Being a Charity Trustee or Director

What is a Charity Trustee?

Charity trustees are the people who have overall control over a charity. They are responsible for making sure that it does what it was set up to do. This means, therefore, that they decide how the charity will be run and will operate, what services it will provide, who will be employed and so on.

Trustees may also be called directors, board members, committee members or governors—but they all have the same role. Trustees are not usually paid to act in this capacity, but they can claim reasonable expenses.

Who can be a charity trustee?

There are rules that govern who can and cannot be a charity trustee or director. In the UK:

You must be over 16 to be a trustee for certain forms of charity, and over 18 for others; and
You cannot have been disqualified from acting as a charity trustee.

You can be disqualified for several reasons, including being on the sex offenders’ register, having an unspent conviction for certain offences, or being bankrupt. There may also be other restrictions for particular charities, such as those working with young people or vulnerable adults.

The number of trustees required is usually set out in government guidance. In the UK, it is at least three, but can be more.

The Responsibilities of a Charity Trustee

Charity trustees have several key duties, usually defined in law. In the UK, six main duties are set out by the government. Other countries are likely to have similar expectations. The duties are:

1. To ensure that your charity is carrying out its purposes for the public benefit

Our page on Setting up a Charity explains that UK charities can have a range of different ‘purposes’, but all have to act ‘for the public benefit’.

To ensure that the charity is carrying out its purposes for the public benefit, trustees therefore need to:

Be sure that they understand the purposes of the charity, which are set out in its governing document;
Plan the work of the charity, and decide how it will achieve its purposes;
Clarify and understand how each part of the charity’s work contributes to its purposes; and
Understand how the charity’s work benefits the public.

WARNING! A serious matter

It is particularly important that charity funds are not spent on the wrong purpose.

Charity trustees may be personally liable to pay back any funds that are misspent, even if that has been over a period of several years.

2. To comply with charity law and the charity’s governing document

Trustees have a responsibility to ensure that the charity complies with both its own governing document and charity law. This means that they may need to read guidance about charity law to ensure that they fully understand this responsibility.

For registered charities, this responsibility includes providing accurate periodic returns to the regulator.

3. To act in the charity’s best interests

The charity trustees have to decide what will best allow the charity to carry out its purposes, both now and in the future.

This means making decisions that are balanced and informed, and reflect both the current and likely future situation. Note that this is a responsibility that only rests on the shoulders of the trustees. Even if there are also paid executives or a committee, the designated trustees are responsible for this decision.

Trustees also have to avoid putting themselves in a position where they may have a conflict of interest—that is, where their personal interest clashes with the charity’s interests, or may affect their ability to make balanced decisions.

Finally, trustees should not receive any benefit from the charity (unless it is in the charity’s best interests to provide that benefit). This also applies to anyone closely connected to a trustee, such as a spouse, partner, parent or child.

4. To manage the charity’s resources responsibly

Trustees are required to act “responsibly, reasonably and honestly”, sometimes known as “the duty of prudence”. In practice, this means that trustees must be clear that the charity’s assets are only being used to support or carry out its purposes.

Trustees must not take any inappropriate risks with the charity’s assets or reputation. They need to take particular care when investing or borrowing, because both these can be high-risk strategies (and for more about why, you may like to read our pages on Understanding Investing and Understanding Debt). Trustees must also not over-commit the charity.

Finally, trustees must comply with any restrictions on spending funds. For example, money raised for a particular purpose can only be spent on that purpose (see box).

[Case study] A question of purpose

A small infant school had a swimming pool, which cost a considerable amount to maintain. The school’s Parents Association—a registered charity—therefore agreed that it would support the pool, including buying a new liner whenever that was needed. Each year, the children at the school carried out a sponsored swim, and all the income from that event went into a designated fund. As it turned out, the liners lasted longer than expected, and at times, the fund could get quite large.

At one of these times, the school’s administration approached the Association, and asked for help funding a new computer room for the school. The administration had a clear budget in mind, and wanted to start buying immediately. The Association’s trustees explained that there was not enough money at this stage, but it could be a target for future funding.

“Oh!” said the school’s business manager, surprised. “But the swimming pool fund has £10,000 in it. I thought we could use that and you could refill it over the next few years.”

The treasurer looked both astonished and appalled, then spoke firmly.
“No, you can’t do that,” he explained. “That money was raised for the purpose of maintaining the pool. That’s why we keep it in a separate fund. Under charity law, you can’t spend it on anything else. It’s not permitted.”

“Oh….” The business manager’s disappointment was almost palpable. “It seems like such a waste to have that sitting there when we could make such good use of it.”

“And what,” asked the treasurer, “if the swimming pool liner gave way the next day? It would be hard to explain that to the parents who have been donating money for so long.”

The computer room was never mentioned again. The trustees later agreed that it had clearly been a matter of (apparent) money burning a hole in the business manager’s pocket.

5. To act with “reasonable skill and care”

Trustees are required to act with what the government calls “reasonable skill and care”.

This means drawing on your own skills, knowledge and experience in running the charity, and calling in expert advice when necessary. It also means putting sufficient time and energy into the role. For example, you should expect to attend all the trustees’ meetings. You should also make time to read the papers and prepare for meetings.

6. To ensure that the charity is accountable

Finally, the trustees are expected to ensure that the charity is accountable.

There are four parts to this. First, you need to comply with any accounting or reporting requirements laid out by the regulatory authority. Second, you need to be able to prove that everything that the charity does is in pursuit of its purposes, and that it complies with the law. Third, you need to be able to account to the membership (if applicable) separately from the regulator. Fourth, you need to have clear lines of accountability within the organisation, especially if activities are delegated to volunteers, members or paid staff.

The Role of a Charity Trustee

The key role of all charity trustees is to work together to make the right decisions about the charity’s activities.

These decisions do not have to be unanimous, and are often majority decisions. Some charities may set out that one trustee—often the chair—has the deciding vote in the event of any disagreement.

You may find it helpful to read our pages on decision making to support this part of your role.

Some trustees also have specific roles, such as acting as chair, secretary or treasurer.

These roles are set out in the governing document for the charity.

You may find it helpful to read our pages about the role of the secretary and the role of the chair, although these focus on meetings rather than the wider role within a charity.

Even if these ‘officer roles’ exist, it is important to remember that all trustees remain jointly liable for the work of the charity. This means that even if the charity has a treasurer, all the trustees share responsibility for the financial running of the charity.

Fundamentally, this means that trustees must understand the work of the charity, and be prepared to ask questions if they have any concerns or doubts about what is happening.

A Final Thought

Being a charity trustee is an important role, both for individual charities and for society as a whole. Through the work of their charity, trustees can make a difference to individuals, communities and even the country as a whole. It is therefore extremely worthwhile.

It is also essential that trustees understand their role and are willing and prepared to carry it out effectively.

Nobody should feel that they ‘should’ take on this role if they do not wish to do so, or do not have the time to do it justice. It is worth remembering that being a trustee is very much a voluntary role.

Continue to:
Careers in the Third Sector
Running a Charity: Governance Issues