Charities

The role and responsibilities of Charitable Trustees

Many people are Charitable Trustees as part of their involvement with local branches of charities, schools and churches. Trusteeship carries legal responsibilities and duties. It is not a position of honour without responsibility and requires time, understanding and effort.

The Charity Trustees are the people responsible under the Charity's governing document for controlling the management and administration of the charity.

Some charities have custodian or holding trustees, whose function is simply to hold the legal title to the charity's property or investments. Custodian or holding Trustees have no role as such in the charity's management. Trustees are not entitled to receive payment, other than reasonable and necessary out-of-pocket expenses and cannot benefit personally either directly or indirectly.

Liability of trustees

Liability - If a Trustee acts prudently, lawfully and in accordance with the governing document e.g. the Constitution, then any liabilities the Trustee incurs can be met out of the charity's reserves, otherwise the Trustee may be in breach of trust and personally liable. Trustees are responsible for ensuring that any fundraising act is properly undertaken.

A Charitable Trustee can dispose of land belonging to the Charity, but has to follow a statutory procedure or obtain an order from the Charity Commissioners. Charitable Trustees have power to invest funds under the terms of the governing document or under the Trustee Investments Act 1961 as amended.

Charitable Trustees have a duty to protect the charity's property. Charitable Trustees can employ Agents in this respect, but will be responsible for ensuring that the Agents are themselves reliable and responsible bodies.

Accounting

Trustees are required to keep accounts and new requirements came into force on 1st March 1996. All registered charities with an income over £10,000 must have their accounts scrutinised by independent examination or audit.

The effectiveness of the Trusts of the Charity should be regularly reviewed. There are procedures for drawing up new objects of the charity set out in the Charities Act 1993 and if the charity's objects are re-drawn, they should be kept close to the original intention of the charity and the purposes of the charity must remain legally charitable.

Charitable Trustees can mortgage the Charities property (if the Governing Document provides for them to do so) but must first obtain advice from an experienced financial advisor with no personal interest in the proposed loan.

Winding up

A Charity can only be brought to an end if

all its property is expendable and has been disposed of; or
the governing document contains a dissolution or winding up provision; or
Sections 74 and 75 of the Charities Act 1993 apply. (These Sections include various options for Charities with an income under £5,000 per annum such as transferring the Charity's property to another Charity with similar purposes)

For your own protection, make sure any charity you are involved in is being run properly.

The Charity Commissioners provides information on all aspects of running a Charity.