What does it mean to be a charity trustee?

“No one is useless in this world who lightens the burdens of another” (Charles Dickens)

A sound sentiment, clinging on to which can sometimes be difficult for charity trustees. The work undertaken by them in service of others, on an unpaid basis, varies enormously according to the individual charity, the purposes for which it exists, the beneficiaries it serves, the activities it carries out and the legal structure it has. Trustees are willing (usually!) volunteers who generously give of their time to support a cause they believe in and to which they may have a particular personal connection. Adults and children across all sections of our society, and animals too, depend on the goodwill of trustees running charities which support their needs. The kind-hearted trustee has a legal role, though, which includes duties and responsibilities, as well as potential liabilities. Forewarned is forearmed and it is important for all trustees to have a clear understanding of what they have agreed to take on.

What are a charity trustee’s responsibilities?

Charity law states that charity trustees are the persons having the general control and management of the administration of a charity. Sometimes trustees are known as, for example, directors, board members, committee members, members of a council of management or governors (depending on the charity’s legal structure and governing document), but the duties and responsibilities described in this article apply in all cases. There are also additional duties for certain types of trustee (such as those who are directors of charitable companies).

All charity trustees act personally, within their powers, and have fundamental duties to exercise those powers in the best interests of their charity and in pursuit of its objects. Although they may delegate some charity functions to others (such as employees or agents), as the Charity Commission states:

“Trustees have and must accept ultimate responsibility for directing the affairs of a charity, ensuring that it is solvent, well-run and delivering the charitable outcomes for the benefit of the public for which it has been set up.”

All charity trustees also have duties of compliance, prudence and care. Those who are directors of charitable companies must also comply with directors’ duties under company law:

• To act within the company’s powers
• To promote the success of the company
• To exercise independent judgement
• To exercise reasonable care, skill and diligence
• To avoid conflicts of interest
• Not to accept benefits from third parties
• To declare any interest in a proposed transaction or arrangement.

Legal structures for charities

Charity trustees’ liability is affected by a charity’s legal structure and particularly whether it is incorporated or unincorporated. Trustees of unincorporated charities have personal liability, which may include, for example, contractual liabilities, and may mean that trustees are required to meet personally liabilities which exceed the value of their charity’s assets. Trustees of incorporated charities have the protection of limited liability, but all charity trustees may be liable for a breach of trust (acting contrary to their governing document or failing to perform their duties). Trustees may also have legal liabilities (for example, charity trustees of charitable companies may be personally liable for wrongful or fraudulent trading, under the Insolvency Act 1986).

There are some legal measures to protect charity trustees who have acted honestly and reasonably, and these may apply where a mistake has been made: if trustees can demonstrate that they made a reasonable decision which a reasonable board of trustees could make, even if it turns out to be the wrong decision, they may be protected. The Charity Commission has power to relieve a charity trustee from liability in certain circumstances.  Trustee indemnity insurance may also be available to the charity.

Never assume, however, that ignorance is a viable defence for legal muddle, mistake and mishap: it’s not. Nor should you assume that protests of your being “just a volunteer!” and exclamations of “but this is a charity!” will have any impact: they won’t. High profile scandals, affecting household name charities such as Oxfam and Kids Company, delivery salutary warnings to the unwary trustee.

Why would anyone do it?

Because being a charity trustee infuses life with interest, challenge, stimulus, diversity and fun. And because Charles Dickens was right: there is great value to be derived from knowing you are helping others.

Most trustees fulfil their roles without any negative consequences, such as adverse legal challenge or regulatory censure. A conscientious charity trustee knows and understands their legal duties and responsibilities, keeps abreast of developments in relevant law and best practice and knows where and when to seek guidance and support. When navigating what may feel like a quagmire of regulation, always remember to keep your eyes trained on the beacon of what is in the best interests of your charity. And then your house should not be bleak.

For more information about this topic, please do get in touch info@ts-p.co.uk