Governance for Family Enterprise: Family Business, Family Office, Family Councils, and Trusts
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NACD Nashville
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NACD Nashville
programs@nashville.nacdonline.org
About The Event
August 26, 2026 | The Governors Club in Brentwood, TN
Family enterprises present unique governance. Directors may need to understand not only the business or family office, but also the governance maturity, ownership structure, family dynamics, trusts, succession expectations, and the mechanisms through which owners communicate with the board. Most importantly, Directors need to understand the family, both as individuals and as a system.
That understanding is becoming increasingly relevant for directors. The number of US-listed public companies has fallen from about 8,000 in 1996 to roughly 3,657 as of June 2026, while the family and private company base has not experienced the same contraction. For directors, the implication is significant: an increasing share of governance opportunities—and many of the governance questions that come with them—sit within private and family enterprises, where the dynamics can be quite different from those of a public company. The Nashville discussion was designed to explore those differences and their implications for directors.
NACD Nashville recently convened a discussion on family enterprise governance featuring Betsy Blunt Brown, founder and CEO of Pendleton Square Trust Company; Ryan Flury, partner and portfolio manager at Brown Advisory; Caleb White, principal and family enterprise practice leader at CFAR and board member of Ensign-Bickford Industries; and Rich Wolkowitz, founder of Xylogenesis Family Office Advisory. The discussion was moderated by Leonora Zilkha Williamson, family enterprise coach and associate professor of the practice at Vanderbilt University.
The conversation defined family enterprise, family businesses, and family offices; introduced the governance structures common for each type and, most notably, emphasized the critical importance of relationship, empathy, and human connection, even and especially in the boardroom.
KEY TAKEAWAYS
Understand the Family as Well as the Business
• Directors considering a family-enterprise board should conduct diligence on the family and ownership structure with the same seriousness they bring to understanding the company, industry, strategy, and management team. They should ensure values alignment.
• Due diligence questions will look different than for a public company board, and even for a private equity board. From the list needed for a public company, subtract disclosures, as there are likely few, and add a deep understanding of ownership/ownership structures; what – if any – governance mechanisms exist; the management team and how they’re compensated, as equity is usually not awarded; family dynamics.
• The presence of independent directors on a family board generally signals that the company has reached a certain stage of maturity. Many companies operate for decades with no board, or a family-only board. If you are going to be the first independent director, what does that mean for you and for the family? What is prompting the family to hire an independent director? And finally, remember that the presence of an independent director alone does not ensure strong governance. Governance structures must continue to evolve as ownership, leadership, and generations change.
• A prospective director should understand the family’s willingness to accept outside perspectives before accepting a board role.
Know Which Governance “Room” You Are In
• Family enterprises often involve individuals serving simultaneously as family members, owners, directors, executives, trustees, or beneficiaries.
• Governance structures help separate those roles and reduce the risk that family, ownership, board, and management issues become intertwined.
• The Harvard Business Review Four-Room Model discussed during the program—Family, Owner, Governance, and Management—provides a practical framework for clarifying where decisions belong and who has responsibility for them. The published model treats the Family Room as a room with its own agenda—not simply a hallway between the Owner, Board, and Management rooms. That distinction recognizes family governance as a legitimate discipline in its own right.
• A useful discipline for directors is to ask: Which room are we in, and does the issue before us properly belong in this room?
• Understanding family dynamics does not expand the board’s authority. It helps directors maintain appropriate boundaries.
Create a Clear Channel Between Owners and the Board
• Independent directors need a reliable way to understand the objectives of the broader ownership group rather than relying primarily on the perspectives of family members who happen to sit on the board.
• Owners councils or similar structures can provide a more disciplined connection between owners and directors while helping family members better understand capital, risk, and the responsibilities of ownership.
• Periodic owner communications to the board can help clarify long-term priorities and reduce the risk that the board responds disproportionately to the most vocal family member.
• Caleb White offered a practical example: an annual communication from the family or owners council to the board setting out the owners’ goals and objectives, so the board is not hearing only the “loudest family member in the room.”
• Clear communication between owners and the board can strengthen alignment without compromising independent judgment.
A Trust Is a Framework, Not a Governance Plan
• Families can mistake estate documents and trust structures for a complete governance plan.
• Trusts provide legal structure, but effective family governance also requires clarity around intent, communication, decision-making, succession, and family preparedness.
• Betsy Blunt Brown described a trust as “just a framework,” while the governance plan surrounding it is “a human operating system.” Her distinction captures an important point for directors: documents establish structure, but people, relationships, communication, and decision-making determine whether that structure functions effectively.
• When trusts own interests in an operating company, directors should understand at a high level how the trustee, ownership structure, and board interact and where decision rights reside.
• Legal structures are most effective when they support, rather than substitute for, effective governance processes and family communication.
Prepare for Transition Before It Becomes a Crisis
• Heavy dependence on a founder, patriarch, or matriarch can delay difficult governance conversations until death, incapacity, or another event forces action.
• Leadership succession, board succession, next-generation involvement, trustee responsibilities, and adviser transitions should be addressed before they become urgent.
• Families and boards can benefit from conducting governance “fire drills” that test what would happen if a key family or business leader suddenly became unavailable.
• Even well-established governance structures should be periodically tested rather than assumed to work when needed.
Develop the Next Generation Deliberately
• Next-generation family members should be educated and prepared before receiving significant responsibility within the business or governance system.
• Family meetings, philanthropy, financial education, junior committees, and rotating assignments can help build understanding of ownership and governance over time.
• Poorly defined family employment practices or premature access to governance roles can create cultural and performance problems that become difficult to unwind.
• Effective family governance treats ownership as a responsibility to be learned and exercised thoughtfully, not simply an entitlement to be inherited.
IMPLICATIONS FOR DIRECTORS
• Diligence the family as well as the enterprise before accepting a family-company board seat.
• Understand how ownership communicates with the board and whether that process reflects the broader ownership group.
• Maintain clear boundaries among family, ownership, board, and management responsibilities.
• Ask how succession and transition plans work in practice, not simply whether documents exist.
• Understand ownership and trust structures sufficiently to know where decision rights reside, while relying on appropriate legal and trust advisers for technical matters.
• Remain independent without remaining uninformed about the family system surrounding the company.
Family-enterprise boards operate at the intersection of business, ownership, and family. The independent director’s responsibility is not to govern the family. Still, effective directors understand the family and its ownership objectives well enough to govern the enterprise with clarity, independence, and a long-term perspective.
That distinction matters. The independent director brings value precisely because they are not part of the family system. But independence should not be confused with distance or lack of understanding. Family history, relationships, values, ownership expectations, and generational transitions can all influence the environment in which the board carries out its responsibilities.
The strongest family-enterprise directors learn enough about that environment to recognize when it should inform the board’s work without allowing it to redefine the board’s role. They understand which decisions belong to owners, which belong to the family, which belong to management, and which properly belong in the boardroom.
Perhaps that is the larger governance lesson from the Nashville conversation. Structure matters—boards, trusts, owners’ councils, family councils, and clearly defined decision rights all have important roles. But structure alone does not create effective governance. Relationships, empathy, communication, preparedness, and clarity of purpose determine how well those structures function when circumstances become difficult.
For independent directors, the objective is therefore not to govern the family. It is to understand the family well enough to govern the enterprise well—and to know which room they are in.
KEY RESOURCES
NACD Director’s Handbook Series: The Family Business Board
NACD’s handbook addresses the distinctive governance needs of family-owned and family-controlled enterprises, including board structure, independent directors, succession, and the relationship between family and business governance. NACD Family Business Board Handbook
NACD Director Essentials: Family Business Boards and Family Dynamics
Practical NACD guidance addressing the interaction among family responsibilities, ownership, board cohesion, values, and generational differences. Family Business Boards and Family Dynamics
Josh Baron and Rob Lachenauer, Harvard Business Review Family Business Handbook: How to Build and Sustain a Successful, Enduring Enterprise
The handbook includes the Four-Room Model discussed during the program and offers practical frameworks for family-business decision-making, communication, conflict, and governance. Harvard Business Review Family Business Handbook
SPEAKERS
Betsy Blunt Brown
Ryan Flury
Caleb White
Rich Wolkowitz
Leonora Zilkha Williamson (Moderator)
NACD Nashville
Contact Us
NACD Nashville
programs@nashville.nacdonline.org
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