Opinion

When was the last time you looked at your charity’s governing document? Is it time for a health check?

23rd September 2019

When was the last time you looked at your charity’s governing document? Is it time for a health check?

Your charity’s governing document is an important document. It can come in various forms depending on your charity’s structure, examples include Articles of Association, Rules, a Constitution, or a Trust Deed. It is the rule book which sets out most things you need to know about running your charity. For example:

  • the objects – what your charity is set up to achieve
  • the powers – the powers your charity has to achieve those objects
  • who the trustees are and how they are appointed
  • whether you have members and who they are
  • how you call meetings.

All existing trustees should be familiar with the governing document and new trustees should be provided with a copy during their induction.

Unfortunately many trustee boards do not keep their governing document under review and years may have passed since the document was last updated (if at all!). During that time, the activities of the charity and the way it operates is likely to have changed considerably and your governing document needs to reflect that.

Why update your governing document?

  1. Trustees are obliged to make sure their charity is operating effectively and part of that obligation is ensuring it follows its own rules and procedures. It is difficult to do this with an out of date governing document.
  2. Keep up with changes in the law – the Charities Act has changed several times in recent years (1992, 1993, 2006, 2011) and the Companies Act was also updated in 2006. Your governing document should reflect this to ensure the charity is not acting unlawfully.
  3. Simplifying how your charity operates – updating your governing document gives you the opportunity to review the processes and procedures it requires you to carry out and to implement provisions which align with how your charity currently operates on a day-to-day basis. For example, company law no longer requires charitable companies to hold an AGM and so this can be removed from the governing document.
  4. Ensuring your governing document reflects the charity’s current circumstances – as mentioned earlier, the way a charity operates can change drastically over time and your governing document needs to reflect this. A key example we see time and again is where a charitable company’s Articles of Association provide for a wider membership (i.e. members who are not also trustees) when the charity does not have a wider membership and never has.
  5. Introduce the digital age – does your governing document include communication by email or holding meetings by electronic means? These provisions are likely to be helpful and will future proof your governing document.
  6. Lastly, and most importantly, are your charity’s objects still relevant? Some may refer to outdated concepts or to local authority boundaries which no longer apply. It is crucial your objects are reviewed regularly and are kept up to date. Charity trustees have an obligation to ensure their charity can continue to effectively apply its assets in line with its objects and this includes amending them if they are no longer relevant. This process will require the consent of the Charity Commission which we can guide you through.

How you amend your governing document will depend on what changes you want to make and how your charity is structured, and some changes may require Charity Commission consent, but there is no doubt it is an important part of managing your charity.

If you would like to discuss how we can help you review your charity’s governing document please contact Kirsty McEwen or Ellie Williams.

 

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