Essential duties of charity trustees: a refresher for effective governance

Charity trustees hold ultimate control of and responsibility for the affairs of their charity.

Depending on the organisation’s structure, trustees may be known by other titles, for example:

• Directors
• Board members
• Governors
• Committee members.

Whether you’re new to the role, need a refresher or are considering trusteeship for the first time, it’s important to stay informed about your core duties. This article highlights the key responsibilities every charity trustee should understand to ensure both compliance and effective governance.

1) Ensure trustees are eligible and your charity delivers public benefit

This duty has two parts: confirming trustee eligibility and ensuring that your charity is carrying out its purposes for public benefit.

Eligibility

The Charity Commission’s guidance states that trustees must be at least 18 years old, except for charitable incorporated organisations (CIO), which require a minimum age of 16.

However, many CIO governing documents restrict eligibility to those aged 18 and over. Where you’re in doubt about the minimum age of your trustees, you should consult the eligibility requirements in your governing document.

There are several reasons why an individual may be disqualified from acting as a trustee or holding a senior management position within a charity. The full list can be found in the Charity Commission’s guidance.

Eligibility is an ongoing duty. It applies from the point of recruitment and at all times once the trustee has been appointed. If a trustee becomes ineligible after being appointed, continuing to act as a charity trustee is a breach of their duties and may affect other trustees of the charity.

Public benefit

It’s the trustees’ responsibility to ensure your charity is carrying out the purposes it was set up to achieve.

Trustees are expected to familiarise themselves with, and understand the provisions within, their governing document to:

• Plan the charity’s activities and goals
• Explain how those activities are intended to further or support the charity’s purposes
• Understand how the charity benefits the public by carrying out its purposes.

The Commission provides further information on this part of a trustee’s duty, which can be found here.

2) Comply with your governing document and the law

Governing document

A charity’s governing document contains key information about the charity’s purposes and the extent of its operations and powers.

Trustees should be familiar with the entire document, especially:

• The charity’s purposes or ‘objects’
• Powers and restrictions
• Who runs the charity and how – eg meetings and quorum
• How trustees are appointed/removed
• Rules
• Powers of delegation and execution of documents
• Closure of the charity (dissolution).

All plans, activities and decisions must support the charity’s objects, either directly or indirectly. When interpreting these, consider:

• What: what does your charity exists to do?
• Who: who will benefit from your charity’s activities?
• Where: where does your charity operate?
• How: how will your charity achieve its objects?

Law

In addition to a charity’s governing document, trustees must always comply with relevant UK law, including, but not limited to:

• Charities Acts
• Safeguarding regulations
• Data protection
• Tax and accounting.

3) Act in your charity’s best interests

Trustees must act in the charity’s best interests – not those of staff, members or funders. In order to comply with this duty, trustees are expected to:

• Ensure that decision-making follows best practice
• Understand that trustees are collectively responsible for decision-making, and that collective responsibility is not the same an unanimity
• Manage conflicts of interests or loyalty
• Understand and comply with the rules on trustees’ benefits.

4) Manage your charity’s resources responsibly

Trustees must act responsibly, reasonably and honestly when managing their charity’s assets and resources. This includes property, money, investments, staff, and other tangible and intangible resources.

Trustees are expected to, amongst other things:

• Protect the charity’s assets and avoid unmanaged or unreasonable risk – including investments
• Ensure policies are relevant, in line with best practice and regularly reviewed
• Understand risk management and how it applies to their charity
• Monitor their charity’s finances and budgeting
• Review relationships with trading subsidiaries.

5) Act with reasonable care and skill

This duty has two broad parts, requiring trustees to:

• Use reasonable care and skill, drawing on their experience and taking advice when necessary
• Dedicate time, thought and energy to the role – for example, by preparing for, attending and actively participating in all trustees’ meetings and knowing what to do when something goes wrong.

Trustees with specialist knowledge or experience – such as accounting – have an enhanced duty to use it for the benefit of their charity.

6) Ensure your charity is accountable

Trustees must comply with statutory accounting and reporting requirements and demonstrate that their charity is well-run and effective.

Charities with income over £250,000, and all charitable companies, must prepare their accounts and trustees’ annual report in accordance with the Statement of Recommended Practice – Accounting and Reporting by Charities (Charities SORP). Failure to do so is a criminal offence and may be considered mismanagement or misconduct by the Commission.

Summary

The Charity Commission provides detailed guidance notes for trustees of charities in England and Wales, including on their duties. A link to this guidance can be found here.

We recommend all trustees, new or otherwise, review this guidance to ensure compliance and best practice, and to help their charity achieve its purposes and support its beneficiaries.