managing cases of undue influence and intrusion.

Council members recommended that the statement keep the focus on board development and education and guard against a tone that assumes boards don’t understand the issues. Boards and presidents should be urged to keep a neutral tone (remembering that universities are places of open dialogue and discussion) and focus on the positive aspects of policies and practices that can be reinforced and improved through effective board education and development. This begins with comprehensive board orientation and continues through regular attention to board education, especially about the responsibilities of trusteeship. Boards benefit when members are continuously asking, “How well are we doing our job?”

Independence is a long-standing characteristic of American higher education. Beginning in colonial times, the founders of our democracy wanted to ensure that our system of higher education was not an agency of government. As a country, we adopted the concept of citizen volunteers as trustees, while most other countries have a model of state or national control. This concept has served us well and made the American model of higher education the envy of the world. Nobody should be surprised that we sit up and take notice when individuals or political entities try to take control of what we can teach and who we should hire, among other examples of current stresses. We value independence and autonomy and believe it has served us well as a way of working within the context of our democracy. Many believe that this independence is under threat now more than it may have been in the past. Thus, the support for a clarion call for boards to remember first and foremost their fiduciary duties.

This is not to say that boards should ignore external constituencies. In fact, effective boards actively seek input from appropriate constituents and keep open minds about the ideas and comments from these important groups. In the end, however, boards must act in ways that further the long-term vitality and sustainability of their institution.

It was clear in the council’s discussion that definitions matter. Presidents urged that the new statement include definitions of terms such as undue influence and intrusion. They also acknowledged that academic freedom is a concept that is often misunderstood and suggested that boards spend time discussing the core concept of academic freedom, as well as its benefits. For example, innovation in areas such as technology, medicine, and business is driven by an understanding that academic freedom is essential to the innovation process—a process that depends on access to any information that might bear on solving a problem; the ability to consider alternative perspectives and to challenge established positions; and opportunities to follow ideas as deeply as necessary to achieve breakthroughs in problem solving.

AGB’s Council of Presidents supported the inclusion of specific recommendations about undue influence and intrusion to address the current challenges, and members favored practical recommendations in AGB’s updated statement. They felt that the recommendations are primarily about helping boards ensure that they are prepared to make fiduciary decisions even when challenged by outside influences. AGB statements about board accountability and best practices reinforce that governing boards are accountable for protecting the mission of the institution, safeguarding the values that guide American higher education, reinforcing the role of higher education as a public good and public trust, and including the legitimate and relevant interests that various constituents represent.

Many presidents felt that a lack of understanding about the reasons for some core governance concepts and best practices was at the root of a board’s possible reluctance to tackle issues of undue influence or intrusion. For example, alumni may challenge an institution’s investment in diversity, equity, and inclusion programs because they do not understand why such programs are important to student success, even though they may be strong supporters of institutions’ need to improve student success.

Another issue is that board members may feel that they should represent the opinions of those who appointed or elected them. This approach is misguided. Regardless of the method of appointment, once trustees are appointed, board members’ first responsibility is to the institution. This is the fundamental principle of being a fiduciary—being responsible for the long-term health and well-being of the institution. It means that trustees are responsible not only for protecting the asset (the institution) but also for enhancing its value. It also means that any individual agenda cannot and must not interfere with what is in the best interests of the institution.

Recommendations that received strong support in the council discussions included emphasis on the fundamental principle of the need for boards to be prepared. Being prepared means that boards know that:

• They need to take responsibility for leadership regardless of the challenges.
• They need to look at their structure to ensure that the board’s fiduciary duties and authority are appropriately positioned and reinforced.
• They need to engage regularly in thoughtful discussions about the core concepts that underlie their work, such as shared governance, academic freedom, and independence.
• They need to keep listening and learning and accepting that all boards experience the need to adapt and improve.
• They need to look for ways to prevent and deal with issues that might threaten their independence.
• They need to consistently engage in discussions about governance principles and best practices.

The council also considered how best to communicate the new statement after it is approved by the AGB board. To be effective, it needs to be embraced by boards. It goes without saying that those who need it most might be the least likely to accept the content and the recommendations. Direct communication from AGB to boards, rather than expecting presidents and chancellors to carry the message, was suggested. So was building coalitions with other higher education organizations to reinforce the importance of the messages.

Fiduciary duties are the legal responsibility of every individual board member. While boards act collectively, the individual contributions of each board member combine to ensure that boards keep fiduciary duties front and center and that they engage regularly in board education and development to keep best practices top of mind.

Carol A. Cartwright, Ph.D., is president emeritus of Kent State University and Bowling Green State University. She is an AGB senior fellow and senior consultant and the ambassador to AGB’s Council of Presidents.