During the summer of 2017, the Charity Commission for England and Wales (CCEW) used some of their new powers to issue the first official warning to a charity for failing to fully comply with an agreed action plan to remedy weaknesses in the charity’s operations. An official warning is the first step in the process towards potentially suspending a charity trustee, or group of charity trustees!
The sector has been under increasing scrutiny from the public, the press and the regulators recently so it feels that this is an appropriate time to revisit the responsibilities of trustees to ensure that your charity client does not end up in the same position.
The first thing to remind trustees of is that the role is extremely important. Ultimately they are responsible for how other people’s money is being used. Donors give money for the charity to use towards their aims so trustees are ‘trusted’ to ensure that this happens.
The role of the trustee
Charity trustees are ‘…the persons having the general control and management of the administration of a charity.’
They have six main responsibilities as set out in the CCEW guidance, CC3 – The Essential Trustee – What you need to know. These are:
- Ensure your charity is carrying out its purpose for the public benefit: Spending MUST be on activities to further the charity’s objectives and those objectives must provide a benefit to the public. Trustees should not be raising funds just to benefit themselves.
- Comply with the charity’s governing document and the law: Trustees must be aware what their own rules are and what the law states. Where the charity operates in an area where specific laws and regulations apply, the trustees must be aware and keep up to date with such laws and regulations.
- Act in your charity’s best interests: While this may sound obvious, this requirement covers issues such as conflicts of interest and trustees not benefiting from the charity unless it is properly authorised and reasonable. This was the one of the issues which prompted the official warning, where a charity had paid a trustee inappropriately.
- Manage your charity’s resources responsibly: It is the responsibility of the trustees to put systems and procedures in place to ensure that the charity’s resources are only used for the appropriate purposes and that the charity is financially stable. Trustees should therefore be questioning those running the charity, asking what they are doing and why…not just passively agreeing to what is being done.
- Act with reasonable skill and care: The guidance advises that trustees need to give time, thought and energy to their role and use reasonable care and skill in making decisions. The role of the trustee is not just ceremonial!
- Ensure the charity is accountable: This covers the accounting and reporting requirements a charity has. Trustees should have a different attitude to reporting than company directors. Trustees should be open and full in their reporting, happy to tell the world what they have been doing with their donors’ money.
Alongside the CCEW guidance, there is the Charity Governance Code published by the Good Governance Steering Group and supported by the CCEW, which gives trustees extensive guidance on how to run their charity and the issues involved.
All trustees need to be aware of these areas and should have them as favourites in their web browser.
Being a trustee is about much more than attending the occasional meeting and the annual fundraiser…it is a hands on, regular commitment and should not be entered into lightly.
But it will also be immensely rewarding when trustees can see that benefits the charity is providing and they consider the part they are playing in that work and the good governance of the resources.
How can we help
Mercia are offering specialist training on helping charity trustees meet their responsibilities. Our three hour specialist course is designed to examine key areas where participants might be asked to advise or give guidance to charity trustees and focuses on non-financial disclosures and the other responsibilities required by the Commission. It will also consider the results of recent Commission inquiries and examples of published trustees’ reports. To book your place, visit our website.
We also offer a Charity newsletter with the latest accounting, taxation and governance issues for charity trustees and senior management, ensuring your charity clients are kept up to date of all current issues in the sector. To order our newsletter, visit our website.