Board of Governors Vs. Board of Directors

by Greg Sullivan - Updated September 26, 2017
Group portrait of businesspeople

Both the Board of Directors and the Board of Governors have managerial functions, and in many cases can have the same functions. Their differences are fewer than their similarities and usually relate to the type of organization they oversee.

Corporation

Office buildings in Montreal, Canada

Any publicly held company will have a board to represent shareholders' interests and views in making managerial decisions. This is usually a Board of Directors, though it sometimes can be called a Board of Governors. Whether called a Board of Directors or Board of Governors, the responsibilities are the same: to hire and fire executive management, form company policy on the distribution of dividends (profits paid to stockholders), adopt bylaws, form a company mission or vision and hold management accountable to the shareholders' wishes.

Non-Profits

Portrait of a CEO With His Business Executive Team in a Boardroom Meeting

Non-profits or social organizations formed to represent members (such as trade unions or sports associations) or to advocate on behalf of a cause (such as environmental or gun rights groups) generally have a Board of Governors that oversees management. They are usually chosen from among or by the organization's major financiers or donors (sometimes called members depending on the organization's bylaws and structure). Their responsibilities include overseeing management, appropriate use of donations and funding, success in attaining the organization's goals, and shaping the organization's vision and mission. The Board of Governors may also serve to coordinate volunteer activity and as a bridge between communities and members of the organization, and the staff and management of that organization.

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Government Corporations

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Government corporations typically have a Board of Governors which, like non-profits and corporations, sets the organizations policies, appoints executive management and oversees the financial management and mission of the organization. The U.S. Postal Service uses a Board of Governors, as did the British Broadcasting Corporation in England before those responsibilities were taken over by the BBC Trust.

The Federal Reserve

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The Federal Reserve System uses a Board of Governors as well. This national bank has a federal Board of Governors that sets nationwide policies, as well as 12 regional Boards of Governors that set policies for the regions they govern. There are seven governors on each board, and together they are responsible for making decisions pertaining to national monetary policy, such as setting the interest rate and lending money to other banks.

Public Universities

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Public universities -- universities that receive funding from state sources more than private sources -- also use a Board of Governors (though sometimes called a Board of Regents or Trustees) that have similar responsibilities to non-profits, government corporations and private corporations, such as overseeing the financial management of the institution, appointing management and setting organization-wide policy.

When Organizations Have Both a Board of Governors and a Board of Directors

Business meeting

Some organizations have both a Board of Governors and a Board of Directors. Some universities may have a Board of Trustees and Regents. The differences between these bodies then depend on the bylaws of the institution or organization. For example, in many non-profits, the Board of Directors will craft policy, hire and fire executive management, oversee the organization's finances and ensure the organization adheres to a mission or vision, while the Board of Governors will work with its membership base and local communities to increase outreach, and coordinate volunteer activity and community involvement.

About the Author

Greg Sullivan is a political analyst and nonprofit professional who has lived in the Washington, D.C., area and Ukraine. He has served as a writer and editor for university and local newspapers, nonprofit organizations and the nationally distributed "Equality" magazine.

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