gc policy on academic board independence

7/30/2019 GC Policy on Academic Board Independence

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Policy on Board Independence1

in Seventh-day Adventist Institutions2

of Higher Learning34

(Discussion draft)5

1. Purpose of this policy.6The purpose of this policy is to provide information and guidelines concerning the role of7governing boards in Seventh-day Adventist institutions of higher education (i.e. colleges and8universities). The policy will describe how boards of trustees can practice independent9decision-making within the framework ofdenominational objectives, oversight and policies10pertaining to higher education as well as the fiduciary obligations of trustees. The policy11recognizes that boards of trustees are accountable to many different interest groups including:12Church, government, communities served by the institution, needs of society, expectations of13students/donors/business.14

2. Definition of Board independence in Seventh-day Adventist educational system.1516

Seventh-day Adventist educational institutions are an expression of the Church in action.17Education, the transmission and discovery of knowledge, is an essential part of the Churchs18mission and must not be viewed as merely an adjunct business endeavor of the denomination.19Therefore constituencies of Seventh-day Adventist educational institutions will proactively20embrace their role on behalf of the entire Church. The Board of Trustees, established in21harmony with relevant institutional governance documents1, is the group responsible for22linking the institution to the interests and educational objectives of the Church.23

24 Boards of trustees function as stewards of the institution and are given authority to govern25within the context of Seventh-day Adventist identity, doctrine, and educational purpose.26Board independence therefore must not be interpreted as freedom to disregard27denominational interests, policies or goals for higher education. Nor is it the liberty to lead28the institution in a direction that runs counter to what the Church intends through its29educational institutions.30

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For Seventh-day Adventists, board independence functions within rather than outside of a32prior commitment to the Church and its mission. Broadly stated, board independence is the33constituencys confidence and expectation that the board, relying upon its own processes and34commitments to the Seventh-day Adventist Church and to quality education, will ensure that35the operations of the institution serve the educational mission of the Church and provide36practical benefit to the community and the world. Boards must earn and maintain the respect37and trust of their constituencies by demonstrating accountability to denominational identity38in education, to quality in student learning outcomes, to regulatory agencies and to the needs39of society.40

1Articles and Bylaws, Government Charter, etc.


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1Constituencies of educational institutions protect and preserve board independence by the2election of boards of trustees with competency-based membership, by respecting the boards3authority to govern the affairs of the institution between constituency meetings without4interference, and by holding the board accountable through reports provided to periodic5

constituency meetings. Members (individuals or groups) who may be part of institutional6 constituencies will recognize that constituency authority is expressed through constituency7sessions.8

3. Definition of trustee independence.910

Trustee independence is a specific term in governance to describe a trustees relationship to11the institution. It is not required that all trustees meet the conditions for trustee independence12as described below. However, regulatory and/or funding agencies may require a certain13proportion of the board membership to qualify as independent trustees. Subject to revisions14in applicable law and regulations, a member of the Board of Trustees of the institution shall15

be deemed tobe independent if all of the following circumstances applied at all times16during the institutions tax year:17

18a. The trustee has not been employed by the institution or any of its subsidiaries, nor does19

the trustee have a family member2 who is or has been an executive officer of the20institution or a subsidiary, within the last two years.21

22b. The trustee or a family member has not been a recipient of more than $____________ in23

direct compensation from the institution or its subsidiaries, excluding any pension or24other deferred compensation for prior services, during any 12-month period within the25last two years. (The amount of compensation may vary depending on local laws or26

expectations of regulatory agencies. The intention is that the trustee or family member27shall have minimal reliance for livelihood upon any direct compensation from the28institution.)29

30c. The trustee has not been in any of the past two years, a Board member, partner, executive31

officer, or employee, or have a family member who is a Board member, partner, or32executive officer of another organization that makes payments3 to, or receives payments33from the institution or its subsidiaries, or for property or services in an amount that34exceeds $____________. (Monetary amounts may be different for each entity35depending on applicable law. In the event that no such law exists the Board may36determine the amount that shall be considered the threshold for determining trustee37

independence.)38

2For purposes of this policy family member shall mean: a persons spouse, parents, children, siblings,mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, anyone (other than

domestic employees) who shares such persons home, and an estate or trust of which the interested personor any of the above is a beneficiary, personal representative or board member.3In this definition payments refers to compensation for services rendered or interest on investment. Theuse of the term here does not include the forwarding of appropriations from a parent organization for the

support of the institution or its programs because the trustee has no personal claim on such funds.


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1d. The trustee has no other direct or indirect relationship with the institution, a subsidiary, a2

vendor, another charitable organization or government agency, or a competitor that could3reasonably be perceived as a conflict of interest. The Seventh-day Adventist Church4recognizes, with certain limitations, that a trustee may serve simultaneously on more than5

one board. General Conference policy outlines the following framework for persons6 serving on multiple boards: Because of the common objectives embraced by the various7organizational units and institutions of the Seventh-day Adventist Church, membership8held concurrently on more than one denominational committee or board does not of itself9constitute a conflict of interest provided that all the other requirements of the policy are10met. However, an officer, trustee, or director serving on an organizations board is11expected to act in the best interest of that organization and its role in denominational12structure.

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Whether or not a trustee qualifies under the requirements for an independent trustee all15trustees are required to complete the institutions Conflict of Interest and/or Commitment16

declaration and to remain in compliance with its conditions. The board of trustees is charged17 with the responsibility of managing any disclosed or apparent conflicts of interest. (GCWP E1885 25 and E 85 30.)19

4. Practices and procedures respecting board independence.2021

The following list of best practices contributes to but does not necessarily guarantee that a22board functions within the definition of independence outlined above. Ultimately, the test of23independence is whether or not the board demonstrates its ability to make decisions in the24best interest of the institution and its role in denominational structure and, in doing so, is free25from the influence or control of persons or parties with competing or divided loyalties.26

27a. The organizations Articles and Bylaws clearly identify the institutions relationship with28

the Seventh-day Adventist Church and its commitment to furthering the mission and29values of the Seventh-day Adventist Church.30

31b. The organizations Articles and Bylaws clearly define the constituency and/or32

membership of the institution. (GCWP BA 50 05 expresses certain requirements for the33constituency composition of General Conference institutions. Comparable provisions34should be considered by other parent organizations for their institutions.) Constituency35or membership meetings are held regularly and not less than once per quinquennium.36One of the responsibilities of such meetings is the election of the board of trustees.37

(GCWP BA 50 10) A Seventh-day Adventist educational institution shall not have a self-38perpetuating board. In addition, amendments to the Articles and Bylaws shall require39constituency or membership approval.40

41c. Persons selected for membership on the board of trustees shall be capable of reflecting42

Seventh-day Adventist Church interests in education. Subject to applicable civil laws43

4General Conference Working Policy 2011-2012, E 85 05.


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and regulations, members of the governing boards of Seventh-day Adventist colleges and1universities shall be members of the Seventh-day Adventist Church in regular standing.2Others may serve in advisory capacities. (GCWP FE 20 10)3

4d. The governing board has a competency-based membership appropriate to the level and5

scope of education offered and the nature of any related business enterprise. Board6 membership shall include gender and ethnic diversity in order to represent the7constituency being served. Trustees shall be informed regarding their fiduciary8obligations and shall participate in on-going board education activities.9

10e. The organizations Bylaws define the authority of the board with respect to the removal11

of individual trustees and the process for selection of new trustees to fill any board12vacancies between constituency or membership meetings.13

14f. A majority of the trustees shall qualify as independent trusteespersons who 1) are not15

employed by the institution, 2) who receive no compensation, other than modest stipends,16

from the institution, 3) who receive no non-economic benefit from the institution, and 4)17 whose immediate family members are not employed by or conduct business with the18institution. (See also Section 3 above.)19

20g. The board of trustees is granted, by governance documents, full authority to govern the21

institution in harmony with established denominational working policies. (GCWP BA 552215) Extraordinary decisions, such as the sale of a significant portion of assets or23dissolution of the entity, may be reserved to the constituency.24

25h. The board demonstrates its trustee role by consistently making policy and operational26

decisions in reference to the institutions mission as an expression of the Seventh-day27Adventist Churchs purpose in operating educational institutions.28

29i. The Bylaws of the institution empower the board with authority to retain, evaluate, and30

discharge the administrator(s) of the institution. (GCWP BA 50 15)3132

j. Within the context of the institutions denominational identity and purpose, the board33serves as the policy-making body for the institution. In particular, the board subscribes to34the denominational policy on academic freedom5, defends the principles of academic35freedom in the interest of advancing knowledge, and rigorously follows due process in36the protection of faculty, staff, and students.37

38k. The board has a published conflict of interest and/or commitment policy, including39

disabling guidelines, and adheres to a transparent process of conflict of interest40disclosures, management and documentation of situations where conflict of interest is41present.42

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5A Statement on Theological and Academic Freedom and Accountability can be found atwww.adventist.org/beliefs/statements/main-stat36.html
http://www.adventist.org/beliefs/statements/main-stat36.htmlhttp://www.adventist.org/beliefs/statements/main-stat36.htmlhttp://www.adventist.org/beliefs/statements/main-stat36.html


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l. The board governs as a body. Although vigorous discussion and dissent is welcome in1the journey to a decision, once the decision is made all trustees shall respect it as the2decision of the group.3

4m. The board empowers committees to address focused attention on various aspects of the5

boards responsibilities. However, no committee is given so much authority as to subvert6 the authority of the board. Board committee charges shall require the committee to report7in sufficient detail to the board so that all trustees are well informed and statutorily-8required items are addressed by the entire board for final determination.9

10n. The board has a process for contemporaneous documentation of its decisions.11

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o. The board demonstrates commitment to ethical conduct on the part of all trustees and,13between constituency meetings, holds trustees accountable for always acting in the best14interests of the institution, including the preservation of confidentiality on matters so15identified by the board.16

5. Powers of Related Entities.1718

Boards of trustees govern their institutions as part of the Seventh-day Adventist Church and19thus carry very significant responsibility for knowing and assuring that institutional20

strategies/policies/practices are consistent withestablished denominational policy and21mission purposes. A board is not free to disregard established denominational policy6 by22claiming that the organization setting denominational policy is an external party (i.e. not the23formal constituency or membership) and therefore limited in its ability to influence the24operations of the institution.25

6. External influences on the board of trustees.2627

Governing boards of educational institutions must take into account the interests of many28other stakeholders including governments, regulatory bodies, faculty, students, donors and29alumni. Boards must demonstrate the ability to engage in active dialogue with these30stakeholders.31

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6Denominational policy here refers to policies established by sponsoring entities such as unions, divisions, orthe General Conference.

gc policy on academic board independence

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