|Is there a difference between 'directors' and 'trustees'?|
|On Sun, 24 Mar, 2002, email@example.com circulated this query:
Is there a difference between a Board of Trustees and a Board of Directors?
Putnam Barber of The Evergreen State Society in Seattle, Washington, responded:
In general, "no." Organizations use both names to identify volunteer
leadership. (Usually the people are "volunteers" -- whether any or all of the members of the board should or can be compensated in any way is a different
question. See http://www.nonprofits.org/npofaq/16/46.html for more on this topic.)
In earlier times, it was common for nonprofit organizations to be set up
as "trusts" (a term with specific legal meaning). Such organizations were
usually controlled by "trustees," with the procedures for selecting
trustees and governing their actions specified in the documents that set up the trusts.
Recently, it has been much more common for organizations to be set up
under nonprofit corporation statutes; in these cases the common corporate
term "director" is, as might be expected, used more frequently. Still, there are
organizations of both types that use the other term, and there are some
organizations where the by-laws call for boards of both sorts with
different powers or roles.
Interestingly, a trust may be set up so that there are several trustees, each with specific duties or responsibilities, but no requirement that they act as a group or consult with each other about anything. One might be responsible for investments, for example, while another deals with unsolicited requests for grants and a third oversees the trust's scholarship program. If the documents creating the trust detail how its resources are to be divided among these (hypothetical) activities, there may be no reason for the trustees ever to be in the same room at the same time.
In contrast, the members of a nonprofit corporation's board all have the same broad responsibilities. The board may create committees, or designate members to give special attention to particular subjects. When formal action is taken, though, all members of the board share equally in the responsibility for the chosen course. If the action follows a committee report, every board member is expected to pay careful attention and form her or his own opinion about what should be done.
As the last couple of paragraphs suggest, there are situations in which there is some consequential difference between the terms board member and trustee. Further, in some states, the statutes may suggest or require the use of one term or the other, or specify duties or responsibilities differently depending on which term is used. If there is any doubt about the question for you and/or an organization you care about, it would be best to check carefully, or consult an attorney who can research the applicable laws and practices on your behalf.
Andrew Swanson, author of Building A Better Board: A Guide to Effective Leadership added:
Several years ago I was on a
consulting assignment with a nonprofit which had both a board of
directors and a board of trustees. The bylaws clearly defined the
role of each and the board of trustees was really a 'letter head'
advisory board. The members of this improperly named 'Board of
Trustees' were all local citizens with rather deep pockets. It has
happened on occasion that boards have found themselves being sued for
no legitimate reason other than that the suing party hoped to force a
settlement which would save the target board expensive costs of
defense. I therefore called my own attorney and asked if this 'Board
of trustees,' the bylaws notwithstanding, might find themselves in
such a situation since the title trustee does at least imply
responsibility. He recommended that this organization immediately
drop the title board of trustees. The organization agreed and "Board of Sponsors" was the title substituted.
Posted 3/25/02; revised 2/1/05 -- PB