Board of Trustees: Definition and Responsibilities

Key takeaways
* A board of trustees is a governing body responsible for overseeing and managing an organization.
* Trustees have a fiduciary duty to protect the interests of stakeholders and hold assets “in trust.”
* Boards of trustees are similar to boards of directors and are common in private organizations such as universities, endowments, museums, and mutual savings banks.

What is a board of trustees?

A board of trustees is an appointed or elected group charged with overall responsibility for an organization’s governance and long‑term direction. Trustees act on behalf of stakeholders—such as members, depositors, students, donors, or the public—and are legally and ethically required to act in stakeholders’ best interests.

How a board of trustees operates

• Composition: Boards typically include a mix of internal members (e.g., senior executives) and external members chosen for relevant expertise. Size commonly ranges from about 3 to 30 people.
• Appointment: Members may be appointed or elected according to the organization’s bylaws.
• Structure: Boards often form subcommittees (finance, audit, governance, investment, etc.) to focus on specific functions and maintain segregation of duties.
• Authority: The board sets policies, oversees senior management, approves major strategic decisions, and ensures compliance with legal and regulatory obligations.
• Fiduciary duty: Trustees are responsible for safeguarding assets and acting prudently and loyally on behalf of beneficiaries.

Where boards of trustees are commonly used

Boards are frequently used in private and nonprofit entities, including:
* Universities and university endowments
* Mutual savings banks
* Museums, foundations, and associations
In many contexts the term is interchangeable with board of directors, board of governors, or board of regents.

University endowments

A university endowment is often governed by its own board of trustees or an investment committee within the board. Key responsibilities include:
* Managing the endowment’s asset allocation and investment policy.
* Choosing between outsourcing investment management (multiple institutional managers or a single manager) or handling investments in‑house.
* Ensuring decisions align with the institution’s mission and long‑term financial sustainability.
Regardless of operational structure, the trustees retain fiduciary responsibility for endowment performance and stewardship.

Mutual savings banks

Boards of trustees at mutual savings banks represent the interests of depositors and the communities the bank serves. Their duties typically include:
* Ensuring customer deposits are protected and prudently invested.
* Overseeing policies that maintain liquidity so depositors can access principal on request.
* Monitoring that interest and other obligations to depositors are met.
* Balancing financial stability with community service responsibilities.

Regulatory and organizational influences

• Bylaws and laws: An organization’s bylaws and applicable regulations define the board’s authority, duties, and composition.
• Industry requirements: Public companies, mutual funds, and regulated financial institutions may face specific oversight and governance rules that shape board responsibilities.
• Special-purpose boards: Some organizations create trustee boards to manage designated portions of assets or programs, with clearly defined scopes and reporting lines.

Conclusion

A board of trustees provides governance and fiduciary oversight to protect stakeholders’ interests and ensure an organization’s long‑term health. Whether overseeing an endowment, a bank, or a nonprofit institution, trustees set strategy, monitor management, and safeguard assets in accordance with legal and ethical obligations.