What is a senior management function?

Charity law provides two ways that a function carried out by an individual holding an office or employment is considered to be a senior management function:

1. The function relates to the management of the charity for which the person is only directly accountable to the charity trustees 
2. The function involves control over the charity’s money and the person is only responsible for that function either:
   1. directly to the charity trustees, or
   2. to a person carrying out a senior management function that does not involve control over money. 

Management of the charity in this context means having responsibility for the day-to-day control and operation of the charity including decisions on key operational matters.

Control over money means having responsibility for the charity’s financial performance and spending, financial policies and controls.

It is important to understand that a job/role title that a person has is not the deciding factor here. It is about the function that a role or job involves. The function may also be undertaken by a volunteer.

Many charities will use the terms ‘senior manager’, ‘senior management team’ and ‘senior leadership team’. The individuals that those terms apply to in an individual charity cannot be assumed to be carrying out a senior management function for the purposes of the rules about automatic disqualification.

As the governance structures vary between charities, the charity trustees should understand who in their charity the criteria will apply to. It may be helpful to consider the governance structure of the charity from the top downwards to identify the people who the automatic disqualification rules will apply to. If no one apart from the charity trustees is involved in the management of the charity, it is unlikely that the criteria will apply to anyone else in the charity apart from the charity trustees. It may also be helpful to refer to job or role descriptions where available and to any scheme of delegation that exists within the charity to help identify where senior management functions are being carried out in the charity. 

1. Where the function relates to the management of the charity and the person is only responsible to the charity trustees

Where a charity has a chief executive, the person occupying this role will generally report directly to the charity trustees. As their role relates to the senior management of the charity, the automatic disqualification rules will apply to them.

A charity may have a member of staff who has a different job title but the function they are carrying out in the charity relates to the senior management of the charity and they only report directly to the charity trustees. The rules would also apply to them.

These questions may help to determine if the automatic disqualification rules apply:

• Who is involved in the management of the charity apart from the charity trustees?
• Are they accountable to the charity trustees directly and no one else? If they are an employee, who is their line manager?  Who do they report to? Do they make decisions about how the charity is being run on a day to day basis without having to have these decisions approved in advance by anyone else who is not a charity trustee?
• If so, the rules will apply to them. 

It might also be helpful to consider situations that may commonly arise in a charity: 

• A person is employed as a manager of a facility run by a charity and reports to the Chief Executive in carrying out that role. They have no responsibility in relation to controlling charity finances. Even though they are referred to as a manager, they are reporting to the Chief Executive who in turn is accountable only to the charity trustees. The manager is not undertaking a senior management function in terms of the rules. The Chief Executive is the person that is carrying out the senior management function.
• A person undertaking a senior management function goes on an extended period of leave. The charity trustees will need to consider who will cover that role in the interim and ensure the person is not disqualified as they will be carrying out a senior management function for the period of time they are undertaking the role.
• Two people job-share the role of Chief Executive in a charity. Both individuals are carrying out a senior management function and are directly accountable to the charity trustees. As a result, the disqualification criteria apply to both individuals.
• A charity’s employee or volunteer attends a meeting of the charity trustees to present a paper they have written for the charity trustees to discuss and make a decision on. Interacting with charity trustees in this way does not mean the person is undertaking a senior management function.

2. Where the function involves control over money and the person is responsible to the charity trustees or another person undertaking a senior management function that does not relate to control over money

It is helpful to consider who the most senior person in the charity is that has control over the charity’s money.  Where a charity has a Finance Director or a Chief Financial Officer, they will often report directly to the charity’s Chief Executive or directly to the charity trustees and where this is the case, the automatic disqualification rules would apply to them.

Another example is where a person is employed as a manager of a facility run by a charity and reports to the Chief Executive in carrying out that role. The person also has responsibility in relation to controlling the charity’s finances. In this situation, the Chief Executive and manager are both undertaking senior management functions.

The function described here does not cover everyone in the charity that has some involvement with the charity’s money. The function is one that includes day to day responsibility for the charity’s financial performance and strategy, policies, controls and compliance with accounting and reporting requirements. It does not include a person who is tasked with solely carrying out administrative tasks of taking payments on behalf of a charity and is responsible for depositing those payments with the bank. A person in that situation would be unlikely to report directly to the charity trustees or to another person undertaking a senior management function.

A questionnaire and flow chart to help individuals and charities understand whether the disqualification criteria apply to them is in Annex 2.