An often-volatile economy, changing demographics, and technological innovations in educational delivery are among the dramatic changes across higher education that have forced boards and institutions to question the viability of the existing business model. Flat or declining state support in real terms, lower investment returns in some years, shifts in federal support, and pressure to control tuition costs have forced institutions to find more efficient and effective ways to operate without compromising quality. While financial assets are not the only assets requiring board oversight, board members have a responsibility to understand the institution's finances. This includes understanding how board and management decisions affect finances and, in turn, how the institution's finances affect those decisions. To assist boards members, AGB has provided best practices that constitute important underlying principles such as: (1) A clearly stated institutional mission--accompanied by statements of vision, goals, and priorities--creates the foundation for exercising financial responsibility; (2) All board members should have a basic understanding of the financial condition of their institution to effectively exercise their fiduciary responsibilities; (3) The financial condition of an institution should not be the exclusive knowledge of a handful of board members and senior administrators; (4) The board is responsible for ensuring that financial decision-making aligns with strategic options; and (5) "Noses in; fingers out."--The board and senior administrators must work as partners. The relationship should be built on understanding, trust, mutual respect, and an appreciation of the other's responsibilities for institutional governance. This publication will help board members understand the financial context in which colleges and universities operate, which is critical to a board's ability to carry out its fiduciary responsibilities.