Skip to content
March 12, 2019

Decoding the Role of a Board of Trustees

A board of trustees functions much in the same way as a corporate board of directors. However, when comparing these two governing bodies, their goals pertaining to oversight are significantly different. Private companies are much more likely to have a board of trustees in lieu of a board of directors. Some of the most common industries to utilize a board of trustees are nonprofit organizations, educational institutions, mutual savings banks, and mutual funds.

Boards of trustees are responsible for holding an organizations’ assets “in trust” including property, funds, and endowments. The strict fiduciary duty of a board of trustees is of the utmost importance with regard to the assets held in their care. While boards of directors function to provide a profit for shareholders, boards of trustees work to represent the community and stakeholders of the organization.

How a Board of Trustees Differs From a Board Of Directors

Boards of directors are the ultimate governing body of an organization and often formed with input from founders and CEOs. They provide the oversight needed to properly run a company regarding financial guidance, compliance, risk management, employee oversight, and corporate culture. Boards are also tasked with keeping shareholders in mind to maximize profit.

Boards of directors are also tasked with staying up to date on industry trends and company needs while acting as a bridge between executives and investors. They strategically plan to help the company meet its goals and ensure the company acts ethically. A board of trustees functions in a similar manner with regards to oversight and compliance but differs in goal setting and representation.

Trustees have a public function to make sure their organization follows federal and state policies as well as overseeing executive hiring, evaluation, and advising. Boards of trustees are often made up of volunteer members and are not involved with the day-to-day responsibilities of executives or employees. They also have the ultimate function to represent donors, the community, and stakeholders in the organization they serve.

The most important duty for a board of trustees is essentially fiduciary and act in the best interest of their organization. According to, a board of trustees has 5 key responsibilities:

  • Ensure the organization achieves its goals
  • Maintain loyalty and confidence of the donors, community, and stakeholders
  • Work to meet all laws and government regulations
  • Develop and foster the organization’s reputation and motivation
  • Engage in strategic planning with managers and executives

Board of Trustees for University Endowments

Universities and other higher educational institutions will often appoint a board of trustees to oversee endowments. Investopedia defines endowments as money or other financial assets that are donated to university or colleges and are meant to be invested to grow the principal and provide additional income for future investments and expenditures.

Trustees usually oversee endowment portfolios and allocate the funds the way the donor sees fit. Endowment donors have the ability to restrict how schools spend their donated money. The board of trustees has the fiduciary responsibility to make all of the endowment’s investment decisions and allocating assets.

Board of Trustees for Mutual Savings Banks

Like credit unions, mutual savings banks are alternatives to traditional commercial banks. Once utilized to serve low-income individuals, mutual savings banks offer fixed-rate assets such as mortgages. They also appoint a board of trustees to oversee these assets. These trustees who serve mutual savings banks ensure that the interests of the depositors and borrowers are protected by the bank’s management. The board of trustees also has the responsibility to make sure depositors’ money is invested safely, interest is paid, and the principal is available to members upon request.


Board of Trustees for Mutual Funds

According to the Investment Company Act of 1940 all mutual funds must have an independent board of directors or board of trustees. Mutual funds are highly regulated, so their boards must manage compliance with federal and state regulations. They also have the fiduciary duty to oversee the advisor and ensure that investors’ money is invested with their best interests. They also have the strict responsibility of managing conflict of interest when investing money.

Board Portal Software for Boards of Trustees

Although corporate boards and boards of trustees have oversight duties, they do function with the overall goal to benefit the organizations they serve. Trustees hold regular meetings, vote on key decisions, and collaborate outside of regular meetings. Board portal software is a necessary implementation for any board to help simplify board management.

Govenda board portal software offers boards of trustees secure access to board information on a paperless, cloud-based platform anytime, anywhere even when an internet connection cannot be reached. Board materials are organized with easy agenda building, integrated meeting minutes, and electronic voting capabilities. Boards of trustees can schedule meetings, track meeting attendance, manage board rosters, and securely collaborate from any preferred device in real time. Built with security in mind, Govenda is the preferred board portal for all organizations and their board of trustees.

If you’re interested in learning more about Govenda’s award-winning board portal software for boards of trustees, schedule a personalized demo with us today!


Other posts you might be interested in

View All Posts