Charity Trustee Duties

Published: 04/04/2016
Updated: 04/04/2016

Summary

All charity trustees have legal duties and responsibilities under the 2005 Act. A duty is something that you must do, and all the duties must be met. These duties are separated out into general duties, that set out a broad framework that all charity trustees must work within, and specific duties detailed in the 2005 Act.

The general and specific duties apply equally to all charity trustees and to all charities registered in Scotland. All of the charity’s trustees should work together to make sure that these duties are met.

We, the Scottish Charity Regulator, work with charity trustees to make sure these duties are understood and complied with. We also have powers to take action where we have concerns about particular charities and their trustees. See our Inquiry Policy for more details.  

In this section we explain what the duties are, what the law says you must do and ways that you can meet the duties.

Charity trustee duties  - Being a charity in Scotland
 

What are a charity trustee’s duties?

As a charity trustee, you are trusted to look after the charity’s assets and responsible for making sure that the charity fulfils its charitable purpose(s).

The charity trustee duties under the 2005 Act set out a broad framework that all charity trustees must work within.

1. You must act in the interests of the charity Legal duty.png

  • You must do what is best for the charity and its beneficiaries, not what is best for you, your friends or family or your business interests.
  • You must put the needs of the charity before the needs of any other organisation that you are involved with, either in a personal or professional capacity.

Where you are faced with a decision where one option would be in your interest and the other in the interest of the charity you must choose the option that is in the charity’s interest. To do this properly, you must declare what your interests are, know when it would be better that you did not take part in certain decisions and take appropriate action.

Good practice Good Practice.png

  • The charity has an up to date list (register of interests) detailing where charity trustees work and any other organisations they are involved with.
  • The charity has a conflict of interest policy that says what charity trustees should do if there is a conflict of interest and what happens if a charity trustee does something wrong. See the conflict of interest section for more details.
  • There is a policy that makes it clear when a charity trustee, their family or the organisation they work for can be paid, for services provided to the charity. See the remuneration (payment) section for more details.
  • The charity has the power in its governing document to remove charity trustees if they are in serious or persistent breach of the charity trustee duties, or a breach of the requirements of that governing document.

If you are at all unsure, you should declare a potential conflict and the other charity trustees can decide whether it poses a conflict.

1.1 You must seek in good faith to ensure the charity operates in a manner consistent with its purposes Legal duty.png

Your charity’s purposes are set out in your governing document (often called a constitution, trust deed or articles of association).

  • A charity’s purposes are what your charity has been set up to achieve and are the reason your charity exists.
  • You must always act honestly and reasonably (“in good faith”) when acting for the charity and make sure that the activities advance its charitable purposes.
  • You must make sure that the charity's assets are used to advance its charitable purposes. This can be done directly by using an asset to undertake activities or indirectly by investing assets to generate funds for the charity.
  • You should understand what the governing document says and means.
  • You must make sure that the other charity trustees and people working at the charity follow the rules in the governing document.
  • When the charity makes plans, the charity trustees must make sure that any decisions or actions fit with the purposes and powers set out in the governing document.

Good practice Good Practice.png

  • Every charity trustee has the most recent copy of the charity’s governing document.
  • Every charity trustee gets an induction into the charity and their role when they start.

See the governing document and meetings section for more details.

1.2 You must act with care and diligence Legal duty.png

The role of a charity trustee will vary from charity to charity. Some charities have staff who are responsible for daily operations, with the charity trustees providing strategic oversight and governance. Other charities are run solely by charity trustees on a voluntary basis. Whatever your charity trustee role involves – hands on or strategic oversight – the decisions you make about the charity should show that you are acting with care and diligence that is reasonable to expect of a person who is managing the affairs of another person.

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.

For example:
You might decide to invest some of your own money on a high risk investment with potentially large returns. You would not be able to do that with the charity’s money.

  • As charity trustees, you must all work together to advance the charitable purposes, including making sure the charity is run properly, responsibly and lawfully.
  • You have to protect your charity including its beneficiaries, assets and reputation. This means understanding and assessing potential risks to make sure decisions are as robust as possible.
  • You should have a clear, up-to-date picture of how the charity is doing financially, and the charity should have procedures in place to reduce any risks. All the charity trustees should know what assets the charity has and understand any restrictions on how money can be spent. The charity must keep clear financial records and share them with all the charity trustees. See the charity finances section for more details.
  • You can use the charity’s money to get professional advice for the charity if needed.

For example:
If the charity was thinking about undertaking trading activities, it would be appropriate to seek professional advice around setting up a subsidiary company to carry out that trading.

Or

If the charity employs staff, some professional advice on HR matters might be needed.

As charity trustees: Legal duty.png

  • You must make sure that the charity has enough money to pay staff and other costs.
  • You must make sure that any staff are treated properly and fairly.
  • You must make sure that the charity’s name and any logo are not used without the charity’s permission.
  • You are responsible for making sure your charity complies with any relevant laws. For example, health and safety, employment, data protection and equality laws.

Good practice Good Practice.png

As charity trustees, you should:

  • Review and update the charity’s plans regularly.
  • Agree financial budgets and monitor financial performance.
  • Review the performance of the charity and, where necessary, agree steps to improve performance.
  • Regularly compare what the charity proposes to do with the governing document to see if anything needs to be changed or updated. See our Making Changes to Your Charity guidance if the governing document needs to be amended.
  • Make sure there are rules in place which set out what happens if the charity trustees cannot agree with each other. For example, set out in a code of conduct.
  • Provide charity trustee induction packs and review the training needs of the charity trustees every year.
  • Agree expectations of charity trustees’ attendance at meetings and what to do if these are not met.
  • Keep up to date with changes in the law that might affect your charity, and make changes when necessary.
  • If your charity employs staff make sure there are rules in place to deal with any grievances raised by the charity’s staff and/or volunteers. For example, an internal complaints procedure.
  • Treat volunteers properly and fairly.
  • Report any notifiable events to OSCR, and/or other relevant regulators.

You do not need to be a legal expert yourself but you should know the basics and the laws that apply to your charity’s activities and where to get help if you need it. See the Sources of help, advice and best practice for details of organisations that can help.

 

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

As a charity trustee, you are required to act in the interests of the charity. 

A conflict of interest which arises between a charity trustee and a person or organisation that appointed them is called an 'appointment conflict'. Where such a conflict arises, the charity trustee must put the interests of the charity first. However, where another duty prevents the charity trustee from putting the interests of the charity first they must:

  • Disclose the conflict to the charity and
  • not participate in any discussion or decision on the matter.

For example:
A charity trustee appointed to the charity by a Local Authority would need to put the interests of the charity first, above those of the Local Authority.

Conflicts of interest can and do happen in all shapes and sizes of charity, so we have a separate section of the guidance for how to manage them. See the conflict of interest section for more details.

Charitable companies also need to be aware of what Company law says about conflicts of interest.

 

2. You must comply with the 2005 Act Legal duty.png

  • You must understand the legal requirements of being a charity.
  • You must comply with the specific duties of the 2005 Act.

See the specific duties section below for more information.

Specific duties for all charity trustees

There are specific duties in the 2005 Act that all charity trustees must meet. You might delegate the practical details of these duties to your charity’s staff, volunteers or professional advisers (if you have them), but you, as charity trustees, are responsible for making sure the specific duties are met.

Specific Duties

 

2.1 – Charity details on the Scottish Charity Register Legal duty.png

Your charity must give us the information we need to keep the Scottish Charity Register accurate and up to date.

This means making sure that we hold the latest information about your charity:

  • The name of the charity.
  • The principal office or the name and address of one of the charity trustees.
  • The charity's purposes.

Your charity must tell us as soon as possible about any changes to the principal contact for the charity.

2.2 – Reporting to OSCR: Making changes to your charity Legal duty.png

If you want to make any changes to your charity, first check what the rules set out in your governing document say. If you do not follow these rules then any decisions you make could be invalid and we may refuse our consent to make the changes if it is required.

Under the 2005 Act you must seek our consent before making any of the changes listed below. You need to ask for our consent at least 6 weeks (42 days) before you plan to make the proposed change.

Changes that need our consent are:

If we consent to the change you must notify us (tell us in writing) once you have made the change. Where a change to the governing document has been made you should send us the updated version.

If you have the power to make other changes to your governing document(that do not need our consent) you must tell us what the changes are and send an updated version of your governing document within 3 months of the changes being made.

See the flowchart below to decide if you can make changes and if so how. See our Making Changes to Your Charity page for more details. 


 

Consents Flowchart

2.3 – Financial records and reporting Legal duty.png

Every year, every charity must:

  • Keep proper accounting records.
  • Prepare a statement of account, including a report on its activities, at the end of each financial year.
  • Have the statement of account independently examined or audited.
  • Send a copy of the accounts, along with the annual return, to us, the Scottish Charity Regulator.

You must keep a copy of the accounting records for at least six years. Other laws or funding arrangements might require you to keep records for longer.

See our charity finance section and Charity Accounting page for more details.

2.4 – Fundraising

As charity trustees you are responsible for taking control of how your charity raises funds.

You must make sure that anyone who professionally raises funds for the charity has an agreement that says how much they will get paid to do it.

See our Fundraising page for more details.

We are currently revising our guidance on fundraising following the changes to the self-regulation system of across the UK.

Our new guidance will be available in the winter of 2017/18. 

2.5 – Providing information to the public Legal duty.png

There is information that you must to give to the public:

  1. You must state your charity’s name and Scottish charity number (SC0[zero]xxxxx) on your charity’s website home page and all external documents, like letters, emails, adverts, posters, invoices and other publications.
    See the publicising that you are a charity section for more details.

  2. You must give a copy of your governing document and/or the latest examined or audited accounts to anyone that asks for them. The reason a person asks for a copy of these documents does not matter; provided it is a reasonable request, you must give them a copy.

Good practice is to publish your governing document and accounts on the charity’s website, if you have one.

What is an unreasonable request?

What is reasonable or unreasonable will depend on the circumstances of each case. It is important to understand that it is the request that must be unreasonable not the reasons for the request or the identity of the requester.

The examples below are when a request might be unreasonable:

  • A request for copies of accounts and/or governing document that are already publicly available, in which case you should tell the person where to get the information, for example on the charity’s website.
  • A request for documents that the person already has.
  • A request for the documents within an unreasonable timescale, for example within 24 hours, or in an unreasonable format.

If you decide a request is unreasonable you should be able to justify your decision, bearing in mind that a concern could be raised with us about it. Where appropriate you should work with the requester to fulfil their request.

Can you charge a fee for the request?

Yes, you can, but only for any administrative costs in producing and sending a copy of the document, for example, the cost of photocopying and postage. You cannot charge for the costs associated with preparing the accounts or staff time taken to copy and post the documents.

Many charities publish their governing document and annual accounts on their own websites. You can put a link to your accounts on your entry in the Scottish Charity Register by emailing us the link and your charity’s details.

If you fail to comply with these duties then this is misconduct and we do have powers to take action against charity trustees, where appropriate. Our response will be proportionate depending on the situation.

Where a charity trustee has acted reasonably and honestly it is unlikely to be treated as misconduct.

Find out more about what we can and cannot do and what to expect if we have a concern about your charity.

For case studies and advice please see our Good Governance pages

These organisations can help with some or all of the duties.

Here we set out the specific sections of charity law in Scotland relevant to each part of the guidance.  

Specific duties:

< IntroductionGoverning Documents and Meetings >