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The Role Of The Board Of Trustees Vs. The Board Of Directors

The Role of the Board of Trustees vs. the Board of Directors

Because there are a lot of similarities in the role of the board of trustees vs. board of directors, it’s common for people to use the terms interchangeably. Both positions have a strong role in governance. In higher education, the role of the board of trustees has been evolving. Much of the responsibility for governance in that arena is transitioning from upper administration to the board because the board is ultimately responsible for decisions governing higher education.

Regardless of the title, the roles and responsibilities for both positions will be outlined in the bylaws. Governance is in the spotlight in every type of business and organization. Board management software is the best way for boards of all kinds to ensure that they’re fulfilling their fiduciary duties and being responsible stewards and leaders.

What Does the Role of Trustees Entail?

The original intent and role of trustees were in connection with the leaders of a charitable trust. Trustees may be paid or unpaid for their duties. The most common types of organizations that would use trustees are hospitals, universities, nonprofit organizations or local governments.

For nonprofit organizations, trustees often have to do fundraising in addition to their other trustee responsibilities. Their duties also include maintaining donor loyalty and the confidence of the community. Trustees are the main overseers of a company or organization, and they represent the stakeholders.

One thing that clearly separates trustees from board directors is charitable trust laws. Some states have charitable trust acts. These regulations differ substantially from the laws that govern nonprofits. Under charitable trust acts, the word trustee has a specific legal meaning. Trustees are held to a higher fiduciary standard that other board directors. Their primary duty is to the beneficiaries of the trust. This is an important distinction because trustees may be held personally liable for simple acts of negligence even if they made decisions in good faith. Also, charitable trust acts implicitly prohibit any transactions with the trust.

What Does the Role of a Board of Directors Entail?

The term for a board of directors is usually in connection with a public or private company or a nonprofit organization. Board directors may either be appointed or elected. Sometimes they get paid and sometimes they serve as volunteers.

One of the main duties of a board director is to recruit and hire the CEO or executive director. Board directors mentor the organization’s senior leader and monitor their performance. They also have the authority to fire a poorly performing senior executive or one who exhibits unethical or illegal behavior. Board directors represent the best interests of shareholders or stakeholders. As senior leaders, board directors are also usually involved with building brand recognition. 

Similarities in the Roles of Board Trustees and Board Directors

While trustees and board directors have many differences, they also share a fair amount of similarities. The most basic duties for trustees and directors fall under strategic planning and oversight. Strategic planning is important because sound planning ensures that the organization will thrive and be sustainable. Board directors are also responsible for risk management, cybersecurity and oversight over the entire operation. Oversight pertains to financial oversight, ensuring that staff and workers act ethically and with integrity at all times, monitoring the organization so it can reach its goals.

A board of directors or trustees is responsible for ensuring that the company or organization follows the policies that they establish and always adheres to the company’s mission. Board directors and trustees must be especially careful about ensuring that the organization fully complies with all laws and regulations at all times. All board directors and trustees have fiduciary duties, including the duty of care, duty of obedience and duty of loyalty. Since much of a board or trustee’s work occurs in committees, directors and trustees are often required to serve on at least one committee.

Board Management Software Is an Important Tool for Board Trustees and Directors

In addition to performing as effectively as possible, board directors and trustees owe it to their shareholders and stakeholders to work as efficiently as possible. The best way to do that is to take a modern approach to board management by digitizing their duties as much as possible.

Digital tools make it possible to cut down many hours alone, just in putting board books together. BoardEffect is a modern governance company that makes it possible for trustees and directors to combine hundreds of pages into one easy-to-read electronic file. The platform makes it easy for leaders to mark up documents electronically. Board administrators can easily make last-minute changes to agendas and board books without having to resort to reprinting and collating however many board books they need for a board meeting. Electronic board books reduce security risks because they lessen the chance that loose papers will be floating around and getting into the wrong hands.

BoardEffect’s platform makes scheduling meetings easy, and it automates the processes for tracking and completing tasks that have been assigned to board directors. Board directors and trustees will have around-the-clock access to board meeting agendas, meeting minutes, and lots of other documents from any location in the world, and they can use any electronic device to get it.

As part of the numerous valuable features, BoardEffect streamlines many of a board’s basic governance duties, like board member recruitment, orientation, reporting, and complying with laws and regulations.  Some companies and organizations are required to conduct annual board self-evaluations. For those organizations that aren’t required to do so, board self-evaluations are part of best practices for good corporate governance. The survey tool makes it easy to do board self-evaluations without the help of a third-party administrator.

One of the most important features of BoardEffect software is its state-of-the-art security. Board directors and trustees should refrain from using nonsecure personal email accounts at all costs. With BoardEffect, directors and trustees have the assurance that all their board communications and shared files are transmitted with total protection and won’t be hacked. As an added measure of protection, directors and trustees can set the system up with granular protection so that they have full control over which users can access various parts of the system.

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