The role of the trustee ~ some practical thoughts

The role of the trustee in a charity is a foundation that must be very solid and reliable. Trustees are legally responsible for effective management and administration of a charity.  Trustees and executives of a charity must work to create clarity over how they work together to achieve the charity’s purpose. In this article I look at the six main duties of trustees and how you can create clarity in practice.

Duty to ensure that your charity is carrying out its purposes for public benefit

Charities exist to fulfil their purpose and under this duty the role of the trustee is to:

  • Understand what this purpose is
  • Plan the work of the charity to achieve this purpose
  • Explain how the work achieves the purpose and
  • Demonstrate how the work delivers public benefit.

When activities fall outside the purpose of a charity the trustees and the charity face serious consequences.

Two key activities can help trustees understand their charity’s purpose. Firstly, when a new trustee joins, having a good induction process that includes a clear explanation of the charity’s purposes.  Secondly, the trustees regularly review the charity’s purpose to ensure the charity remains relevant.

In a larger charity the executive team may do the detailed planning work and present the plan to trustees for discussion and approval. Here the role of the trustee is to constructively challenge to make sure plans are robust and effective. Trustees build understanding through this discussion so they can confidently explain how the plan achieves the charity’s purpose and delivers public benefit.

It is likely that trustees will do the detailed planning work in a smaller charity. In this case, trustees will step back from the detail to make sense of the big picture in fulfilling their duty.

Duty to comply with the charity’s governing document and the law

Trustees need to understand the framework in which their charity operates. In practice all trustees need to be familiar with the governing document.  Normally, a new trustee will receive a copy when they join the board and discuss it as part of the indiction. Trustees, as part of their governance work, also need to ensure that this document remains up to date and relevant.

Laws, regulations and other requirements  increase complexity in any organisation. Having a good mix of expertise and experience on a trustee board enables them to handle this complexity. It is one of the reasons to have the appropriate mix of skills on the Board.

Duty to act in the best interests of the charity

Trustees always retain ultimate responsibility even when they delegate work to executives employed by the charity. The trustees will still make many decisions and must take a balanced perspective. To ensure decisions are robust and informed trustees will seek enough information to support their decision.

A culture that encourages constructive challenge creates sound decision making. As a trustee it is part of your role to share what you think and challenge assumptions in robust discussions. Creating a culture like this takes time and effort and it is definitely worthwhile as it improves performance.

This type of culture is good when conflicts of interest arise. It means any conflicts are dealt with efficiently.  It is also a great way to generate new ideas and opportunities for the charity, as everyone is encouraged to contribute.

Duty to manage charity resources responsibly

Trustees must make choices about how to use resources to achieve the charitable purpose. They must act responsibly, reasonably and honestly in making these choices, avoid undue risk and not over commit charity resources. This is another reason why a good mix of skills and experience is essential in the trustee board.  Again, a culture that encourages open sharing of ideas and constructive challenge is very helpful. It means that trustees work effectively and share their different perspectives in making good decisions.

For some decisions, the trustees will need additional advice or guidance.  For example, investments, borrowing or where restrictions apply to funds and if they are selling or acquiring land and buildings. Seeking external advice for areas beyond the experience of the trustees is an important aspect of the role of the trustee.

Duty to act with reasonable care and skill

There are two dimensions to this duty in the role of the trustee.  Firstly trustees need to have the skills and experience for the work to be done. Any gaps can be filled using external expertise when appropriate.  Secondly, trustees need to give the appropriate time and energy to the role. In practice trustees often have other commitments.  Therefore it is important that each potential trustee understands what is required from him or her before taking on the role of the trustee. When you talk to a potential trustee this is a key thing to explain. A good open culture in a trustee board means that trustees challenge each other to bring enough time and energy to the role.

Duty to ensure the charity is accountable

At the first level of accountability,  trustees demonstrate that the charity complies with laws and regulations, it is well run and effective. Being open to scrutiny in their work is the next level. Beyond this, the role of the trustee requires true ownership of what happens in the charity. When this happens trustees accept accountability to all stakeholders of the charity such as its employees, beneficiaries and the general public.

The role of the trustee is challenging and often incredibly rewarding. It takes effort to create the environment in which trustees can fulfil their duties really effectively. However, the benefits of doing this are significant and I believe provides evidence that a charity is truly well run.

 

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