Board members and senior staff working together

1. Giselle Davies
Partner & Head of Charity Law & Social Enterprise Team
Tuesday 15th March 2016
Charities – Board Members and Senior
Staff working together

2. Know your Charity Structure
Unincorporated
(contract with
trustees)
Register
with CC
Incorporated
(contract with body
itself)
Register
with CC
TRUST Yes COMPANY (Limited by
guarantee/shares)
Yes
UNINCORPORATED
ASSOCIATION
Yes CHARITABLE INCORPORATED
ORGANISATION (‘CIO’)
Yes
COMMUNITY BENEFIT
SOCIETY
No - Exempt
STATUTORY CORPORATION Usually
ROYAL CHARTER BODY Usually

3. In summary
Charity Trustee Role = Voluntary in nature
“The buck stops here”
• Oversight and supervision
• Ultimate responsibility
Employee Role = Paid to do a job
“The buck DOES NOT stop here”
• Delegated responsibilities
• Subject to supervision

4. Division of Responsibilities
Trustees Staff
Strategy Recommend
Policy Undertake
Supervision Report
OR
Decide (and delegate) Do: Carry out (tasks)

5. Charity Governance
Trustees must:
• Know the governing document
• Know the objects & beneficiaries
• Ensure activities further objects
• Ensure activities/objects meet Public Benefit Test
• Operate effective management & financial
controls

6. Charity Operations
Staff should:
• Understand the nature of a charity
• Understand the role of the Trustees
• Be aware of the governing document, the objects
& beneficiaries
• Understand activities should further objects and
meet Public Benefit Test
• Act within delegations

7. Charity Trustee Legal Duties
Basics
• Compliance
• Prudence (responsible, reasonable, honest)
• Care
“Fiduciary Responsibility” – A Duty of Loyalty
• No conflict
• No personal profit
• Undivided loyalty
• Confidentiality

8. Trustee Duties
Compliance:
• Governing Document (Articles of Association)
– Objects & Powers
– Appointment & Administrative provisions
– Restrictions/Limitations
• The law
– Charity law
– Company Law
– Tax law
– Other relevant laws

9. Company Director Duties
Part 10 Companies Act 2006
• Act within powers
• Promote success/achieve purpose of company
• Exercise reasonable care, skill, diligence
• Avoid conflicts of interest
• Not to accept benefits from third parties
• Declare interests in proposed
transactions/arrangements

10. Trustee Duties
Prudence - Sensible Trustees will:
• Use assets / funds properly
• Operate effective management and financial
controls
• Keep the charity solvent
• Undertake regular risk assessment
• Delegate appropriately
• Address special matters – land; borrowing;
investments; reserves; serious incidents

11. Prudence - Internal controls and checks
Trustee matters – Supervision of:
• Budgeting & monitoring
• Financial limits and authorisations
• Arrangements for dealing with cash
• Risk assessment & Risk Register
• Fundraising strategy & implementation
• Reporting & Accounting compliance
• Gift Aid/HMRC – special considerations

12. Trustee Duties – Duty of Care
• Generally
– Reasonable care and skill
– Take professional advice
• Statutory duty of care
– Trustee Act 2000/Companies Act 2006
• Issues
– Trustee meetings
– Acting collectively (even when dissent)
– Confidentiality
– Conflicts of interest and loyalty

13. Trustee Liability
Basics
• Normally?
• When things go wrong?
• Question:
“Have you acted prudently, lawfully and in accordance
with your governing document?”

14. Trustee Liability
If YES is the answer:
• All liability to be met from charity’s resources
• Incorporated body, liability is “limited” BUT
• Note Insolvency legislation – possible liability to
creditors

15. Trustee Liability
If NO is the answer:
• You should be worried!
• Possible personal liability
• Collective responsibility
BUT
• For breach of trust matters, Charity Commission
may relieve trustee of liability if acted honestly
and reasonably

16. Generally:
• None, but ………
• Acting as Shadow Director?
• Acting as de facto trustee?
Staff Personal Liability?

17. What do you think?
Three cases:
• The Arts charity
• The Social Care charity
• The Children’s charity

18. Working at the next level
• Written Role descriptions for trustees especially
Chair
• Clear written delegations to staff, committees or
individual trustees
• Codes of Conduct for trustees and staff
• Internal controls and checks
• Special policies

19. Role Descriptions -Trustees generally:
• Act collectively – even when dissent expressed
• Are responsible for legal obligations
• Set & safeguard vision, values, reputation
• Oversee, manage, support work of staff & any
volunteers
• Differentiate between strategic (Board) matters
and operational (staff) matters
• Ensure delegations are approved by Board,
written and complied with

20. Role Descriptions – Chairman/Officers
• At meetings
• Between meetings
• Externally
• Interaction with staff roles
• Specific issues – performance oversight, financial,
regulatory

21. Delegations
Individual Trustees, Committees, Staff
• Clear terms of reference/role
• Recorded in writing
• Complied with/enforced
• Kept under review & updated
• Interaction with contract of employment/job
description

22. Special Policies
Usual - Volunteers; Child/Vulnerable Adult
protection
E.G. – For Volunteers:
• What is their role?
• Who do they report to?
• Are they fundraising?
• Contact with beneficiaries – Disclosure & Barring (previously
CRB)?
• Reimbursement of expenses
• Liability for their actions

23. Thank You

24. Contact details
Giselle Davies
DD: 029 2039 1797
M: 07918 651 663
E: giselle.davies@geldards.com