Taking on the role of a charity trustee can be immensely rewarding, interesting and life-changing and Governance360 was built on the premise that managed well, Charities are absolutely at the heart of a well functioning society here in the UK.
What do Trustees actually do though?
We continue to meet people who don't fully understand what being a Charity trustee actually means. Whilst our education modules help new (and old!) trustees learn more about their role, their requirements and their duties, let us try and outline some of the differences in just a few words.
Just because someone is called a Director, it doesn't always mean the same thing! For example, someone may be a company director of a charity which is structured as a company (usually a Limited Company) - if so, then they should be registered at Companies House and they hold certain duties, usually called statutory duties, under companies’ legislation.
However... Someone may be a senior employee of the charity, but not actually a company director. But for naming, branding or personnel reasons they hold the title of Director within the Charity.
Anyone who is a company director should be registered as such at Companies House and has certain duties under companies’ legislation.
A trustee is someone who holds legal duties for and assets on trust for another (for example, in a Will Trust). In charities structured as trusts, the trustees hold assets on behalf of charitable purposes set out in the Trust Deed.
In addition, the charity legislation uses the term ‘charity trustee’. This means those who have the strategic responsibility for running a charity. For a charitable company, it will be all of the company directors. For a charitable trust it will be all of the trustees and in the case of an unincorporated membership association, it will be the (normally elected) management committee or equivalent body. Unhelpfully, however, the term ‘trustee’ is often used as shorthand for charity trustees.
Note that company directors of company charities will always be charity trustees and have to be registered as such with the Charity Commission as well as being registered with Companies House.
Executive & Non-Executive
The corporate world uses the terminology ‘executive’ and ‘non-executive directors’. Executive, meaning those who are full time in the company; Non-executive meaning those who sit on the board and have responsibility as company directors like the executive directors, but who are there as a more independent voice and are not engaged in the company on a day-to-day basis.
Normally with charities, all of the members of the board of charity trustees (including where they are also company directors of a charitable company) will be volunteers and, therefore, the label ‘non-executive’ could be applied to them.
However, in some charities individuals will be a charity trustee on the board by virtue of their paid role in the charity; for example, a head teacher in an academy school or minister of a church.
Such individuals having an executive role, does not take away the legal responsibility of the rest of the board.
Anyone who is a charity trustee should be fully engaged with the board and whilst there may be delegation with people having particular roles e.g. a finance sub-committee or treasurer, those delegated areas must be reported to the full board as it is ultimately the full board who is responsible and make strategic decisions regarding the charity. Likewise, where there are employees, it may be appropriate that certain areas and decision-making are delegated to the employees. Indeed, it is usually appropriate to do so and the board should not micro-manage the employee’s role but there should be appropriate reporting and scrutiny in place.
The Charity Commission has highlighted that there are often problems for charity trustees where they do not understand what their role is in the organisation and their collective responsibility and they allow staff to set the entire agenda for the charity and just to rubberstamp their decisions.
Make sure you understand your role!