Trustees of Charitable Trusts

There are a number of points which are particularly relevant to trustees of a charitable trust:

1. In addition to the basic trustee duties listed on related web pages, charitable trustees have a duty to ensure that the charity is solvent and effective. They must exercise overall control of its financial affairs.
2. The trustees must ensure that the way in which the charity is administered is not open to abuse by others; and that their systems of control are constantly maintained to prevent abuse.
3. The trustees must manage the charity’s affairs prudently and take a long-term view as well as a short –term view.
4. The trustees must not accumulate income unless it is for specific use in the future.
5. If the charity has land or buildings the trustee must either occupy it or use it for the charity’s purposes or let it for the maximum possible return. The trustee must regularly consider whether the property is being used to the best advantage of the charity.
6. A trustee must make sure that any property is fully and properly insured. A trustee must ensure that the charity’s property is vested in the trustees or in some authorised body.
7. If the charity has funds to invest then the trustee has a duty to invest in only investments that are authorised under the charity’s governing document. Charity trustees are given express powers by the Trustee Act, to delegate functions including the investment of trust assets; delegation of the implementation of decisions taken by the trustees; and any function connected with raising funds other than by means of trade.
8. The trustee must monitor the performance of investments. The trustee must avoid speculation and must invest prudently to gain both income and capital growth.
9. The trustee is under a duty to seek professional advice about what investments are most suitable for that particular charity.
10. If your charity needs to employ staff then the trustees are under a duty to provide a written contract of employment, and give each employee a written job description making it clear the extent of his or her responsibility to act on your behalf.
11. If your charity raises funds by appealing to the public then as a trustee you should make sure that the appeal honestly describes what the public’s donations will be used for. A trustee must be open and honest if asked about the costs of that appeal.
12. A trustee must not use fund-raising methods which exert undue pressure on the people to give, and must approve in advance any fund-raising or advertising campaign carried out on your behalf.
13. A trustee must ensure that fund-raisers hand over money raised or collected by them before deducting their fees or expenses.

Charitable Trusts Summary

The above information is a brief overview of some of the legal principles that apply to charitable trustees; for further information please contact Aaron Spencer or any member of the Charity Law team.

More information on Charity Law