Fiduciary Duty Is the Law

The good governance work of the Association of Governing Boards of Universities and Colleges (AGB) is built on a solid and essential foundation: fiduciary duty. Much has been written about these duties and their application to the work of higher education governing boards. But where do they come from? Simply put, they are the law. The law of every state, whether by statute or judicial decision (the common law) or both, establishes certain obligations for those who serve on the governing boards of corporations and certain institutions. This includes private corporations, both nonprofit and for-profit, public institutions, and corporations chartered by state or federal law. These obligations, often framed in statutes as “Standards of Conduct for Directors and Officers,” ensure that the essential responsibilities of overseeing and stewarding these entities are carried out prudently and in good faith.