1. Trustees’ Responsibilities
Thursday 16th November 2017
Tracy Davies – Clay Shaw Butler
Chartered Accountants & Registered Auditors 24 Lammas Street, Carmarthen, SA31 3AL

2. Trustee eligibility Minimum age Company/CIO = Minimum 16 years old
16/11/2017
Trustee eligibility
Minimum age
Company/CIO = Minimum 16 years old
Any other charity = Minimum 18 years old

3. Trustee eligibility cont.
2. Not disqualified
You must not act as a trustee if you are disqualified under the Charities Act. This includes if you:
are disqualified as a company director
have an unspent conviction for an offence involving dishonesty or deception (such as fraud)
are an undischarged bankrupt, or have a current composition or arrangement including an individual voluntary arrangement (IVA) with your creditors
have been removed as a trustee of any charity by the commission (or the court) because of misconduct or mismanagement

4. Trustee eligibility cont.
3. Fit and proper person Charities that want to claim UK tax reliefs and exemptions (e.g. Gift Aid) must meet the management condition in the Finance Act This requires all of the charity’s managers (including trustees) to be ‘fit and proper persons’.

5. Trustee eligibility cont.
4. Extra rules if working with children/vulnerable adults
Illegal for a barred person to apply for a regulated activity (paid or voluntary)
Illegal for charity to knowingly employ a barred person to work in a regulated activity
Being a trustee is not a regulated activity
Reputational risk

6. Responsibilities
1. Public benefit 2. Comply with governing docs & law 3. Act in charity’s best interest 4. Manage resources responsibility 5. Act with reasonable care and skill 6. Ensure charity is accountable

7. 16/11/2017
1. Pubic benefit
Everything the charity does should be to achieve its purpose (and no other)
a. Ensure you understand purpose as set out in governing document
- What
Who
How
Priority
Restrictions
Serious to spend charity funds outside purpose

8. 1. Public benefit cont. b. Understand how charity benefits public
All charities must operate for the public benefit
Public benefit guidance on CC website
Needed for charitable status

9. 1. Public benefit cont. c. Planning and reviewing your charity’s work
Trustees responsibility to plan how charity will carry out its purpose
Consider funds/resources required and where they will come from
Involve staff/volunteers
Review effectiveness

10. 1. Public benefit cont. d. Review charity objects periodically
Still appropriate, relevant and up-to-date e.g. beneficiaries, locality
Update objects if necessary (legal documents)

11. 2. Comply with governing docs & law
Governing documents contain key info:
Purpose
Powers
Trustees, number, appointment, removal etc.
Members
Meetings

12. 2. Comply with governing docs & law cont.
b. Comply with charity law
i) Register with the charity commission (E&W)
Keep proper financial records
Prepare annual accounts
Inform CC of changes
Annual return
Report serious incidents

13. 2. Comply with governing docs & law cont.
c. Comply with other laws
Depends on charity structure, activity etc.
i) All charities – equality, data protection, copyright
ii) Other areas
Company/CIO/Community benefit society
Employ staff
Own or rent premises
Operate vehicles
Provide regulated advice, housing, medical/care services, work with vulnerable people
Fundraising
Tax relief
Work outside the UK

14. 3. Act in charity’s best interest
Trustees must:
Act to best enable charity to carry out its purpose
Long and short-term
Not about serving trustees/staff interest, supporters/funders, members, the institution

15. 3. Act in charity’s best interest cont.
b. Make balanced & adequately informed decisions
Vital role
Act within your powers
Act in good faith
Ensure adequately informed
Consider relevant factors/ignore irrelevant
Deal with conflicts of interest
Record significant decisions

16. 3. Act in charity’s best interest cont.
c. Avoid conflicts with personal interests/ loyalties
Could relate to you or a connected person e.g. close relative, business partner, company
Need to:
i) Identify and declare conflicts of interest
ii) Prevent them affecting decisions
iii)Record conflict and how dealt with

17. 3. Act in charity’s best interest cont.
d. Not receive benefit (unless authorised)
Trustees usually unpaid
Can reclaim expenses
Restrictions for transactions with trustees/financial connected people e.g. supplying goods/service, employment, acting as beneficiary, loans etc.
Permission required

18. 4. Manage resources responsibly
Duty of prudence (responsibly, reasonably, honestly)
Assets only used for charitable purpose
b. Avoid exposing assets/beneficiaries/reputation to undue risk
Risk management
Establish risk policy
Identify risks
Assess risks (likelihood and impact)
Action (avoid/transfer/insure/accept)
Review, monitor and assess regularly

19. 4. Manage resources responsibly cont.
c. Budgeting
Important to manage money and resources properly.
Plan and monitor income and outgoings
d. Consider income generation
Avoid relying on single source of income
Consider options available e.g. fundraising, trading etc. and costs, benefits, risks
Legal requirements
Reputational issues

20. 4. Manage resources responsibly cont.
e. Keep funds safe
Procedures for income & expenditure
Keep accurate records
Financial controls
Protect from theft/fraud
Reserves policy
Tax reliefs
f. Special care regarding investment/borrowing not to put charity assets at risk

21. 4. Manage resources responsibly cont.
g. Comply with restrictions on spending funds etc.
Restricted funds
h. Manage property
Ensure property in charity’s name
Adequate insurance
Properly maintained
Review if suitable for charity’s purposes
Restrictions on selling/leasing

22. 5. Act with reasonable care & skill
Use your skills and experience
Reasonable in the circumstances
Specialist knowledge/experience
b. Take advice when needed
Some decisions carry more risk e.g. buying/selling land, investing funds, legal actions

23. 5. Act with reasonable care & skill cont.
c. Give sufficient time, thought & energy
Prepare for meetings
Attend meetings
Actively participate
d. Deal with problems promptly
Prevent or minimise further loss or damage
Report to CC, police etc.
Prevent re-occuring

24. 6. Ensure charity is accountable
Comply with accounting requirements
Prepare accounts/annual return
Requirements vary depending on size/constitution
b. Be accountable to people with an interest in the charity
Complaints procedures
Good practice

25. 6. Ensure charity is accountable cont.
c. Trustees and delegation
Delegation can be useful
Chose what to delegate (not high risk/unusual)
Can not delegate overall responsibility
Put in writing e.g. job descriptions
Clear, appropriate channels for communication

26. 6. Ensure charity is accountable cont.
d. Ask questions
Need to hold people to account
Question information provided
Be prepared to say “I don’t understand”
Ensure receive timely, understandable info
Request training if required

27. 7. Liability Personal liability to the charity
Trustees can be liable to charity for any financial loss
Trustees who act honestly & reasonably generally protected
No legal protection for acting dishonestly, negligently or recklessly

28. 7. Liability cont. b. Liability to third parties
16/11/2017
7. Liability cont.
b. Liability to third parties
e.g. breach of employee rights, public injury, liability to staff pension scheme
Depends on legal structure
Incorporated bodies can specify trustee/members limit
Unincorporated – trustee sign contracts personally. Honest mistakes can be met by charity but if insufficient funds trustees must meet

29. 7. Liability cont.
c. Criminal liability - Can be held responsible for offences committed by staff e.g. Bribery Act, corporate manslaughter law

30. 7. Liability cont. d. How to reduce personal risk
Ensure understand responsibilities
Ensure can meet financial obligations before signing new contracts
Hold regular meetings and keep records
Deal with conflicts of interest appropriately
Ensure transactions with trustees/connected persons are authorised
Take appropriate advice
Ensure delegated powers are clear and written
Ensure effective management and financial controls
Ensure comply with laws
Consider whether needs additional insurance
Consider whether need to incorporate

31. Thank You
Any Questions?

32. Contact details
Tracy Davies Relationship Accountant Clay Shaw Butler