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3. Charity Trustee Duties

Published: 26/03/2018
Updated: 26/03/2018


The charity trustee duties in the 2005 Act set out a broad framework that all charity trustees must work within. As a charity trustee, you are trusted to look after the charity’s assets and you are responsible for making sure that the charity fulfils its charitable purpose(s). There are general duties that help charities to be run properly and specific duties that are legal requirements all charities must meet. 


General duties:

1. You must act in the interests of the charity 

1.1 You must operate in a manner consistent with the charity’s purpose 

1.2 You must act with care and diligence 

1.3 You must manage any conflict of interest between the charity and any person or organisation who appoints charity trustees.  

As charity trustees you must be clear of the benefits that trading or setting up a trading subsidiary will bring to your charity, and act in the best interests of the charity. As charity trustees you must consider the implications of trading for your charity:

  • Do you have the power to in your governing document to trade or establish a trading trading subsidiary?
  • How will the charity benefit from the trading?
  • What are the risks and how will they be managed?
  • As a charity trustee, you are trusted to look after the charity’s assets and you are responsible for making sure that the charity fulfils its charitable purpose(s)


Tax and trading is a complex area and you should make sure you understand the rules before starting any trading activity. Charity trustees should always take appropriate advice where necessary: See sources of help and advice

The requirements of charity trustee duties apply equally to trading activity carried out by charities. Charity trustees need to consider what’s appropriate for their charity. Key questions to consider are:

3.1       Does it advance the charity’s purposes and provide public benefit?

Generally everything a charity does must advance its charitable purpose(s) and provide public benefit, or be designed to generate income to advance its purpose, including trading. Where trading would not advance your charity’s purposes then you may need to think about whether a trading subsidiary needs to be set up. 

3.2       Does the charity’s governing document allow the activity?

A charity's governing document is the written statement that sets out its purpose, structure and describes how it will operate. To be able to trade your charity’s governing document must not prevent such activity. If it does the charity cannot trade, although you may be able to amend the governing document to be able to do so. See making changes to your charity for more information. 

3.3       Is trading in the interests of the charity?

As charity trustees you must make sure that any activities, including trading, are in the interests of the charity. Taking on trading activity can be risky and you need to weigh up the pros and cons before making any decisions that could significantly impact the running of your charity.

3.4       Are the charity trustees acting with care and diligence? 

As well as acting in the interests of the charity, you as charity trustees must act with care and diligence that is reasonable to expect of someone who is managing the affairs of another person. This means when you are dealing with the charity’s affairs, you should do so as carefully as you would if you were looking after someone else’s affairs, for example a relative or a friend.

Where trading, is concerned, either directly or through a trading subsidiary, acting with care and diligence includes:

  • Exercising reasonable commercial sense and developing a sound business case for any proposed trading activity
  • Assessing potential risks to help with good decision making
  • Seeking and acting upon appropriate professional and technical advice
  • Monitoring and reviewing trading performance closely.

Charity trustees are collectively responsible for the charity, they must all work together to protect the charity including its beneficiaries and assets. A charity’s reputation is one of its assets and where that reputation is in question this can have a negative impact on how the public supports the charity and whether funding organisations will give the charity money. It can also impact on how the charity sector is viewed in general.  

Where the charity is involved in trading activity, either directly or through a trading subsidiary, the way that activity is carried out can impact on the charity’s reputation.