General legal issues

Common Law duties of charity trustees

Common Law duties of charity trustees

Charity trustees are those with control and management of the organisation (section 177 Charities Act 2011).   This refers to strategic management, not day to day management.
The concept of charity trustee derived from trust law.  A trust is an organisation where individuals hold property and have power to deal with it on behalf of others, or in the case of a charity, for particular charitable, purposes.

In the case of a charitable trust, the trustees will generally be those named as such, but some charitable trusts do have separate trustees who simply hold property and do not have a strategic role, as well as a set of charity trustees who do actually manage the organisation.

In the case of unincorporated associations, the charity trustees will commonly be referred to as the board of management, or executive committee, or something similar that indicates that they are in charge.  Property will usually be held by a smaller group of individuals who are known as trustees, which can be confusing because of their limited role and the fact they are not charity trustees.

For corporate bodies, it is important to understand that they also have charity trustees, who have separate obligations under charity law to those that may apply by virtue of their status in the corporation.  In the case of companies, community benefit societies and CIOs, charity trustees will be the company directors, committee members and trustees, respectively.  For companies established by Royal Charter or statute, the position may be more difficult where there is more than one management body in the governing documents, but you would be looking for those who have ultimate strategic control, and would need to weed out any apparent management groups with any advisory status.

Guidance from the Charity Commission states,  “Trustees have and must accept ultimate responsibility for directing the affairs of a charity and ensuring that it is solvent, well run and delivering the charitable outcome for the benefit of the public for which it has been set up.”
In the case of property transactions, the duty that applies to trustees to “act in a reasonable and prudent manner showing the same level of care and skill that a prudent man of business would show in managing his own affairs” is particularly relevant.  For registered and excepted charities, there is to an extent a reflection of this in the provision of the Charities Act 2011 relating to disposal of property.

Another particular duty that is of relevance is the duty to to act with integrity and avoid conflicts of interest.  Again this is, to an extent, addressed in the Charities Act.

Charity trustees are also required to ensure that the charity complies with relevant regulation and legislation, including the provisions in the Charities Act 2011 mentioned above.

Charity trustees must also be aware of their organisation’s constitution, particularly the objectives of the organisation and any limitations on what they can do.

To ensure that the charity remains true to its charitable purposes, trustees should ensure they act within their powers and in accordance with any special trusts.  [Special trusts and permanent endowment]