1. Fiduciary Principles and Habits of Effective Boards December 7, 2015 Dr. Sheila Stearns, AGB Consultant Dr. Kevin Reilly, AGB Senior Fellow

2. Questions to Consider 1.What’s special and distinctive about your institution? What most excites and engages you as a Trustee? 2.How can you best enhance and strengthen your institution as a board member? 3.What makes you proudest of your institution as a Trustee? 2

3. Ever present: Fiduciary Duties of Directors and Officers What is a Fiduciary?  someone with special responsibilities in connection with the administration, investment, monitoring, and distribution of property. 3

4. College/University Trusteeship… The Assets– The college/university you govern, including mission and identity, property, human resources, educational product, endowment, and reputation. For Whom – The institution: students and their families (current and future), faculty, donors, alumni. Others?-- The community? The public? The taxpayers? Fiduciary Duties of Governing Board Members- AGB Board July 24, 2015 4

5. Fiduciary Duties Duty of Care –Act in good faith for best interests of institution –With that degree of diligence, care and skill which ordinarily prudent persons would reasonably exercise under similar circumstances in like positions. Duty of Loyalty –Put interests of institution before personal interest –Do not act from self interest; no self-dealing –Conflicts of interest 5

6. Fiduciary Duties Duty of Obedience –Obligation to act consistently with mission –Obligation to cause the institution to act in compliance with law State law may describe or apply these standards of conduct differently (for example, under particular rules applicable to regents or public bodies) 6

7. Best Practices / Traits of High-Performing Boards Full board involvement/ Sense of engagement and participation Respect for process and a focus on results that further the mission Effective partnership with the President/Chancellor 7

8. The Effective Trustee Prepares for, attends, and participates in meetings Knows the institution/system Knows the environment/circumstances Asks questions Challenges ideas and positions, not individuals Knows the difference between governance and management Is an ambassador for the institution/system Knows when to step down 8

9. Habits of Highly Effective Boards… 1. Create a culture of inclusion. 2. Uphold basic fiduciary principles and fundamental responsibilities. 3. Cultivate a healthy relationship with the president. 4. Select an effective board chair. 5.Establish an effective governance committee. 6.Delegate appropriate decision-making authority to committees. 9

10. Highly Effective Boards… 7.Consider strategic risk factors. 8.Provide appropriate oversight of academic quality. 9.Develop a renewed commitment to shared governance. 10. Focus on accountability. 10

11. Hallmarks of an Effective Board An effective board… 1.understands and respects the vital difference between governing and managing, and it nurtures and supports presidential leadership. 2.always balances the institution’s interests and welfare with the needs and priorities of the state. 11

12. An Effective Board… 3.balances advocacy and oversight. 4.observes and imposes the highest ethical standards and avoids even an appearance of conflict of interest. 5.even when sharply divided, speaks with one voice. 12

13. An Effective Board… 6.listens to and learns from the institution’s constituencies without giving any of them a veto. 7.nurtures and enhances the legacy of the institution. 8.recognizes its special responsibility to students for the quality and value of their educational experience. 13

14. An Effective Board… 9.represents and advocates for the institution in the larger community. 10.commits itself and the institution to due process and academic freedom for faculty and students. 11.commits adequate time and energy not only to its basic tasks, but also to the enjoyment of the board experience. 14

15. Questions for discussion: 1.How can a board and its members most effectively engage in a candid conversation on difficult and critical issues – especially given open meeting and public records, media scrutiny, and presence of observers? 2.Even when its members may be sharply divided on a vital and contentious issue, how can a board manage to speak with one voice without suppressing the free speech and inquiry of those who do not share that consensus? 15

16. Questions for discussion: 3.How can a board most effectively balance the institution’s interests and its welfare with the needs and priorities of the state that provides support? Specifically, how can a conscientious trustee maintain independence against countervailing pressure from the governor to whom he or she is accountable? 4.When the dictates of a board member’s professional affiliation – for example, as attorney, engineer, etc. – threatens to conflict with the perceived interests and goals of the institution and other trustees, how can a potentially conflicted trustee reconcile such tension? 16

17. Questions for discussion: 5.When an individual trustee initially encounters a potential conflict of interest, what steps should he or she pursue in maintaining the highest ethical standards in order to avoid the appearance of a conflict? 6.How most effectively can a board (and its individual members) learn from and listen to the institution’s myriad constituencies without giving any of them a veto? 17

18. Question for discussion: 7.In what ways may an individual trustee and the board as a whole serve as an ambassador and advocate for the institution in the larger community – especially at those occasional times when the institution is beset by political intrusion or external influences? 18

19. Questions? 19

20. Suggested Publications Available in the AGB Store http://agb.org/store 20

21. Upcoming AGB Events December 8, 2015: Webinar – Staging an Engaging Board MeetingStaging an Engaging Board Meeting January 24 – 26, 2016: Foundation Leadership ForumFoundation Leadership Forum April 15 – 17, 2016: Workshop for Board ProfessionalsWorkshop for Board Professionals April 17 – 19, 2016: AGB National Conference on TrusteeshipAGB National Conference on Trusteeship www.agb.org/events 21

22. Thank You 22