What is a Board of Trustees?

Board of Trustees is a group of individuals that oversee the affairs of an organization. Board of trustees is often appointed or elected to supervise the management of an organization. Board of Trustees can be found in a business, an organization, a non-profit firm, a government agency or any corporate firm. Members of the board of trustees have the responsibility of governing the affairs of an organization, including its finances. Usually, members of the board of trustees are not paid, but they strive to make decisions in the best interest of the stakeholders of a firm.

How Does a Board of Trustees Work?

Individuals who make it into a company's board of trustees are either appointed or elected based on their expertise and experience in managerial roles. For most firms and organizations, the board of trustees comprises both internal and external people in order to have a blend of ideas, perspectives, and experience regarding the company's matters. The internal individuals in a board of trustees are those who have previously held managerial positions and have been involved in the decisions making of the organization. In many cases, the board of trustees and board of directors are used interchangeably, this is because both boards perform similar roles and one can be used in the place of the other. More explicitly. Private organizations or establishments use the board of trustees more while government-owned or public agencies use the board of directors. Both the board of trustees and board of directors make crucial decisions in an organization, the board often comprises of top executives and individuals with outstanding skills. There are different committees set up in a board of trustees to handle different needs and core areas of an organization. Depending on the target needs of an organization, membership of a board of trustees can be from three and above.

University Endowments

University endowments use the board of trustees structure in order to effectively manage the assets held in-trust. In university endowments, the board of trustees has the responsibility to manage and protect the portfolio of assets, popularly called endowments. Decisions made by the board of trustees on how best to manage the assets are in the best interest of the trust. In most cases, the board can make the decision to invest the endowments so as to get returns on the portfolio.

Mutual Savings Banks

The mutual savings bank is another prominent entity that uses the board of trustees to manage the assets, funds, and properties kept by depositors. Individuals make deposits which can be funds or assets into a mutual savings bank, in trust that the management of the bank would manage and protect their funds. The bank through the board of trustees protects the deposits of their customers. The board of trustees makes all investment decisions pertaining to the funds or assets and how they are securely managed. When investments yield returns, these returns are paid to the depositors as interest.

Related Topics

• Corporate Governance Law (Intro)
• What is Business Governance?
• Berle-Means Thesis 
• Corporate Governance Rating Definition
• Who are the members of a corporation?
• Corporate Charter
• Shareholder Register
• Common Stock
• Preferred Stock
• Par Value
• Authorized Shares
• Issued Shares of Stock
• Unissued Shares of Stock
• Outstanding Shares
• Institutional Shares
• Dual Class Shares
• What is a closely-held corporation?
• Close Corporation Plan Definition
• What is a Private Company vs a Public Company?
• What is the role and purpose of the corporation?
• What is the Agency theory of corporate governance?
• Shareholder-Centric Perspective
• Shareholder Value
• What is the Stakeholder theory of corporate governance?
  
• What is the role & rights of Shareholders in the corporation?
  
• Shareholder Democracy Definition
• Quorum Definition
• Information Circular
• Straight and Cumulative Voting
• Statutory (Straight)
  
• Cumulative Voting
• Plurality Voting
• Class Voting Shareholders
• Changing the Voting Rules
• Supermajority (Voting)
• Shareholder Sponsored Proposal 
• What are the variations on attributes of Ownership structure?
• Stock Split
• What are the fiduciary duties owed by shareholders?
• When is a shareholder personally liable for corporate obligations?
• Appraisal Rights
• Dissenter's Rights
• Say on Pay Rights
• How can shareholder enforce their rights (direct and derivative actions)?
• Amotion
• What is the process for bringing a Derivative action?
• What are corporate vote Proxies?
• Proxy Statement
• Proxy Fight or Contest Definition & Explanation 
• What is Shareholder Activism and the significance of Institutional Investors?
• Activist Investor
• Overview of Board of Directors
• Board Decision Making
• Advisory Board (Observer Directors)
• What is the role of the Board of Directors?
• Board of Trustees
• Board of Governors
• What is the composition of the board of directors?
• Chairman of the Board
• CEO as Chairman of the Board
• Inside Director
  
• Outside Director
• Outside Director or Non-Executive Director Definition
• Independent Outside Director
• Budget Committee
• Audit Committee
• Compensation Committee
• Nomination Committee (Corporate Board)
• What standards govern the actions of the board of directors?
• Duty of Candor Definition
• Duty of Care (Board of Directors)
• Duty of Loyalty (Directors) 
• Self-Dealing
• Board Evaluation Definition
• What is the Business Judgment Rule?
• What is D&O insurance?
• Codetermination (Foreign)
• What is the role of Managers of the corporation?
• What standards govern manager actions?
• Chief Executive Officer (CEO)
• Chief Financial Officer
• Chief Information Officer (CIO)
• Chief Investment Officer (CIO)
• Chief Legal Officer
• Chief Operating Officer
• Chief Risk Officer
• Chief Security Officer
• Chief Technology Officer (CTO)
• What are the primary state and federal corporate governance laws?
• What is the role of the state in corporate governance?
• What is the role of Securities Laws in corporate governance?
• What is the role of the Foreign Corrupt Practices Act in corporate governance?
• What is the Sarbanes-Oxley Act (SOX) effect on corporate governance?
• Sarbanes-Oxley Act (SOX)
• What is the Dodd-Frank Wall Street Reform and Consumer Protection Act effect on corporate governance?
• Corporate Monitors
• What industry organization standards affect corporate governance?
• How do proxy advisory firms affect corporate governance?
• What is the role of ethics in corporate governance?
• What are the major causes of corporate governance issues?
• What are the access to information issues?
• What are decision-making structure issues?
• What are the power struggle or competition issues?
• Holding Company
• What are hostile takeovers and defenses to hostile takeovers?
• Williams Act
• Staggered Board
• Shark Repellent Defenses?
• Poison Pill Defenses?
• Flip Over Poison Pill Definition
• Flip In Poison Pill Definition
  
• Voting Poison Pill Plan
• Delay-Tactic Defenses?
• Legal Lockup Defenses?
• White Knight and Pac Man Defenses?
• Jonestown Defense
• Lady Macbeth Strategy
• Macaroni Defense
• Yellow Knight
• Back-end Plan Definition
• Backflip Takeover Definition
• Dead Hand Provision Definition
• Kamikaze Defense
• Operating Company Property Company Model
• Whitemail
• Scorched Earth Policy Definition
• Revlon Rule
• What are benefit-alignment issues?
• Cadbury Rules Definition