Summary guide to charity trustees’ responsibilities

Contributed by Wright Hassall Solicitors

There are many reasons why you might like to become a trustee of a charity: positive support for a good cause, putting a particular skill set or experience to good use, or remaining active in the community. Whatever your motivation, you need to be aware that being a trustee is a significant legal responsibility, shared with your fellow trustees, and you must understand your obligations before volunteering. The most important document you need as a trustee is the charity’s governing document which should contain all the information you need to understand how the charity is run and what it has been set up to do. For detailed information please see our full guide on charity trustees’ responsibilities.

The post of trustee is almost always voluntary (with reimbursement of reasonable expenses) and you need enough spare time to undertake your duties properly, not least as trustees are liable for the decisions they make. You can find a more detailed guide on the responsibilities and duties of charity trustees in Charity Commission’s ‘The Essential Trustee’ – VoluntaryNews update.

Getting to grips with the charity’s governing document

Every trustee must have a copy of the charity’s governing document which details what the charity has been set up to do, its legal structure, how it should operate and how its income should be distributed.

  1. You need to understand the charity’s objects (its charitable purposes) and that it passes the public benefit test. This means that its activities must be for the public’s benefit – or a sufficient section of the public.
  2. You need to make sure that suitable trustees are appointed, for instance you cannot appoint someone disqualified under the Charities Act. Consider whether or not an individual’s experience and skill set would be a valuable addition to the governing body.
  3. Make sure you understand which legislation your charity needs to comply with, such as employment legislation.
  4. Review the governing document regularly to make sure it accurately reflects what the charity does. If it needs updating, seek legal advice.

Acting responsibly, reasonably and honestly

  1. You must always act in the best interests of the charity and not those of the individuals involved.
  2. You must ensure that the charity’s resources are being used responsibly and that it is financially well-managed.
  3. You need to understand any risks that the charity might face and have a policy in place to evaluate and mitigate those risks.
  4. You must act in good faith and with ‘reasonable care’ which will depend, to an extent, on your skills and experience.

Exercise financial prudence

  1. You need to be sure that your charity is complying with the relevant accounting requirements and is able to produce the most recent set of accounts on request.
  2. You must understand that trustees can be held liable for any financial loss caused by them acting dishonestly or irresponsibly.

In short

Being a trustee should be a rewarding experience. However, as trustees are ultimately responsible for the efficient management of the charity and its capability to deliver its objectives it is crucial that they understand exactly what that responsibility entails. The starting point for any trustee is to familiarise themselves with the governing document which sets out the charity’s legal structure, its objectives, who (or what) it is intended to help and how it meets the public benefit test. Beyond that, trustees must act in the best interests of the charity, applying common sense and good judgment.

Trustee and Member Resources

Trustees

Don’t forget that trustees often go under another name. In charities which are limited companies, they will also be company directors. The board might be called a management committee.

Training, Advice, Networks

There have been a number of initiatives around ‘Good Trusteeship’ over the years, although some have now disappeared off the web. Here are some useful current results.

Charity Trustee Networks became part of Small Charities Coalition in 2011. There is a list of various local and specialist trustee groups, who may have events, resources, meetings.

Young Charity Trustees website appears to have gone, Jan. 2014.

NCVO’s Governance and Leadership pages now generally refer elsewhere.

In Northern Ireland Volunteer Development Agency, which has become part of Volunteer Now, had a governance project offering training, support and information for management committee members – now defunct? But see the next item.

DIY Committee Guide provides online access to “extensive resources and guidance for voluntary management committees in Northern Ireland”.

TrusteElearning has 12 online training modules developed by the Governance Hub and Suffolk Association of Voluntary Organisation.

See Functional support bodies for Charity Treasurers’ Forum.

Other umbrella bodies have useful material. For example SITRA has Job descriptions for Company Secretary, Treasurer, Management Committee member etc. (look under Publications).

Published Guidance

Duties of Charity Trustees direct link, pdf format. Pocket size introduction to the issues from specialist solicitors Bates Wells and Braithwaite.

Charity Commission also publishes guidance. See The Essential Trustee (CC3) for instance and check out other material on their web site. Also of interest CC24 Users on Board: Beneficiaries who become trustees looking at how potential conflicts of interest can occur, suggests ways to minimise their effects and lists sources of further guidance for charities looking at the issue. Publications order line 01823 345427.

There’s a trustee’s checklist on our Governance issues page.

Recruitment

REACH recruits volunteers (to be placed in a charity of community group) with managerial, professional and technical experience, including for trustee positions. 89 Albert Embankment, London, SE1 7TP, phone 020 7582 6543. Also has Scottish, Welsh and NI bases.

Bar in the Community is a Bar Council initiative which aims to help voluntary sector groups by identifying barristers willing to serve on Management Committees. It is not about barristers providing free legal advice, rather that they have many other valuable skills which would benefit voluntary organisations. Bar in the Community, c/o Bar Pro Bono Unit, 289-293 High Holborn, London WC1V 7HZ, phone 020 7611 9511.

ICSA (company secretaries) runs a trustee register to help with the recruitment of charity trustees.

NCVO have set up Trusteebank which lists trustee placement services.

Trustee Finder is a service from Small Charities Coalition and the volunteering site Do-it.

Business on Board NI, a project of Business in the Community NI.

Also see: our Consultancy page for projects putting professionals with particular skills in touch with local projects (under Business Links). Sector support bodies sometimes publish such ‘opportunities’ or have lists.



Members

Voluntary organisations have members for a whole host of reasons. Some exist purely for their members, such as self-help groups (educational as well as supportive), others want member involvement in campaigns, raising funds or volunteer activities to carry out various functions . While there are many membership issues in common, such as keeping records (see Membership Software), others will be more particular. If making comparisons with other groups on how they handle members, do think about what is different in your case and apply lessons appropriately.

Meetings

The Charity Commission has produced (April 1999) with ICSA, a guide to Charities and meetings (ref CC48), with suggestions on good practice, specimen notice and venue checklist as well guidance on the law. Registered charities should obtain in the usual way from the Charity Commission.

Members’ Code of Conduct

When asked a question on this, we wondered why this wasn’t an issue with a higher profile. Perhaps it is because of the diversity of the sector. On a quick Google search, we came up with 2 contrasting examples: a family history society and a Lesbian, gay centre (ie building based), while the enquirer was going to have service users alongside community professionals and public sector members . What is essential for one could be completely over the top for another. We’ve looked at these as we put together something of a checklist on issues to consider. We would suggest that shortness, clarity and keeping the Code as ‘unheavy’ as possible are good guiding rules.

  • Control of the identity and intellectual property of the organisation. Should you highlight the need for permission to use the logo or name, reproduction or re-use of (published) material, who is allowed to speak on your behalf?
  • Conduct on the premises. In many instances, reference to ‘acceptable types of behaviour’ may be sufficient; in more sensitive contexts explicit reference to unacceptable actions which will result in immediate suspension/removal may be appropriate. What members should do if encountering abuse (of themselves, another person or the premises/equipment).
  • Codes for undertaking activities – e.g. field work. This starts to overlap with volunteering codes or policies, but if member means effectively the same as volunteer, does there need to be a separate document?
  • Are there more than one type of member? E.g. service users, service providers or volunteers. Where is the appropriate place to define conduct or boundaries of relationships? Are there possible professional discretions which could complicate a wish for complete openness, for instance?
  • Complaints, grievances. Who to address them to, how, timescales for response, maybe set procedures.
  • Disciplinary procedure / why and how someone’s membership might be revoked.
  • More positive statements about supporting the ideals and aims of the organisation. Tolerance of views, lifestyles, equal ops.
  • Establishing common expectations amongst members, to enhance interaction and understanding, reduce conflicts. Declarations of interest when debating issues.
  • Appropriate reference to the constitution. Try not to repeat or overlap too much, as that complicates any later amendments and peoples understanding of the legal position. The constitution, whether for a club, trust or a limited company, should always be seen as the prime document. Standing orders for meetings is another place for rules which could connect up (e.g. exercising voting rights, rules of debate).

Where membership may, entirely or partly, consist of other organisations, issues are more likely to be about avoiding conflicts of interest, clarity of roles and legal responsibility (which body is a person representing?).

Governance

Overview, types of governing body, checklist for committee members

Introduction

Governance – the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation. from Cornforth via ChangeUp (2004)

NB We will use ‘The Board’ to equate with Management Committee, Board of Trustees or Directors or any other title the governing body is called.

Governance is very much a live issue in the charity world at present. Both via SORP (accounting standards) and greater monitoring, the Charity Commission is out to ensure The Board are clear on their legal responsibilities and how these are carried through by the activities of staff or volunteers. With increased contracting of care and other services to the voluntary sector, rather than the commercial or public, journalists, politicians and commentators are recognising the management weaknesses which have previously been ignored because of the ‘good cause’ perspective.

The Board, however composed or called, has ultimate legal responsibility for the organisation. Much may be delegated, but there must be clear lines of authority – key is defining responsibility reporting, to ensure that information of the right type and detail for the organisation’s size and complexity gets to Board members in a reasonable timescale. Boards should meet frequently enough to handle the resulting workload, although sub-committees and officers can play a part.

Strategy, policy matters and monitoring of efficiency and effectiveness are often quoted as the function of the Board. Operational details should be left to staff and volunteers. However, particularly in smaller organisations, it is not easy to be so clear cut. Board members may be closely involved in the work and will often comment on their experience at the ‘front line’. Here they should try to recognise that they are really wearing a different hat, as a volunteer or ordinary member, and not confuse it with their essential Board role.

Functions can be classified under five headings, according to Margaret Harris (Professor of Vol Sector Organisation at Aston University Business School, quoted in Voluntary Organisations and Social Policy):

  • being the employer
  • formulating and monitoring adherence to agency goals
  • securing and safeguarding resources
  • being the point of final accountability
  • providing a link or buffer between the agency on the one hand and its external stakeholders and environment on the other.

Checklist for Trustees/Management Committee members

  • Is it a Limited Company? If yes:
    • You are therefore a company director, subject to company law.
    • Check the Companies House web site. Essential information and downloadable forms are available here. If your organisation is registered under Industrial and Provident/Friendly Society legislation – ignore the next two points.
    • Newly appointed? Form 288a must be filled in and returned (don’t forget the date of birth box!). The timetable for this is very tight but in practice just get it in a.s.a.p.
    • Companies House has been in recent years sending out info on director responsibilities to newcomers – check with your organisation if nothing arrives after filling in the form.
    • Who is the Company Secretary? This is not an optional post. Often the most senior staff member carries out this role (they can even in a charity as they are not automatically a director).
    • Is it required to hold AGMs?
  • If not a limited company, has this been considered? See our Registration page.
  • Is it a registered Charity? If yes:
    • You are therefore a trustee, subject to charity law.
    • In England or Wales, see the Charity Commission web site. They have an introductory leaflet for new trustees, downloadable.
    • Has the charity made it annual return, on time or at all? This used to be a non-event, but the Charity Commission are now will be pursuing defaulters much more vigorously.
    • See our page on various Trustee resources.
  • Are you an Officer – Chair, Treasurer, Secretary? If yes:
    • Is there a job description for the post? If not, find a model or at worst draw up your own, listing the areas you believe are your responsibility, who you need to work with etc. (Try ICSA Guidance notes.) Then circulate it for comment, and possibly approval.
  • Do you know how the following duties are carried out within the organisation?
  • Have you seen ….
    • The most recent annual accounts? Are they audited? If not, why is this?
    • The ‘Mem and Arts’ if a limited company, or other constitution.
    • Procedures for conducting Board and other meetings? May be in constitution or separate ‘standing orders’.
    • A list of approved policies and procedures, and know how to get copies?

Types of Governing body

Five ‘types’ of governing body have been identified. This approach can be used to examine how it relates to the rest of the organisation, and management consequences. (Research by Vic Murray and Pat Bradshaw-Camball as reproduced in Open University Business School course B789.)

  • Approving. Well established, serviced by a professional manager who makes recommendations on all major issues, with sub-committees and few votes.
  • Leaders. Honorary officers or the whole group are strongly committed and zealous in their pursuit of the organisations goals, with staff there to implement. Communication is often personal, and an expectation placed upon senior staff to have unquestioning loyalty.
  • Representative. All stakeholders (see Working Relations) well represented on the governing body, with multiple and potentially conflicting goals, objectives, and values. There will be power contests and staff and governors are seen more in terms of their commitments than their formal roles. The senior manager will have to be politically astute!
  • Consensual. Rejects the traditional roles and structures, and only acknowledges them on paper where legally necessary. Rotating offices, sharing experience and responsibility etc are characteristic.The senior manager will need to provide appropriate support to committees and consensus. Tensions are likely to arise over employment rights, and some will gain considerably from opportunities made available.
  • Involved. Lacks clear direction, leadership or agreed purpose. Loads of energy and commitment, but lacking in co-ordination. Achievements will be uneven and the senior manager may be expected to both provide support and be closely controlled by the governing body. This scenario is frequent in early days of a voluntary organisation.


The Recent Picture

From research done by Chris Cornforth at Open University Business School, using postal questionnaires sent to 2797 charities, with a 26% response rate:
– Only about 35% of charities provide job descriptions for board members.
– Only 23% provide some sort of initial training or induction for new board members.
– These percentages are somewhat higher for the larger charities (the range goes from 20% for the smallest to 77% for the largest!).
– Average frequency of board meetings was between 5 and 7 a year.
– The size of board in small to medium charities is increasing, but decreasing in larger charities.
– The average size of boards increases with organisation size, going from under 9 in the smallest charities, up to almost 21 for the largest.

The full results from this research are in ‘Recent Trends in Charity Governance and Trusteeship’ published May ’01 by National Council for Voluntary Organisations, ISBN 07199 15910, £12.50.

Further Resources

Printed

See magazine listings re Governance bi-monthly.

On the Web

NCVO’s Governance resources.

Governance pages is from research body ARVAC “information on governance and management committees for community groups and small voluntary organisations”.

Governance in the Jewish voluntary sector Report for Jewish Policy Research, 2001.

Founder Syndrome. Seemingly an international issue, we recognise the picture given in a piece on Help4Nonprofits. We would add to the problems associated with founders carrying on running an organisation for too long: carrying a sense of history and mindset which may make it difficult to recognise how things have changed; thinking that nobody else can do what they do (possibly true but this perception is often wrong) when there are other ways that the organisation can (and perhaps should) work.