Board members too often cross the boundary from oversight and strategy into operational matters. The Board's concern must be limited only to whether an appropriate policy exists, and whether the policy is followed. What might happen when a Board member forgets this?
The independent school's financial aid program is funded partly through donations and fundraising, and partly by a line item in the budget. The former represents income, the latter is seen as a cost. (I would argue against this perspective. A student on a 35% scholarship is not costing 35%, but contributing 65% for an otherwise empty seat.)
Families apply for financial aid and an external, objective algorithm provides a score used by the financial aid committee when making awards. In addition to the score, the committee also considers how the student and his/her family would benefit the school, and how s/he would be benefited. This score reflects the algorithm's view of the family's ability to pay, not the family's, so appeals for a higher are often made.
A parent was awarded less than she thought she deserved, and being a close friend of a Board member, she appealed to her friend. "Jo" raised the matter at a Board meeting, challenging the school's director and, quoting several anecdotal reports, she accused him of improprieties and of favoritism. Every anecdote Jo quoted was inaccurate, but as financial aid applications and awards were confidential the director could do little more than assure the Board that Jo's reports were incorrect and all financial aid procedures were followed.
Jo demanded a detailed report of all financial aid applications and awards so that the Board could review them and adjust where necessary. The Board chair concurred, stating that in his view the Board was indeed responsible for any aspect of the school's operations which involved finance.
The director felt strongly that financial aid applications and award decisions are not the Board's business. He also consulted the school's attorney who advised that revealing such information to the Board was legally problematic, and would almost certainly expose the school to litigation. Accordingly, he refused to share the information.
The Board chair used his privileged access to extract financial award information from the school's accounts, and he also pressured a member of the financial aid committee to reveal details of the committee's deliberations. Nothing untoward was discovered. Jo's friend was found to have embellished her reports to the point of fabrication.
Jo lost the respect of other Board members and the community last faith in the school's financial aid process. I do not know if any suits were filed, although the financial aid application process did promise confidentiality. Several families did leave the school, furious that their personal circumstances had been made public.
Above all, the relationship between the Board and the director, and the Board chair and the director, was destroyed. One or both will have to leave, and the parting will surely not be sweet sorrow. All this occurred because Jo allowed a friendship to cause her to step outside the bounds of what she should have been doing as a Board member. Other than ensuring that an appropriate policy exists, and that the policy is followed, financial aid considerations are not the Board's business.