trustee conference am2: what every trustee should know

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WHAT EVERY TRUSTEE SHOULD KNOW: UNDERSTANDING YOUR ROLEDAN FRANCIS & EMMA HERBERTGOVERNANCE CONSULTANTS NCVOLEONA ROCHE SENIOR ASSOCIATE AND JOINT HEAD OF FAITH-BASED ORGANISATIONSBWB

7 NOVEMBER 2016

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• Context of trusteeship and sector • Role of a trustee• Legal duties• Liability and legal forms • Good Governance• Opportunity for any questions

WHAT WE WILL COVER…

Trusteeship in context quiz

Match the statement with the number

?

Trusteeship in context quizStatement NumberNumber of charities 57Total annual income of the UK voluntary sector in £billion 162,965 % of voluntary sector’s income derived from individual donations and purchases

83

% of the total number of charities with an annual income of under £100,000

44

Number of voluntary sector paid workforce 35Number of trustee board positions 27 Average age of a trustee 43.8% of trustees under the age of 24 945,769 % of the UK adult population who volunteered at least once a month during 2013/14

0.5

% of 16 – 25 year olds in the UK who volunteered at least once a month during 2013/14

827,000

Trusteeship in context quiz: AnswersStatement NumberNumber of charities 162, 965Total annual income of the UK voluntary sector in £billion 43.8% of voluntary sector’s income derived from individual donations and purchases

44

% of the total number of charities with an annual income of under £100,000

83

Number of voluntary sector paid workforce 827,000Number of trustee board positions 945,769Average age of a trustee 57% of trustees under the age of 24 0.5% of the UK adult population who volunteered at least once a month during 2013/14

27

% of 16 – 25 year olds in the UK who volunteered at least once a month during 2013/14

35

Micro Under £10,000 Small £10,000 to £100,000 Medium £100,000 to £1 millionLarge £1 million to £10 millionMajor £10 million to £100 millionSuper-major > £100 million

Proportion of number and income of organisations by size 2013/14 (%)

CHARITY INCOME

7

CURRENT CHALLENGES

CHARITY GOVERNANCE IN THE NEWS

9

WHO ARE THE TRUSTEES?

The persons having the general control and management of the administration of a charity.

Section 177 of the Charities Act 2011

• Voting members of the governing body• Ultimate legal responsibility for the charity• A collective group of decision makers • Elected or appointed in accordance with the charity’s governing

document• Operate within a formal set of rules• In a charitable company, company directors and trustees are

the same people• Trustees often delegate day to day tasks to staff and/or

volunteers• Almost always unpaid

WHO ARE TRUSTEES?

WHAT DOES THE TERM CHARITY MEAN?

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• To be a charity an organisation must be set up with purposes which are exclusively charitable

• What constitutes a charitable purpose is defined in the Charities Act 2011

• In order to be a charity your purposes must meet the “public benefit requirement”

• We prove this by requiring charities to report annually to the regulator on how they have deliver their purpose

• This is all about trust and confidence

KEY LEGAL DUTIESCC3 THE ESSENTIAL TRUSTEE

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Charity Commission (2015) CC3: The essential trustee: What you need to know, what you need to

do

Each group will be allocated a legal duty to consider.

For the legal duty think about…

• What trustees can do to ensure they meet this legal duty?

and

• Times you think this legal duty may be challenged and how trustees should deal with this?

CHARITY STRUCTURES AND TRUSTEE LIABILITY

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COMPARISON OF LEGAL FORMS

17

Charitable Trust

Charitable

Unincorporated Association

Charitable company limited by guarantee

(“CLG”)

Charitable incorporated organisation

(“CIO”)

Unincorporated Incorporated

• Governance liabilitiese.g. breach of duty under charity law

• Operational liabilitiese.g. claims from third parties

• Failure to comply with relevant statutory requirements e.g. health & safety, PAYE, trade descriptions, data protection

TRUSTEE PERSONAL LIABILITY

• Incorporation (CIO; company limited by guarantee) but does not offer complete protection

• Plus – • trustee indemnity insurance• good management practices• clear roles and responsibilities• records of decisions taken• provisions in governing document• contingency funds• professional advice• board development• risk management

TRUSTEE LIABILITY – PROTECTION!

CHARITY COMMISSION’S VIEW

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The Charity Commission expects trustees to take their responsibilities seriously... The Commission recognises that most trustees are volunteers who sometimes make honest mistakes. Trustees are not expected to be perfect – they are expected to do their best to comply with their duties. Charity law generally protects trustees who have acted honestly and reasonably.

Charity Commission (2015) CC3: The essential trustee: What you need to know, what you need to do

GOOD GOVERNANCE

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SIX KEY PRINCIPLES OF GOOD GOVERNANCEAn effective board will provide good governance and leadership by:• understanding their role• ensuring delivery of organisational purpose• working effectively both as individuals and as a team• exercising effective control• behaving with integrity• being open and accountable.

Good Governance: A Code for the Voluntary and

Community Sector, 2010

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• NCVO: www.ncvo.org.uk/practical-support/governance• NCVO Consultancy and training:

https://www.ncvo.org.uk/training-and-events• Knowhow Nonprofit: http://knowhownonprofit.org• Good Trustee Guide, 6th ed, NCVO 2015• BWB booklet:

http://www.bwbllp.com/knowledge/2015/05/08/duties-of-charity-trustees

• Charity Commission website: www.charity-commission.gov.uk and the core guidance - The Essential Trustee: What you need to know

• Good Governance: A Code for the Voluntary and Community Sector and supporting material: www.governancecode.org

USEFUL RESOURCES

THANKS DAN.FRANCIS@NCVO.ORG.UKEMMA.HERBERT@NCVO.ORG.UKL.ROCHE@BWBLLP.COM

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