Charity trustees are responsible the activities a charity undertakes and can be held legally accountable for their decisions. It is important that a trustee understands their duties and also to remember that in addition to owing duties as charity law trustees, duties may also be owed depending on a charity’s legal form, for example a director of a charitable company will also owe duties as a company law director.

Listed below are ten tips to help trustees in the everyday running and administration of their charities:

1.    Constitution

It is imperative that you understand your charity’s legal structure, its governing document (which typically sets out a trustee’s powers) and its objects. The objects of a charity are central to all the charity’s activities; a charity can only act within its objects. Do your current and future plans fall within these objects? Are your activities for the benefit of the public or only certain individuals and do you apply your mind to these questions when making trustee decisions? Trustees should also be familiar with their charity’s policies and procedures.

 2.    Induction

Devise an induction programme for trustees. Ensuring your board is clear about its role and aware of any risks and liabilities will minimise your charity’s exposure.

3.    Finances

As a charity trustee you have a legal duty to ensure the funds of your charity are properly safeguarded and expended in furtherance of your charity’s objects. Trustees should keep accurate and up to date financial records that cover income and expenditure and there should be a culture of transparency within a charity. Trustees should also consider procedures for authorisation and oversight of charity funds. Your charity’s auditors can provide advice.

4.    Conflicts

Ensure you and your fellow trustees take time to consider conflicts. The issue of conflicts of interest was recently identified by the Charity Commission as the single biggest reason for the opening of inquiries into the running of charities. Are you involved, or do you have a particular interest in a transaction or situation that could lead to a conflict of interest? First and foremost trustees must try to prevent the conflict but if this cannot be done, it is important trustees consider how to make their decision in the best interests of the charity. This could include removing the conflict by, for example, the affected trustee stepping down or the charity not taking up a particular contract. Consider any provisions in your charity’s governing document. It is important that your charity has a conflicts of interest policy. Make sure you document your reasoning for making any decisions relating to a conflict. Where trustees don’t identify or properly respond to a conflict of interest, there can be serious consequences for the affected trustee, the charity and public confidence in charities generally.

5.    Skills

When recruiting new trustees look at the board’s existing skill set. Keep a register of trustees’ skills and competencies. Conduct an annual skills audit and compare these against the skills required for the charity.  

6.    Property

Does your charity own a property or lease property? If so, on what terms? Have you seen evidence of the right to occupy the property and evidence of ownership, for example, the title register?

7.    Insurance

Obtain copies of your charity’s insurance policies. Ensure that you understand the limits of any cover and any exclusions. As a trustee your personal liability will depend on your charity’s structure; if your charity is unincorporated your liability could theoretically be unlimited. As a consequence, many unincorporated charities choose to incorporate as a company or charitable incorporated organisation (CIO).

8.    Payments

What are the restrictions in your governing document and policies on trustees receiving benefits or remuneration? Whilst most trustees are able to recover expenses, trustees are not generally permitted to be paid for acting as a trustee or as an employee but may be remunerated for the provision of services. Ensure you are acting within your governing document and the law in respect of payments as failure to do so can cause serious reputational damage.

9.    Data

Charities must comply with the Data Protection Act 1998 (“DPA”) in processing personal information relating to its employees, patrons, suppliers etc. Breaches of the DPA, such as data loss/theft, security breach or unlawful data processing, can result in enforcement action from the regulator (the Information Commissioner’s Office (“ICO”)) which can include fines of up to £500,000, public rebuke and subsequent negative publicity. The ICO publishes helpful guidance on the DPA, including in relation to the exemption from registration for some organisations which are established for not-for-profit making purposes.  Our specialist Privacy & Information Law team is experienced in advising on all aspects of DPA compliance.

10. Refresh

 Refresh your trustee board regularly to ensure new ideas are considered and that accepted modes of operation are challenged. Seek out new trustees with the skills required by the board and ensure a diverse range of skills amongst the trustees.