Taken On Trust

TRUSTEE
DEVELOPMENT

Module One
Trustee Induction
TRUSTEE DEVELOPMENT
Module One

 By the end of this session you should be

able to understand:
 What a charity is
 What the role of a trustee is
 The responsibilities of trustees
 The liabilities of trustees
 Your governing document
What is a charity?

 Elizabethan statute of 1601 defined

charitable as: ‘the relief of aged,
impotent and poor people, the
maintenance of schools of learning, the
repair of bridges, churches and
highways, and the relief or redemption of
prisoners or captives’
What is a charity?

 1891 concept of charity classified under

four ‘heads’
 The relief of poverty
 The advancement of education
 The advancement of religion
 Other purposes beneficial to the
community in a way recognised as
charitable
However…….
The new Charities Act 2006
(did not repeal the 1993 act but updates and
creates new provisions)
http://www.charity-
commission.gov.uk/About_us/Regulation/charbill.aspx
 Heads of charity increased to 13
 New Charitable Incorporated Organisation
(CIO) status to be introduced
 New rules on public charitable collections
 Changes to audit thresholds
 Other changes include rules on payment of
trustees and power to spend capital
 Must be able to demonstrate and have a duty to
report ‘public benefit’
 Heads of Charity – Revision
2006 (increased to 13)
 The prevention & relief of poverty
 The advancement of education
 The advancement of religion (include belief of many
gods – or no god)
 The advancement of health or the saving of lives
 Advancement of citizenship or community development
 The advancement of culture, arts, heritage and science
 Heads of Charity – Revision
2006
 The advancement of amateur sport
 Advancement of human rights, conflict resolution and
reconciliation or the promotion of religious or racial harmony
or equality & diversity
 The advancement of environmental protection or
improvement
 The promotion of animal welfare
 Relief of those in need by reason of youth, age, ill health,
disability, financial hardship or other disadvantage.
 Promotion of the efficiency of the armed forces, police, fire &
rescue or ambulance services
 Other purposes currently recognised as charitable and any
new purposes which are similar to another
 Taken On Trust

WHAT IS
TRUSTEESHIP?

The responsibilities, liabilities and

accountabilities
What is Trusteeship?

 Trustees are people who are entrusted to look

after money or other resources given to charity
by a person or group of people
 Trustees have a responsibility to ensure the
charity’s resources are used only for the
purposes for which the charity was set up
 Trustees should operate within Charity Law and
according to their governing document
Who are Trustees?
 Trustees are defined under Section 97 of the Charities
Act 1993 as:
 “the persons having general control and management of
the administration of a charity”
 Trustees may also be called:
 Members of the committee
 Management committee members
 Council members
 Executive committee members
 Governors
 Directors
BUT THEY ARE STILL TRUSTEES AND HAVE THY
SAME RESPONSIBILITIES AND LIABILITIES
 What is Trusteeship? – The relationships
FUNDERS BENEFICIARIES
Donors, charitable trusts, local Service users, members,
authorities Local community

TRUSTEES
! Act in best interests of
beneficiaries
Partners ! Make sure money is spent on
purpose intended
Support & Advice
! Operate within an organisational
structure
! Avoid conflicts of interest

Day to day tasks

often delegated to staff or
volunteers
12 Essential Responsibilities

1. Determine the organisation’s Vision (where

the organisation is going) and mission (how
they are going to get there)
2. Engage in strategic planning
3. Formulate needed policies
4. Approve and monitor the organisation’s
programmes and services
5. Ensure adequate financial resources
6. Provide effective fiscal oversight and ensure
sound risk management
12 Essential Responsibilities
7. Select and support staff and review
their performance
8. Understand and respect the
relationship between trustees and staff
9. Act as a responsible employer (as set
out in employment law)
10. Enhance the organisation’s public
image
11. Carefully select and induct new
trustees
12. Carry out trustee business efficiently
How do you become a Trustee
 Election
At the AGM
 By a section of the association with representative rights
 Co-option
 Normally balanced against number of elected members
 Appointment from outside
 Local authority representatives
 Other related agencies
 Ex-officio
 Appointed by virtue of their office e.g. a mayor or vicar

Details of how your committee is made up will be in your

constitution
Observers

 May be nominated to your organisation

 Are there by invitation
 It should be clear that they are observers
and not trustees and therefore cannot
take part in any decision-making and do
not have a vote
Can anyone be a Trustee?
 Not everyone can be a trustee.
 The Charities Act 1993 sets out who is disqualified from
acting as a trustee
 Company Law sets out who is disqualified from acting as
a company director
 See Charity Commission publication CC3, The Essential
Trustee – What you need to know, for more details
(you can order free copies from the Charity Commission
or download from the website at)

http://www.charitycommission.gov.uk/Charity_req
uirements_guidance/Charity_essentials/The_es
sential_trustee.aspx
Duties of a Trustee

 To comply with the governing document

 To exercise ‘Duty of Care’
 Comply with charity and company law
(as appropriate)
 Protect the charity’s property
 Act in the best interest of beneficiaries
 Avoid conflicts of interests
 Duty to act collectively
 Not to financially benefit
Trustee Liabilities
 Not to commit breach of trust
 Debts and liabilities of the organisation
 Note: Trustees of all types of charity can be
held personally liable for:
 Breach of trust under charity law
 Acting as trustees when disqualified

 Failure to comply with statutory requirements such

as health and safety etc
 Failure to deduct employee’s PAYE

Remember trustees will only be held liable if they

have been negligent, but remember that ignorance
is no defense as this is considered as negligence
 Limiting Liability

Few trustees who have acted honestly suffer financial

loss as a result of their trusteeship as long as they-
 Develop good management practice
 Define clear roles and responsibilities for everyone
involved in the organisation
 Keep records of decisions taken (minutes of meetings)
 Board development – Make sure trustees are well trained
 Ensure you have contingency funds as defined in a
reserves fund policy
 Take appropriate professional advice on anything the
board does not have knowledge about
 Limiting Liability
Insurance will not protect a trustee from liability incurred as a result of
a breach of trust knowingly committed

“The Insurers shall not be liable for loss arising from any act or
omission which the trustee knew to be a breach of trust or breach
of duty or which was committed by the trustee in reckless
disregard or whether it was a breach of trust or breach of duty or
not.” Charity Commission 2008

Therefore insurance will have limited value as it will

not cover you unless a problem has occurred
despite having all appropriate systems and
procedures in place
 Who’s Who?
Who they are What they do Special features
Board members Work as a team to make Don’t get paid
(trustees, council, most important decisions Team of equals
committee
The Chair Board member chosen by Important job
other board members to run Runs meetings
meetings Ensures all opinions heard
Acts as facilitator

Chief Executive Day to day running or org – Gets Paid

(Centre Manager/ puts boards decisions into Not a board member
Administrator etc) practice Reports to the board
Sub-committee Small group assigned to Can’t make decision
focus on particular task without board’s authority
Honorary Officers

 Treasurer – responsibility for monitoring

and reporting financial information to
board (but not solely responsible for
charity’s finances)
 Secretary – administrative support to
the board, taking minutes, dealing with
correspondence and legal issues
Holding Trustees (patrons)
Most charities are unincorporated which means
they do not exist in law and therefore cannot
hold legal contracts. To solve this holding
trustees can be appointed. These individuals

 Purely ‘lend’ their names for the legal holding of

property
 Are not managing trustees!
 rights to property (whether leased or owned)
 Holding trustees have no right of vote and may
not interfere with the business of managing the
charity
Official Custodian
The Official Custodian for Charities (via Charities
Commission) will act as holding trustee if
requested.
Having an Official Custodian preferred way of
securing property as individuals can move or
even die. There is also now a cost to changing
names on Trust deeds
Information can be found at in the Charity
Commission document CC13 - The Official
Custodian for Charities' Land Holding Service
http://www.charity-
commission.gov.uk/library/guidance/cc13text.pdf
Governing Document
(Your Organisations Constitution)

 Sets out the aims or ‘objects’ – the underlying

purpose of the organisation
 Objects must be exclusively charitable and will
often define the geographical area in which the
charity will work
 It sets out the powers and structural
arrangements for managing the charity
 Vital document that should be used as
reference point for government decisions.
Governing Document

 The charity can only do what the

governing document says it can do
 If it does not say you can do it, you can’t
do it!
 All trustees, staff and volunteers should
be familiar with this document as it
defines your organisations aims and puts
a structure to its activities
Governing Document Exercise

Follow the link to some simple exercises

you could do to see how well you know
your constitution

Link to exercise
This training can be brought to your
organisation – if you would like to
discuss this further please contact Alison
Angell (link to email)