CHARITIES
ARE YOU IN CHARGE?
IF YOU are reading this, the chances are you are already one of the million charity trustees in England and Wales or you are thinking of joining them. Being a trustee can be a hugely rewarding role — but it should not be taken lightly. Charity trustees have the general control and management of a charity’s administration. They may well delegate these responsibilities to other people — the CEO and others — but it is the trustees who are ultimately responsible for the charity.
WHAT ARE THE KEY DUTIES OF CHARITY TRUSTEES?
The overriding duty of all charity trustees is to advance the purposes of their charity for the ultimate benefit of the charity’s beneficiaries.
In doing so, they have several basic responsibilities:
Trustees are responsible for the proper administration of their charity.
They must ensure the charity’s assets and resources are used only for the purposes of the charity and that the charity is run in accordance with its constitution, charity law and all other applicable laws and regulations.
Trustees must accept ultimate responsibility for everything the charity does.
The trustees are responsible for the vision, mission and management of the charity. While they may delegate in some circumstances, it is the charity trustees who are accountable should anything go wrong.
However, if the charity has the legal status of being either a company limited by guarantee or a “charitable incorporated organisation” then the charity trustees can benefit from limited liability to the extent that they have not been wrongfully trading.
Trustees have to act reasonably and prudently in all matters relating to their charity.
The law imposes a duty of care on charity trustees, which is sometimes expressed as a duty “to exercise such care and skill as is reasonable in the circumstances”.
Trustees must safeguard and protect the assets of the charity. This would include investments, cash, land, intellectual property. Charity trustees also need to ensure they meet all necessary legal requirements as an employer and that they have put Trustees must safeguard the assets of the charity
Trustees have a duty to act collectively.
Decisions and responsibilities are shared, so all trustees should take an active role. Trustees can act by majority decision, unless the constitution states otherwise. Larger charities may have sub-committees for specific areas of decision-making but all the trustees are collectively responsible for decisions made by the trustee body.
Trustees must act in the best interests of their charity.
The interests of the charity are paramount. This means charity trustees are not allowed to let their personal interests or views hinder their decisionmaking. They must exercise independent judgement at all times.
Trustees must avoid any conflict between their personal interests and those of the charity.
The ability for trustees to benefit personally from their charity is very limited. Trustees must deal appropriately with any conflicts between their own personal interests and those of the charity. They must also be alert to possible conflicts between duties they may owe to other organisations and the duties they have to the charity.
Additionally, charity trustees have responsibilities to ensure that the charity performs a public benefit, puts in place appropriate financial controls and avoids any activities that might jeopardise the charity’s reputation.
Last month the Charity Commission published a major new report, Taken on Trust: the Awareness and Effectiveness of Charity Trustees in England & Wales. It estimated the value of time trustees spend on their role at around £3.5 billion per year. Although making 28 recommendations, the report found awareness of trustees’ responsibilities was much better than previously thought.
The Charity Commission’s publication CC3 The Essential Trustee: what you need to know, what you need to do (updated July 2015) provides some more detail on the points covered above.
I think it is good practice for new trustees to sign a declaration confirming they have read this publication and also that they are eligible to act as a charity trustee.
Trustees’ time is worth £3.5 billion a year