Understanding the responsibilities of a charity trustee
Deciding to be become a charity trustee can be driven by an interest in helping others as well as a desire to offer public service, often alongside a successful professional career.
The important role a trustee plays in helping a charity deliver its objectives cannot be underestimated. Trustees can make a real difference within the community that the charity serves as well as society on a broader basis.
When accepting a position on a trustee board there is a degree of responsibility attached as it involves making decisions in the charity's best interests. A trustee helps make a charity sustainable and ensures it fulfils its objectives in providing the right support for the beneficiaries it serves.
Whether the charity has a national or local focus, its board will normally have a mix of professionals and other lay people involved in the sector. As a result the board may have a wide range of experience that comes from many sectors and professions.
Trustees may include business leaders, professionals such as lawyers and accountants, high-net worth individuals and other high profile sponsors. Many on the board of trustees will be driven by a philanthropic desire to give time and skills to a cause about which they care.
Potential trustees should be mindful of the level of collective responsibility that comes with decisions made by the board and the implications which decisions could ultimately have on their professional life.
Liability of a trustee
The trustee and the charity must have clear expectations of what they expect of each other to ensure that they can build a successful working relationship. Potential trustees should fully consider what they can realistically add to the board and should be comfortable with what they are asked to contribute.
As many charities are still constituted as a trust, or an unincorporated association, there is a degree of personal liability for a board member. Alternatively, other charities may be corporate bodies but an individual’s personal liability is not fully protected in cases where a charity fails, a situation many can be unaware of.
Charities have come under pressure to secure funding streams in difficult financial times and some have made decisions, supported by the board, which have proved fatal to the organisation. These decisions can negatively impact on staff and, significantly, the beneficiaries.
Becoming a trustee has to be a move which is right for both the charity and the individual. For the relationship to be successful it has to work for both parties. It is important that when someone joins the board, its balance of experience, knowledge and support remains strong.
It is advantageous before taking up an offer to join a board that potential candidates, particularly high profile individuals, seek independent advice from trusted advisers. It is important to ascertain that a charity’s objectives are aligned with an individual’s own ambitions and beliefs. Additionally, their personal advisers should believe that it is the right time, from a personal and professional perspective, to become involved.
Professional standards
There are wider issues to consider for professional advisers, such as lawyers or accountants, who are considering becoming trustees. Professional advisers have to be comfortable that they can meet their own professional body's guidelines as board membership can entail collective responsibility for decisions made.
Trustees have to be able to demonstrate that they use the same level of skill and knowledge which they would apply in their professional capacity. Similarly, trustees must ensure that they are always able to take a step back and not let ‘their hearts rule their head’. Regrettably, there have been examples of professional careers being affected when issues have arisen from decisions agreed by the board and subsequent actions taken by the charity.
Interaction with the executive team
A charity’s executive group typically manage the organisation’s day to day activities and develops long term strategies. It is important that there is a strong and respectful relationship between the trustees and the charity’s executive team.
All trustees should feel comfortable that they are able to work with the executive team. They have to feel confident that they are being fully briefed on all relevant issues and activities because of the reputations at stake, not only for the charity, but also for the individual.
Trustees should be aware of the operational aspects of the charity and be prepared to push back on the executive’s activities and proposals if they don’t reach required standards or meet the trustees' professional thresholds. It is important that the executive does not appear to act as a group of shadow directors because individual trustees are still responsible for any decisions where their authority has been delegated.
In recent years there have been a number of well documented examples where a charity’s executive has sought to widen the remit of the charity as an attempt to strengthen its income flow. However, this can lead to major problems and, potentially, the demise of the charity.
These actions would have been sanctioned by the board of trustees and it is incumbent on each individual board member to consider the potential impact of their decisions in supporting a change of direction or strategy. Trustees should consider the risk of personal liability for any losses should those decisions affect the financial position of the charity.
Trustees should maintain a degree of independence in decision making, particularly where it draws upon their professional experience.
Mistakes happen and things do not always work out according to expectations. That is why it is crucial that decisions are fully documented. Actions may be challenged at a later date so taking contemporaneous notes and minutes will provide an accurate view of what really happened.
Duty of care
Actions made by a charity could have a long-lasting personal and professional impact, particularly if there is a need to answer to professional bodies in relation to the level of duty and care that was exercised.
The key message is that before taking up a role as a trustee, one should carry out a due diligence process to ensure that it is the right move. The prospective trustee should consider talking to trusted advisers who may act as a guide in maintaining a personal and professional reputation. This can be particularly important in the case of high net worth individuals where there is a large personal wealth to protect.
However, if these relationships can be managed the role of a trustee can lead to a highly fulfilling experience. Becoming involved in a charity, and working to support a cause by helping to improve the lives of the charity’s beneficiaries, can be a very rewarding experience.
