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CHARITY WATCH Trustee Briefing

Essential reading for Trustees of all horsey charities

What are charities?

Charities are organisations set up for the benefit of the community. They enjoy some tax advantages from the government. While they can in certain circumstances trade for profit, they must use any such profit for the purposes of the charity.

To qualify as a charity, an organisation has to meet strict conditions about its overall purposes, also referred to as its objects, including demonstrating that its purposes are for the public benefit. The organisation also has to be set up with a constitution or rules which meet certain conditions. These rules are usually referred to as a charity’s governing document.

Some charities are set up to give direct help, advice, grants or support to people in various kinds of need, for instance older people, or those with a particular medical condition. Charities are also set up to carry out research, provide training or education, or to focus on meeting the wider needs of a particular deprived area. And some charities exist mainly to support other charities, by giving grants and other assistance to them.

Several kinds of organisation can qualify as a charity. For instance, some charities are also registered companies, while others are trusts. Some charities are also set up by special legislation. All are subject to the general principles of charity law.

Most charities are small local organisations, but some are large national operations with household names, such as Help the Aged or Oxfam. Charities receive their money in various ways, such as donations from the public, payment for services provided, government grants and legacies.

An overall description of the framework for charities provided by the Charity Commission.
It is not a legal document, but an overall summary of the position, written in everyday language.
Click here to read.

Role of the trustees

Charity trustees are the people who serve on the governing body of a charity. They may be known as trustees, directors, board members, governors or committee members. Charity trustees are responsible for the general control and management of the administration of a charity.

The great majority of trustees serve as volunteers, and receive no payment for their work.

Charity trustees come from all walks of life, and are united by their wish to create positive change in society. Most people are eligible to serve as trustees. The work of a trustee should be rewarding and enjoyable, and an opportunity to serve the community while learning new skills.

Trustees and their responsibilities

Charity trustees are the people who serve on the governing body of a charity. They may be known as trustees, directors, board members, governors or committee members. The principles and main duties are the same in all cases.

Trustees have and must accept ultimate responsibility for directing the affairs of a charity, and ensuring that it is solvent, well-run, and delivering the charitable outcomes for the benefit of the public for which it has been set up.

Compliance – Trustees must:

  1. Ensure that the charity complies with charity law, and with the requirements of the Charity Commission as regulator; in particular ensure that the charity prepares reports on what it has achieved and Annual Returns and accounts as required by law.
  2. Ensure that the charity does not breach any of the requirements or rules set out in its governing document and that it remains true to the charitable purpose and objects set out there.
  3. Comply with the requirements of other legislation and other regulators (if any) which govern the activities of the charity.
  4. Act with integrity, and avoid any personal conflicts of interest or misuse of charity funds or assets.

Duty of prudence – Trustees must:

  1. Ensure that the charity is and will remain solvent.
  2. Use charitable funds and assets reasonably, and only in furtherance of the charity’s objects.
  3. Avoid undertaking activities that might place the charity’s endowment, funds, assets or reputation at undue risk.
  4. Take special care when investing the funds of the charity, or borrowing funds for the charity to use. Duty of care – Trustees must:
  5. Use reasonable care and skill in their work as trustees, using their personal skills and experience as needed to ensure that the charity is well-run and efficient.
  6. Consider getting external professional advice on all matters where there may be material risk to the charity, or where the trustees may be in breach of their duties. If things go wrong The Charity Commission offers information and advice to charities on both legal requirements and best practice to help them operate as effectively as possible and to prevent problems arising. In the few cases where serious problems have occurred we have wide powers to look into them and put things right. Trustees may also be personally liable for any debts or losses that the charity faces as a result. This will depend on the circumstances and the type of governing document for the charity. However, personal liability of this kind is rare.

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