UK law outlines a number of legal responsibilities and duties for charity trustees. In this post we will take a closer look at what these duties entail, and explore how specialist trustee insurance can help you stay safe and compliant in your role as a trustee.
What is a Charity Trustee?
A charity trustee is anyone who has overall control of a charity and its operations. Trustees are chiefly responsible for ensuring that the charity is run effectively, and that it stays true to its mission and goals.
As well as dedicated trustees, a charity’s directors, board members, governors, and committee members may also take on trustee roles and responsibilities.
Charity Trustee Eligibility Laws
The UK Government sets the following eligibility criteria for charity trustees:
- You must be at least 16 years old to be a trustee at a charity that is a company, or a charitable incorporated organisation (CIO). To be a trustee at any other kind of charity, you must be at least 18 years old.
- The charity must appoint you following the procedures and restrictions in their governance documents.
What Can Disqualify You From Being a Charity Trustee?
The UK Government also lists some criteria that will disqualify you from acting as a trustee:
- Bankruptcy, or an individual voluntary arrangement (IVA)
- Unspent conviction for certain criminal offences, such as those involving dishonesty or deception.
- Being on the sex offender’s register.
There are additional restrictions concerning any charities that work with children or adults at risk. You can read a full guide to the trustee eligibility laws.
You can apply for a waiver from the Charity Commission if any of these disqualifying criteria apply to you.
Main Duties of Charity Trustees
There are six main duties that charity trustees are expected to carry out:
- Ensure that the charity is carrying out its purposes, and no other purposes, for the public benefit.
- Comply with the charity’s governance documents, along with all applicable laws, including preparing and submitting annual returns.
- Act in the charity’s best interests. This means making adequately informed decisions, avoiding conflicts of interest, and refusing all benefits from the charity unless they are properly authorised, and clearly in the charity’s interests.
- Manage the charity’s resources responsibly. Among other things, this means ensuring that the charity’s assets are only used to support or carry out its purposes.
- Act with reasonable care and skill.
- Ensure the charity is accountable. As well as meeting all statutory accounting and reporting requirements, you should be able to evidence how your charity is run, and how it complies with all relevant legislation.
Specialist Trustee Roles: Chair and Treasurer
Some trustees, such as the chair and the treasurer, take on specialist roles. They are known as officers, and though they do not automatically have any additional legal duties, there should be specific provisions in the charity’s governance documents concerning their responsibilities.
But even if one trustee works as a treasurer, it does not mean that this trustee takes sole responsibility for the charity’s finances. Plus, while a chair of trustees might coordinate meetings, they will not take sole responsibility for anything that happens to the charity.
In short, regardless of whether or not the charity appoints officers, all trustees will always remain jointly responsible for the charity.
Can Charity Trustees Be Personally Liable for Issues?
If a charity trustee fails to comply with these duties and responsibilities, then they may be held personally liable for any financial losses the charity suffers. They may also be held personally liable for any claims made by a third party against the charity.
For example, if a trustee spends a charity’s funds on the wrong purposes, then they may ultimately be required to reimburse the charity personally. Plus, if the charity faces any fines or other penalties as a result of not meeting certain accounting or reporting requirements, then once again, the trustees may be held responsible for these expenses.
Make Sure You Are Covered For All The Risks You Face as a Trustee
Bespoke charity insurance can include cover for trustees who may be held personally liable for claims involving dishonesty or mismanagement.
At James Hallam, we have supplied dedicated insurance and risk management solutions to charities and other third sector organisations since 1982. We are an independent Lloyd’s broker, and charity trustees across the UK rely on us for expert advice and market-leading solutions at a competitive price.
Find out how we can help you manage all of the risks you face as a charity trustee.