If the Enron and Worldcom failures didn't appear as applicable to theological schools, certainly the economic downturn and resultant diminishing endowments do keep us awake at night. It is our fiduciary responsibility to be concerned about money. So what exactly is fiduciary responsibility and why is it considered the primary role of trustees? And how does fiduciary responsibility in colleges and universities differ from expectations for trustees of theological education? 

Because the term is most often used when describing financial issues, a close examination of the root and present day definitions will be useful.


Fiduciary is derived from the Late Latin word fiducia (circa 1641), which means "trust and confidence of, relating to, or involving a confidence or trust, depending on public confidence for value or currency" (Merriam-Webster's Collegiate Dictionary, 2001). The American Heritage Dictionary of the English Language, Fourth Edition, defines fiduciary as "relating to a holding of something in trust for another? one, such as an agent of a principal or a company director, that stands in a special relation of trust, confidence, or responsibility in certain obligations to others." 


When I searched the Chronicle for Higher Education from 1989 through 2002, I found eighty-nine occurrences of fiduciary. In closer examination of twelve, I found four in which the term applied to a financial responsibility, eight in which it had a broader application. The financial use of the term in the Chronicle articles covers a range of circumstances. At Mount Holyoke College, the alumnae association and the college both declared a legal right to control of the annual fund that has historically been managed by the alumnae association. The alumnae association claims fiduciary responsibility for money given to the annual fund and then decides how much to give to the college. 

Faculty at Cornell University, where the endowment more than doubled in the 1990s, admonished the administration for not improving academic program and faculty salaries. Labeling the endowments "warehouses of wealth," the faculty called on those with fiduciary responsibility to be "as aggressive in distributing assets as they are in investing them." Administrators at California State University at Fullerton shrugged off charges of violating their fiduciary responsibilities when they were charged in an audit report with using scholarship money to pay off other expenses. 

Using a broader context for the term, in two cases accreditors admonished boards to better understand their appropriate fiduciary responsibility. El Paso Community College was reprimanded by its accreditors for having an overly intrusive, micromanaging board. More training for the board in the areas of fiduciary responsibility and policymaking was suggested to correct the situation.

The term is used in three cases to refer to governance structures. In the California two-year college system, where the culture is overtly political, trustees were admonished for "forsaking their fiduciary duties to get re-elected." In another case, faculty members recognized the responsibility of administration to carry out policy and that trustees have "ultimate fiduciary responsibility for the institution." A State University of New York trustee, concerned about remedial education in the university, asserts the fiduciary responsibility of the board to take a "clear, principled position" in its oversight of quality of academic programming. 

An article by Richard Chait (Chronicle of Higher Education, August 2000) examines the differences and similarities between the responsibilities of trustees and faculty. He explains that trustees are less likely to micromanage at the operations level of the institution if they are engaged with the strategic priorities of the institution. He goes on to say that at the heart of fiduciary responsibility trustees should be asking the question "What are the unresolved issues of mission, strategy, and values of the institution?"

Re: Seminaries 

For theological schools especially, fiduciary responsibility means more than oversight of our financial health. The well-being of the spiritual and academic components are just as important. Our constituents and in most cases, the church, expect an academic program that prepares leaders for mission. As trustees, we should ask ourselves, Is the curriculum visionary? Will it meet the needs of the future as well as honor the traditions of the denomination? Will it prepare missional leaders for vocation in communities and churches? Will it meet the needs of our broken, confused, and unsettled world? Or will it perpetuate a stereotypic view of religion and faith as people set apart and "holier than thou"?

And what about the spiritual health of our seminary communities? Are they prepared to offer spiritual direction to students, faculty, and staff? Is the community effective in crisis situations? In dealing with the suicide, a vehicle accident that claims the life of a beloved faculty member and injures students, or the dismissal of a student for improper conduct? How does the seminary deal with social issues beyond the churchly position papers written by faculty? What happens when someone in the community has a personal struggle with addictions, abortion or homosexuality? Does the board care for itself when one of its own members is in crisis? These are the times when the spiritual health of a seminary community is understood as either salutary or dis-eased. Because the board is entrusted to assure the salutary state of the theological institution that it serves, board members should ask whether there are appropriate staff, resources, and mechanisms in place to address the spiritual health of the institution.

The financial health of an institution is, of course, the easiest to view, and I would argue that it is the responsibility of the president and senior staff to bring to the board concise financial information--ratios and benchmarks that give a snapshot of financial health. The senior staff are then responsible for bringing to the board questions and information about trends and churchwide issues that stimulate strategic, future-oriented board discussions that add value to the thinking of the president. 

Wartburg's Move 
Wartburg Theological Seminary Board Purpose Statement

Being entrusted with the spiritual, academic, and financial health of Wartburg Theological Seminary, the board will be accountable for the strategic directions that serve to advance Wartburg Theological Seminary as a “worship centered community of critical theological reflection where learning leads to mission and mission informs learning.”

Last fall, when several board members of Wartburg Theological Seminary and the school's president attended an In Trust Good Faith Governance Seminar, their attention was captured by a presentation titled "The Board, the Mission, and Fund-raising," and the group began to think about a formal policy statement that would link the board's work to the school's mission and vision.

Changes were afoot at Wartburg. The president had been in his position just three years, a capital campaign and building project was concluding, and board membership and leadership was in transition. New board members were encouraging reexamination of the role of the board. 

The Wartburg team at the seminar proceeded to draft a purpose statement to focus our overall responsibilities. Following adoption of the statement by the full board, it was used in a board installation service, the first time the seminary board had participated in this service of call and commitment. The process of drafting and adopting such a statement was in itself a healthy exercise for the board as we think about our own definitions of fiduciary and stewardship of resources.

Fiduciary responsibility is at the same time solemn and vital. The overarching responsibility of trustees is to assure the long-term viability of the theological school. The outcome should be a board that has appropriate focus (strategic as opposed to operational) and a board that adds value to the thinking of the chief executive. This engenders responsibility beyond reading the agenda and reports and bringing financial resources to the table. It means being engaged, weaving one's self into the fabric of the institution. It means being adequately informed so that one can take fiduciary responsibility seriously. On us has been placed trust and confidence at a higher standard of conduct.

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