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Running a charity can be very time consuming and complying with the law and charity regulations can sometimes seem very daunting.  To help, we have put together our top tips for trustees running a charity.

 
Only Carry out Charitable Purposes for Public Benefit

Once started, you must ensure that your charity continues to do what it is set up for and nothing else.  Make sure you understand your charity’s purposes and plan what your charity will do and how it will do it.  You should be able to explain how all of your charity’s activities further or support its purposes and understand how that meets the public benefit test.

You should regularly review what your charity does and how it achieves its purposes to make sure it remains effective and relevant to its beneficiaries.  Having a business plan that is regularly updated will help you to focus on your charity’s goals and how they will be achieved. A good charity business plan will help trustees to:

i)   Clarify what their charity does and how it does it 

ii)  Set out goals and how they will be achieved 

iii) Spot potential problems and set out how they will be resolved 

iv) Measure progress

Do What Your Governing Document Says

Your charity’s governing document should clearly set out what your charity does and how it is run.  That includes who will run it, what powers you have to further its purposes, rules for meetings and how changes can be made.

You should regularly review your charity’s governing document to make sure it remains up to date and is fit for purpose.

Make Sure You are All Eligible to be Trustees

You have to be at least 16 years old to be a trustee of a charitable company or Charitable Incorporated Organisation (CIO).  To be a trustee of any other type of charity you must be at least 18 years old.  But these are not the only restrictions.  You must not act as a trustee if you are disqualified under the Charities Act and other restrictions apply to charities that help children and vulnerable people.
 
It is prudent to ask all current and prospective trustees to sign a declaration form confirming that they are eligible to act within these restrictions.
 
Work Together as a Team to Make Decisions
 
Trustees are jointly responsible for running their charity, so it follows that decisions should be made together.  Your governing document should tell you how decisions are to be made and who can make them.  In most cases the trustees will make the decision, but sometimes it will fall to others such as members of the charity.
 
Before making any decision, check what you charity’s governing document says about voting and making decisions.
 
Always Act in Your Charity’s Best Interests
 
Once you become a charity trustee you have a legal duty to act in its best interests.  This means always doing what the trustees decide is best for the charity, both short and longer term.  You should be prepared to question proposals and not allow one person on the trustee body to dominate the decision making process.  Make sure that the trustee body is well informed before making a decision and avoid conflicts of interest that might leave you open to challenge.
 

Have the Right Policies in Place

A good way to make sure you always act in your charity’s best interest is to have appropriate policies and procedures in place. Policies and procedures are in addition to your governing document and should complement what your charity does. Having clear policies that are relevant to your charity will help your charity’s trustees to make decisions more consistently and to act within their powers and the law.

The Charity Commission for England and Wales expects all charities to have a reserves policy. As a minimum, we recommend that you also put in place a conflicts of interest policy.

Reserves

Charity reserves are funds that can be spent at any time on the charity’s purposes, but which the trustees decide to keep aside.  They exclude funds that have certain restrictions on them and normally exclude tangible fixed assets such as land, buildings and others assets held to be used by the charity.

A reserves policy is one of the most essential policies a charity should have. It tells people why a charity is holding a particular amount of reserves.  Having a reserves policy is an important part of managing a charity’s finances.  There are also rules around what trustees must say in their annual report about their reserves policy. A good reserves policy will show potential donors and funders that the charity’s money is being well managed.

Conflicts of Interest
 
A conflict of interest is a situation in which a person is in a position to derive personal interest from their position of office, in this case as a trustee.
 
Trustees have a legal duty to make decisions that are in the best interests of their charity.  If a conflict of interest exists, the trustees’ ability to fulfil this duty will be compromised.  It is therefore essential that conflicts of interest are identified early and managed appropriately.  Having a conflicts of interest policy and maintaining a register of interests will go a long way towards helping trustees to manage conflicts of interest properly and avoid potentially serious consequences if they do not.
 
 Other Relevant Policies
 

There are hundreds of policies that you could have for your charity and, depending on what your charity does, some you must have by law. For example, you must have a health and safety policy if your charity employs five or more staff.  If you are uncertain what policies you must have by law, you should take legal advice from a qualified solicitor.

As well as a reserves policy, a conflicts of interest policy and those policies you must have by law, you might also want to consider putting in place the following key policies for your charity:

 

Financial   Protecting People
     
Grant making   Child protection
Authorisation of expenditure   Safeguarding vulnerable adults
Fundraising   Data protection
Investment   Volunteering
Anti-bribery   Equal opportunities
Acceptance of hospitality   Storage of electronic data
Acceptance of donations    

 

This list is not exhaustive and there are many other types of policies that may be relevant for your charity.

As a starting point, think carefully about what your charity does and what risks you need to manage.  A bit of careful thought now could save you a lot of problems later.
 
Manage Your Charity’s Resources Responsibly
 
Trustees are responsible for ensuring that their charity’s resources are managed properly so that it can meet its charitable objectives.  Resources might include:
 
  • money & investments
  • land and buildings 
  • other assets such as vehicles, office equipment etc 
  • staff and volunteers 
  • goodwill and reputation

 

Make sure that your charity’s resources are only used to further its purposes.  Make informed decisions about investments and borrowing and take appropriate advice if needed.  Do not over commit your charity and manage the risks to its assets, beneficiaries and reputation.

Managing its finances properly is essential to achieving your charity’s aims and making sure that money is used properly.  It is important to have effective systems in place for managing your charity’s resources such as sound internal financial controls.  This will help to reduce the risk of accidental errors and deliberate fraud or theft.

Having sound financial controls in place will not only reduce the risk of mistakes or wrongdoing, it will also help you to manage your charity’s money more effectively. The Charity Commission recommends that a review should be conducted at least annually of the effectiveness of your charity’s internal financial controls.

If your charity owns land or buildings you should regularly review whether it meets your charity’s needs. Trustees can usually buy, sell or lease land, but legal restrictions apply and sometimes you will need to obtain permission from the Charity Commission.
 
Ensure Your Charity is Accountable
 
Every charity has a legal obligation to keep financial records and produce accounts.  You should also be able to demonstrate that your charity is well run, effective and that your are complying with the law.
 
All charities must produce accounts and make them available to anyone on request.  Registered charities must also provide information annually to the Charity Commission.  This is done through the Charity Commission’s Annual Return.
 
It is your responsibility to demonstrate that you comply with the law and that your charity is well run and effective.  Doing so will help the people who are interested in your charity to have confidence in your charity and what you are doing.  You may find it helpful to review your charity’s governance against best practice guidance and legal requirements.
 
Always Act with Reasonable Care

As someone responsible for managing a charity you have what is called a ‘duty of care’.  This means you must use reasonable care and skill to manage your charity, taking advice where necessary.  You are not expected to know everything or be an expert in charity matters, but you should give enough time and thought to running your charity.  Trustees can delegate tasks to staff or professional agencies provided they maintain overall control of the charity.

 


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