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Board of Governors vs. Board of Directors

by Clayton Browne

Public and private corporations, educational institutions and nonprofit organizations are generally overseen by a board of directors, board of governors or board of trustees. While the duties of board members are similar in all three types of boards, the legal responsibilities of the board vary by organization, or in some cases are divided between a board of governors and a board of directors.

Board of Governors

Academic institutions, quasi-governmental and nonprofit organizations tend to have a board of governors rather than a board of directors. For example, Rutgers University, the World Bank, the U.S. Postal Service, the Federal Reserve and the IEEE Computer Society all have a board of governors. Boards of governors typically have five to 15 members, usually nominated and elected by other board members, and most have full budgetary and decision-making authority.

Board of Directors

State laws typically require that all corporations have a board of directors. Larger corporations might have a dozen or more members of the board of directors, but small companies with few shareholders might have a board of directors with just one or two members. Members of the board of directors are typically elected by shareholders, and are responsible for both financial decision-making and strategic planning for the organization. Some nonprofits have a board of directors rather than a board of governors or trustees.

Board of Trustees

Academic and charitable institutions are frequently governed by a board of trustees. A board of trustees is typically larger than a board of directors -- as many as 40 or 50 individuals in some cases -- but has very similar budgetary and management oversight responsibilities. A number of states have replaced the large, unwieldy board of trustee governing structures of their university systems with more streamlined board of director or board of regent structures.

Dividing Responsibilities With Two Boards

The board of governors is usually the controlling board in organizations that have two boards. In most cases, the board of governors is developed to replace an outdated and inefficient board of trustees structure, and is empowered with most budgetary and decision-making authority. The board of trustees retains some significant powers in a few institutions, while in others it is simply an advisory body.

About the Author

Clayton Browne has been writing professionally since 1994. He has written and edited everything from science fiction to semiconductor patents to dissertations in linguistics, having worked for Holt, Rinehart & Winston, Steck-Vaughn and The Psychological Corp. Browne has a Master of Science in linguistic anthropology from the University of Wisconsin-Milwaukee.

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