A report by the Charity Commission last year claimed that many charity trustees still ‘fail to understand their duties’. Recent press claims that this is still the case , so in this blog post I take 5 minutes to remind trustees of their key responsibilities and how best to discharge them.
The Commissions ‘Charities Back on Track 2011-2012’ Report revealed that 85% of the Commission’s investigations involved concerns about poor governance or poor trusteeship.
So what are the key duties of a trustee? Ultimately, the trustees are responsible for the affairs of the charity including ensuring the charity is solvent, well-run and delivering its charitable outcomes.
The Charity Commission’s guidance ‘The Essential Trustee’ splits out trustees’ duties into 3 key areas; Compliance, Duty of Prudence and Duty of Care.
– Ensure the charity is compliant with charity law, and with Charity Commission requirements; this means ensuring that the necessary reports, Annual Returns and Financial Statements are prepared and filed as required by law and the Charity Commission.
– Ensure that the charity operates in accordance with the rules, charitable purpose and objects set out in its governing document. (“Mission Drift” can often cause issues).
– Ensure compliance with requirements of any other relevant legislation or regulators e.g. Registered Social Landlords.
– Act with integrity, avoiding any personal conflicts of interest or misuse of charity funds or assets.
— Ensure the charity is and will remain solvent.
– Use charitable funds and assets reasonably and only to further the charity’s objects.
– Avoid undertaking activities that might place the funds or reputations of the charity at risk.
– Take special care when investing funds or borrowing funds.
Duty of care
– Use reasonable care and skill in their work, using their personal skill and experience.
– Consider obtaining external professional advice on matters where there may be risk to the charity or where the trustees may be in breach of their duties.
Top tips for ensuring key responsibilities are met…
Trustees must be able to demonstrate that they have fulfilled these responsibilities. I summarise below our top tips for ensuring that key responsibilities are met:
– Keep detailed minutes of all trustee meetings, noting the decision making process behind key actions.
– Ensure that the trustees regularly review the charity’s financial records and ensure regular management accounts are produced.
– Regularly review the charity’s governing documents to ensure any new activities, or grants to carry out services, are in line with its objects.
– Ensure the trustees are aware of the necessary returns to be made to the Charity commission and the deadlines for submission.
– Seek professional advice when considering changing the activities of the charity, or undertaking anything out of the ordinary, e.g. investing or borrowing funds.
– Strive for a balanced board of trustees with a wide range of skills and experience.
– Document any potential or perceived conflicts of interest, carefully outlining the trustees’ decision making process.
Further details can be found in the Charity Commission’s document ‘The Essential Trustee’ which is available to download from their website .
If you have any questions arising from this article, or any other concerns relating to the governance of your charity, please don’t hesitate to contact me on 01772 821021 or by email [email protected]