By Heather Salko, Esq.
Donors or high-profile alumni selected as trustees may lack understanding of institutions’ workings or trustees’ fiduciary duties. Ensuring your institution’s trustees understand their duties can help avoid costly claims stemming from their actions while also fostering a culture of responsibility and accountability.
Why it Matters.
United Educators (UE) insurance has seen claims involving trustees' actions. Consider taking these actions to help your board of trustees or its individual members avoid causing a claim or becoming a crucial component of it:
Educate them about fiduciary and institutional oversight responsibilities. Do this while vetting candidates. Stress that their duty lies with your institution and not particular administration members or those courting them for board seats.
Offer training on your policies and your state's nonprofit and fiduciary requirements. Ensure trustees understand the fundamentals of board operation and their individual legal duty to your institution. Put your policies/procedures in board orientation materials and explain the importance of following these policies/procedures. Educate all members on additional state law requirements for fiduciaries of nonprofit organizations or educational entities.
Explain enterprise risk management (ERM). ERM looks holistically at risks that your institution faces at different levels and will help trustees understand questions they should ask administrators. Topics include typical risks such as minors on campus or deferred maintenance, and also fiscal management, accreditation, and other fiduciary issues.
Outline the role that trustees play in litigation decisions. Explain the litigation process, and teach them about typical questions and interactions with counsel. Ensure they understand they may be called upon to approve significant settlements. Update them on the status of your institution's significant claims.