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May I ask you why the board of trustee is considered as principal? what is the benefits that the board of trustee gain from BCO?
In a company, shareholders are the principals and directors/management are the agent. The agents should run the company for the ‘benefit’ of the principles, whether benefit is dividends gains or other requirements of the shareholders.
Charitable trusts have no shareholders. Instead, the trustees take ttheir place as principals and are ultimately responsible for the trust. Directors/management (agents) should run the trust in line with trustees and the trusts objectives.
cant we take the donors as principals and BOT as agent as donors would like to know whats heppening to their donations
I remember when this question came out I wondered who the principal was and considered the donors. However, they could have disparate objectives and, apart ftom witholding donations, little influence. The question could have been clearer in making clear who was to be taken as the principal
Yes, I have same idea as you. It’s not clear in the exam that does the BOT have significant donation or not, and what is the benefits that they expect to be received?
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