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WHAT EVERY TRUSTEE SHOULD KNOW: UNDERSTANDING YOUR ROLEDAN FRANCIS & EMMA HERBERTGOVERNANCE CONSULTANTS NCVOLEONA ROCHE SENIOR ASSOCIATE AND JOINT HEAD OF FAITH-BASED ORGANISATIONSBWB
7 NOVEMBER 2016
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• Context of trusteeship and sector • Role of a trustee• Legal duties• Liability and legal forms • Good Governance• Opportunity for any questions
WHAT WE WILL COVER…
Trusteeship in context quiz
Match the statement with the number
?
Trusteeship in context quizStatement NumberNumber of charities 57Total annual income of the UK voluntary sector in £billion 162,965 % of voluntary sector’s income derived from individual donations and purchases
83
% of the total number of charities with an annual income of under £100,000
44
Number of voluntary sector paid workforce 35Number of trustee board positions 27 Average age of a trustee 43.8% of trustees under the age of 24 945,769 % of the UK adult population who volunteered at least once a month during 2013/14
0.5
% of 16 – 25 year olds in the UK who volunteered at least once a month during 2013/14
827,000
Trusteeship in context quiz: AnswersStatement NumberNumber of charities 162, 965Total annual income of the UK voluntary sector in £billion 43.8% of voluntary sector’s income derived from individual donations and purchases
44
% of the total number of charities with an annual income of under £100,000
83
Number of voluntary sector paid workforce 827,000Number of trustee board positions 945,769Average age of a trustee 57% of trustees under the age of 24 0.5% of the UK adult population who volunteered at least once a month during 2013/14
27
% of 16 – 25 year olds in the UK who volunteered at least once a month during 2013/14
35
Micro Under £10,000 Small £10,000 to £100,000 Medium £100,000 to £1 millionLarge £1 million to £10 millionMajor £10 million to £100 millionSuper-major > £100 million
Proportion of number and income of organisations by size 2013/14 (%)
CHARITY INCOME
7
CURRENT CHALLENGES
CHARITY GOVERNANCE IN THE NEWS
9
WHO ARE THE TRUSTEES?
The persons having the general control and management of the administration of a charity.
Section 177 of the Charities Act 2011
• Voting members of the governing body• Ultimate legal responsibility for the charity• A collective group of decision makers • Elected or appointed in accordance with the charity’s governing
document• Operate within a formal set of rules• In a charitable company, company directors and trustees are
the same people• Trustees often delegate day to day tasks to staff and/or
volunteers• Almost always unpaid
WHO ARE TRUSTEES?
WHAT DOES THE TERM CHARITY MEAN?
12
• To be a charity an organisation must be set up with purposes which are exclusively charitable
• What constitutes a charitable purpose is defined in the Charities Act 2011
• In order to be a charity your purposes must meet the “public benefit requirement”
• We prove this by requiring charities to report annually to the regulator on how they have deliver their purpose
• This is all about trust and confidence
KEY LEGAL DUTIESCC3 THE ESSENTIAL TRUSTEE
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Charity Commission (2015) CC3: The essential trustee: What you need to know, what you need to
do
Each group will be allocated a legal duty to consider.
For the legal duty think about…
• What trustees can do to ensure they meet this legal duty?
and
• Times you think this legal duty may be challenged and how trustees should deal with this?
CHARITY STRUCTURES AND TRUSTEE LIABILITY
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COMPARISON OF LEGAL FORMS
17
Charitable Trust
Charitable
Unincorporated Association
Charitable company limited by guarantee
(“CLG”)
Charitable incorporated organisation
(“CIO”)
Unincorporated Incorporated
• Governance liabilitiese.g. breach of duty under charity law
• Operational liabilitiese.g. claims from third parties
• Failure to comply with relevant statutory requirements e.g. health & safety, PAYE, trade descriptions, data protection
TRUSTEE PERSONAL LIABILITY
• Incorporation (CIO; company limited by guarantee) but does not offer complete protection
• Plus – • trustee indemnity insurance• good management practices• clear roles and responsibilities• records of decisions taken• provisions in governing document• contingency funds• professional advice• board development• risk management
TRUSTEE LIABILITY – PROTECTION!
CHARITY COMMISSION’S VIEW
20
The Charity Commission expects trustees to take their responsibilities seriously... The Commission recognises that most trustees are volunteers who sometimes make honest mistakes. Trustees are not expected to be perfect – they are expected to do their best to comply with their duties. Charity law generally protects trustees who have acted honestly and reasonably.
Charity Commission (2015) CC3: The essential trustee: What you need to know, what you need to do
GOOD GOVERNANCE
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SIX KEY PRINCIPLES OF GOOD GOVERNANCEAn effective board will provide good governance and leadership by:• understanding their role• ensuring delivery of organisational purpose• working effectively both as individuals and as a team• exercising effective control• behaving with integrity• being open and accountable.
Good Governance: A Code for the Voluntary and
Community Sector, 2010
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• NCVO: www.ncvo.org.uk/practical-support/governance• NCVO Consultancy and training:
https://www.ncvo.org.uk/training-and-events• Knowhow Nonprofit: http://knowhownonprofit.org• Good Trustee Guide, 6th ed, NCVO 2015• BWB booklet:
http://www.bwbllp.com/knowledge/2015/05/08/duties-of-charity-trustees
• Charity Commission website: www.charity-commission.gov.uk and the core guidance - The Essential Trustee: What you need to know
• Good Governance: A Code for the Voluntary and Community Sector and supporting material: www.governancecode.org
USEFUL RESOURCES
THANKS [email protected]@[email protected]
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