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What makes a good Trustee? – Reflections from this year’s Trustees’ Week

6th November 2020

What makes a good Trustee? – Reflections from this year’s Trustees’ Week

During Trustees’ Week 2020, the Charity Commission launched a range of guides for Trustees highlighting the importance of all those involved with charities reflecting on their roles and making good governance a priority.  Kirsty McEwen, Partner and Head of the Charity and Not for Profit Team at Higgs & Sons, takes a closer look at five key points raised in those guides.

Decision Making

This is fundamental to any Trustee role.  So what do Trustees need to think about?

Trustees should act collectively and work together to make decisions. Trustees should also remember that they remain responsible, even when decision making has been delegated to someone else, and they therefore need to maintain close oversight.

Trustees must make informed decisions based on appropriate and relevant information and record the basis for those decisions clearly in minutes.  No charity wants to be the focus of scrutiny but, should this arise, the Trustees need to be in a position to justify their decision and show that a proper process was followed.

Further, if the decision involves issues which are outside of the Trustees’ or the charity’s in-house expertise then appropriate professional advice should be sought.  Any costs incurred by the charity for this reason are justifiable and in the best interests of the charity.

The Trustees must also remember to act within their powers and this means analysing what the charity’s governing document says, following the guidance it provides and also checking if there are any legal or regulatory rules or procedures that need to be followed (which is where professional advice is so crucial).

This is an area where making sure the charity has an up-to-date and user-friendly governing document is key.  A governing document which sets out clear instructions on how decisions are made and whether the Chair has a casting vote, for example, can prevent situations of deadlock and ensure the charity is not prevented from continuing to carry out its purposes whilst any disputes are resolved.

As advisers to the charity sector, we often see charities with out-of-date governing documents which don’t allow the Trustees to effectively manage the charity in the way they want to or in line with current governance best practice.  It is important to keep the governing document under review and to actively consider whether it continues to meet the charity’s needs. 

The team at Higgs & Sons can provide a no obligation view on whether your charity’s governing document is in need of updating.

Your Charity’s Finances

The Charity Commission’s guidance highlights the importance of making sure that a charity’s money is safe, properly used and accounted for.

This is often an area Trustees can feel uncomfortable with or in need of extra support.  The Trustees should therefore consider whether they have sufficient expertise on the board and recruit specifically for this skill if they feel this would benefit the charity.

Trustees must ensure they have oversight of the charity’s finances and ask questions if they don’t understand something.  Understanding a charity’s financial position is a key part of a Trustees’ role and crucial in terms of carrying out strategic planning and approving budgets for the year. Seek professional advice where required.

Trustees should also work to protect the charity against the risk of theft, fraud or cyber crime.  There is a lot of guidance available to Trustees on these subjects (including from the Charity Commission) and it is important that Trustees and their charity remain vigilant at all times.  Also, remember that if your charity is hit by any of these issues, a serious incident report may need to be submitted to the Charity Commission.

Safeguarding your charity’s finances also includes making sure that Trustees do not receive any unauthorised benefit and/or remuneration without proper authorisation.  Authorisation might come from the governing document, Charities Act 2011, the Charity Commission or the courts.

Serious incident reports and trustee payments are something that the Charity & Not for Profit Team advise on regularly as these requirements are often overlooked. 

Purpose and Rules

Every Trustee should be familiar with their charity’s objects and this is something that should be built into a proper induction process, as should an introduction to the charity’s governing document which sets out the rules for how your charity must operate.

The Charity Commission advises Trustees to read the governing document and make sure to understand:

  • what the charity is set up to achieve (its purposes);
  • who the charity is there to benefit (its beneficiaries);
  • what the charity can or cannot do to carry out its purposes (its powers).

 

Trustees should keep the charity’s activities under regular review to ensure it is not acting outside of those objects and there is no ‘mission drift’ - operating outside of your objects is a serious issue and, whilst it can be tempting to consider delving into new areas of work or services, detailed consideration should be given to whether it is in the best interests of the charity and its beneficiaries.

Whilst Trustees are not expected to be experts in all things, they should try to familiarise themselves with key rules and regulations which apply to their particular charity, whether that be safeguarding guidance for a pre-school charity or understanding the rules for charities operating internationally if you undertake activities overseas.

 

Conflicts of Interest

Conflicts of interest involve a personal interest, or an interest of someone or an organisation connected to a Trustee which does, or is likely to, conflict with that Trustees’ duty to act in the best interest of their charity.  This can include a conflict of loyalty.

The reality is that conflicts of interest will arise for most Boards of Trustees.  The important thing is to make sure that the Trustees can identify that there is an actual or perceived conflict of interest which needs to be declared and understand how to manage that conflict so that it doesn’t impact on the Trustees’ decision making.

The Trustees should ensure they have appropriate processes and procedures in place to help them to identify conflicts, including declarations of interest, a register of interests and a conflicts of interest policy which are kept under regular review – annually is best practice . Conflicts of interest should also be a permanent agenda item for every meeting.

The impact of a conflicts of interest can vary hugely, some will be minor and some will be very serious and the approach of the Trustees should reflect this.  In certain circumstances, advice may be required.  A written record should be kept of all discussions about conflicts, how they were dealt with and why they were dealt with in that way. 

If your charity would benefit from a review of its policies and procedures, or you need to implement a robust conflict management process, the team at Higgs & Sons will be happy to assist.

Diversity

This is a hot topic in the charity sector and one which is discussed extensively - and rightly so.  The Charity Governance Code sets out that diversity supports a Trustee Board’s effectiveness, leadership and decision making.  It goes on to say that Boards whose Trustees have different backgrounds and experiences are more likely to encourage debate and to make better decisions.

Diversity is about considering the protected characteristics set out in the Equality Act 2010, including age, gender, race and religion, but that should not be the start and end of the conversation.

The Trustees should not see diversity as simply a tick box exercise and should consider this in a wider context.  They should apply their mind to considering individuals who are diverse by virtue of their background, the career path they have taken and who offer diversity of thought.  This is key to ensure the Board is diverse enough in its widest sense to actively scrutinise and challenge and, thereby, make better decisions for their beneficiaries.

In order to achieve this, the Trustees will need to review their recruitment process and consider how they can actively recruit to fill any gaps on the Board and attract individuals to the role.

This can be a daunting task for Trustees and the team at Higgs & Sons has provided assistance to many charities undergoing the same process to ensure they have the framework in place to help them achieve successful recruitment of the right candidate, including preparing role descriptions, helping with interview panels and collating induction packs for new Trustees.

 

 

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