Good morning everyone,
can everyone hear me at the back okay? A very warm
welcome to everyone to this session looking at the role of the
charity trustee and then we’ve got a few extra tips and tools towards the
end for you. Let’s have a look at where we’re going. Here is the roadmap for
this morning. First of all, we’re going to look at why people become
charity trustees, what actually motivates people to take on the role. Then we’re
going to look at what being a charity trustee actually means, what is it
involve, what does it mean in practice. And then we’re going to do a bit of
reflection on our experiences as a regulator on some of the common issues
that we often see charity trustees grappling with. Then we have a
few tips and tools to help you at the end. I’m going to start off then
by levelling with you all, I’m going to be really honest here – being a charity trustee is
not plain sailing. If I’m really honest, at times it can be really, really
tough. So, the question has to be then – why would you take it on? Why would you become
involved? I think that often the commitment to the charity’s cause is the
real reason why people become involved. For example, where the purpose of the
charity is close to their heart or it relates to their local community.
There’s real clear dedication to the reason that the charity exists from
the charity trustees. Also, what the charity is trying to achieve is
really needed by the trustees. This means that
they’ll be committed and passionate about making a difference, trying to
achieve the very purpose for which the charity exists. So, we’ve got a clear
commitment to the cause, and to what the charity is aiming to do – but it’s also
necessary to be really clear, I think, on what comes with being a charity trustee –
what are the practical implications of actually taking on the role. Legal
duties are the really key thing to bear in mind here and these are set out in
charity law in Scotland. Being a charity trustee carries with it huge
responsibilities as well as immense rewards. What we’re going to do next
is a refresher on what the key charity trustee duties are and, as I
said – it won’t always be easy. There’ll be tough times and you may feel
sometimes as a charity trustee like giving up. But when
you do feel like that, I would encourage anyone in that situation to just
remember the commitment, the enthusiasm, and the passion that they have for the
charities cause and that should see you through. Let’s just take a little bit
of time to be really clear on the basics in terms of who’s considered to
be a charity trustee, the key principle about collective responsibility, and what
the legal duties actually are. So, charity law defines charity trustees as
those persons who have the general control and management of the
administration of the charity. Essentially these individuals are
the members of the group that governs the running of the charity – the board. It
doesn’t really matter what they’re called in your charity. In some cases
they’re referred to a management committee, directors in the
case of a company, but the key here is actually the role that they play and
what they fulfil in the organisation. They are in control of the organisation.
We talked also about the collective responsibility principle. So when we’re
talking about trustees and governance, the really key thing to
remember the principle of collective responsibility whereby all trustees are
responsible for the actions of the charity, and all the decisions taken
within it. This really reinforces, for me, the point that everyone around the
board table has to work together. They need to share information, and they need
to be confident that decisions that they’re making are robust and can be
easily explained if they’re challenged on them.
I mentioned earlier that trustees have legal duties in law so, as you would
expect, these are actions and behaviors that charity trustees have
to demonstrate and carry out because these are legal requirements. There is no
getting away from that, there’s no choice for charity trustees to make about
whether they do or do not comply to these rules. They apply it to every charity
regardless of its shape and size. Now, some of that might be a wee bit hard for
some of you to read but I’m going to go through these in brief
anyway. So what we’ve got here is that duties for charity
tend to say they fall into two categories. We have general duties
and we have more specific duties. The general duties are those more
towards the left-hand side of that slide with more specific ones on the
right-hand side. Don’t worry if you can’t read that all at the moment I’m going to
go through them over the next few slides anyway.
The overarching thing to remember for charity trustees, I would say, is that
they have to act in the interests of the charity at all times. In terms of
what that comes down to in practice, we have the need to make decisions that are
best for the charity not for the trustees as a group, or as individuals, or
for any of their friends and family, or associated businesses. It’s really
focusing very clearly on what the charity actually needs. Next, charity
trustees have to operate in a manner which is consistent with the charity’s
purpose at all times. Stripping that right back to
basics, the charity’s purposes are obviously what the charity has actually
been established to do. All of the activities that the charity
undertakes have to be in advancement of that of that purpose, of furthering that
purpose, be that directly or indirectly. By indirectly I mean that some
activities might be done in order to raise money for the charity to then
spend on its charitable activities. The key thing for charity trustees to
make sure they understand here is make sure they understand what the actual
purpose is. I would really recommend going right back to the governing
document of the charity here to ensure that there hasn’t been any mission creep
which has unknowingly become common and accepted practice within the charity.
If it’s found that the purposes in the governing document may be are no
longer appropriate for that for the organisation or the situation then the
purpose can be changed by potentially seeking consent from OSCR or maybe
using a reorganisation scheme. Now, any of you in the room that are charity
trustees that haven’t looked at your governing document for a very long time,
and you may be thinking it’s gathering dust in a cupboard somewhere, I would
encourage you for your next charity trustee meeting to dig out and make
sure that you’re really confident with what the governing document requires
your charity to be doing and what your powers are – what you can and can’t do –
as well. If I had a pound every time I’ve dealt with a board of charity trustees who
actually have no idea what their governing document is, let alone what it
says, I would be retiring now! So, if you have not dusted it off in a little while, dig it
out that cupboard and have a good look. Ensuring that the charity is
acting in line with its purposes as well, charity trustees have to act honestly
and reasonably in achieving that purpose They need to ensure that all the
assets of the charity are used for that purpose and nothing else. There can’t be
any expenditure that doesn’t directly or indirectly contribute to the furtherance
of the purpose. That’s pretty common sense I would think. Acting with due
care and diligence is the next element of the general duties and sometimes it’s
bit difficult for people to grasp what that
means in practice. Quite often we use the analogy that it’s easiest to
think about this one as being the standard of care that you would apply if
you were dealing with someone else’s money instead of your own. And
that’s, of course, exactly what charity trustees are actually doing because
they’re dealing with the funds of the charity and not their own property.
Ultimately that should engender quite careful considered behavior on the part
of the charity trustees. In terms of what that then looks like in
practice, charity trustees should be protecting the charity, all of the
assets of the charity and that very much includes the reputation and focusing on
the beneficiaries of the charity. They also need to
have good understanding of the financial position of the organisation. They
need to have appropriate information to enable them to make really sound
decisions and to act carefully. In that respect, it’s important for them to
understand the financial position of their organisation. For example, if
they’re trying to make decisions about what money to spend or what money to
invest, they need to understand what position the charity is in financially
before they can make that kind of decision properly. They need to
understand the implications of making certain choices and they can’t simply
devolve responsibility away to just one charity trustee or just
say that’s the treasurer’s job. Everyone on the Board should at least
understand the basics of the charity’s finances so that they can contribute
properly and effectively to discussions and decisions. More widely, it’s
not just finance that trustees need to know and understand – it’s also the risks
that the charity faces more generally so that they can contribute really effectively to
decision-making in the organisation. The third general duty
in law is about conflict of interest but it’s a very specific
conflict of interest that this one refers to. We often used a kind of
shorthand as this being the appointment conflict. What this means is that
charity trustees have a duty to manage appropriately any conflict of interest
that exists between the charity and any person or organisation who appoints
charity trustees. That might be a local authority for instance. But
just a word of warning, don’t fall into the trap of thinking that that’s the
only conflict of interest that trustees have to manage appropriately. Just
because the appointment conflict, as we term it, is kind of pulled out
into a separate duty, any other conflict of interest would also fall under acting in
the interests of the charity. So just think about it as charity trustees have
to manage conflicts of interest appropriately. It’s
just that that one is is pulled out slightly separately.
Conflict of interest is an area where we see an awful lot of charity trustees get into a bit of a mess sometimes. It doesn’t really matter
what shape or size of organisation we’re talking about here, I’ve seen it happen
in organisations that are really tiny and ones that are very large as well – it
can happen wherever. In our guide “Guidance and good practice for charity
trustees”, a copy of which you all have on your seats today and is on our website, there’s some really good practical tips for helping trustees deal with conflicts of interest.
There’s a whole section on it. We took the decision to write a whole
section on it because we know it can be such a problematic area. Essentially,
when you’re managing conflicts of interest there are four key
steps. The first is identify. Make sure as
charity trustees that you’re able to easily pick up where there’s a conflict
or a potential conflict so that you can deal appropriately with the situation.
Second – manage. Have a proper procedure so it’s really clear how the conflict is
actually going to be handled and make sure that everyone that needs to
understand that procedure does. It’s no use having a procedure if no one
reads it, no one knows it exists or people don’t understand it. It needs
to be read and understood by everyone. Next – record. Keep a good record of what
happens. Even when your are having a trustee meeting, for example, note down that declarations of interest have been asked for, whether
any have been declared and if so what were the implications for the ensuing
discussion, and then learn and reflect on the experience and make improvements or
changes whether where necessary. That might be to a policy or to a procedure.
Don’t be complacent don’t think it can just always stay the same, it might need
to change. Let’s move on now and have a look at the specific duties. These will be the ones that were on the right-hand side of the slide that we had
earlier. So there’s five key duties that we’re going to cover here. The first is
about charity details on the Scottish charity register. There are certain
details about each charity that have to appear on the register by law.
These include the name the principal office and the purposes of the charity.
Trustees have to ensure that OSCR is notified of any changes to these
details whether you do occur. It’s our expectation that notifications
comes to us on a quite a timely basis – not necessarily three months after it’s
actually happened. If we don’t have, for example, an up-to-date contact address
for the charity it becomes difficult Particularly in terms of our communications.
So it’s really important to us to have these details up-to-date. Many of you
also know that there’s an option for charities to have a link to
their website on their entry on the Scottish charity register plus also a
more specific link to where they published their trustees annual report
and their accounts on their website. If you do have this, and you don’t have
that link currently on our register, I would really encourage you to obviously
provide that to us because certainly having your annual report and accounts
on your website it engenders much greater transparency both for your own
charity but also for the sector at large okay.
It contributes therefore to public trust and confidence in the sector.
That’s really important to us all but also quite simply it allows other
interested people in your organisation to find out more information about your
charity. People might be considering, for example, if they want to volunteer with your
organisation or they might want to donate to your organisation but they
just want a bit more information about what you actually do, how you are set up and
that can really help in that situation. Reporting to OSCR is the next one. This
one is about situations where charity law requires trustees to seek consent
from OSCR before making certain decisions or taking certain actions.
For example, making changes to the charities purposes, its name or indeed
winding the charity up – all of those things would require prior consent from
us before you take the action. We’ve got really good comprehensive guidance on
our website that explains how this works and any of you in that kind of
situation, or if you’re thinking you might be approaching that kind of situation, I
would really encourage you to refer to that guidance. The key thing to
remember here is that if you want to do something like changing your name, it
doesn’t know how fantastic you think the idea is that you’ve
got for your new name, you need to seek our consent and our permission before
you actually go ahead and make that change. The third specific duty is financial
records and reporting. Every charity in Scotland is required
to keep good accounting records and to prepare a trustees annual report and
accounts that it is externally scrutinised be that either by an auditor
or an independent examiner which is then submitted to us along with the charities
annual return – the annual return is obviously now completed online. Now, I’m
just going to pause a wee moment here and indulge the accountant in me, because
this for me is an area that so many charity trustees seem to be anxious
about and often I see so many Boards say “everything to do with money or the
budgets or the accounts is the treasurer’s job, I don’t engage in that”.
Actually, the stark reality is that every charity trustee needs, as I said
earlier, to have a good level of understanding of the charity’s finances
so that when they’re making decisions they can make them on an informed basis.
It’s simply, and I’m going to be quite clear about this, it simply isn’t good
enough to say you don’t understand how much
money the charity has. Surely you wouldn’t say that about your own finances
so why would you say that as a charity trustee?! Next one we’re going to look at
briefly is fundraising and clearly there’s been a number of changes in the
fundraising arena in recent times. It’s also an area that’s received an awful
lot of publicity right across the UK across in the last few years. The
key points I want you to bear in mind under this heading is that charity
trustees have to take all steps to ensure that the funds that are raised
for their charity are properly accounted for and if they’re collected for a very
specific purpose then they can only be used for that purpose and no other
purpose. Wwe’ve now got a dedicated fundraising section on our website so if
you’re looking for further information on that area then have a look on that.
If you can’t find it it’s on the the drop down menu under the “Managing a charity heading”. If you
hover over that you’ll get a drop down menu and
it’s about sort of two-thirds of the way down there. So, if you’re looking for a
bit more information about fundraising that’s where you’re going to find it. The
last one here is about providing information to the public. Now there’s a
couple of key requirements to remember here. The first one is about being clear
on all of the charity’s materials that you are a charity. That means having
your legal name and your Scottish charity number clearly displayed – that
applies to your website, stationery, emails, all that kind of things. That
is a legal requirement. Secondly there is provision in charity law for any person,
any member of the public, to request from a charity a copy of its governing
document and its latest set of accounts. So if you receive a request for that information you have to comply with it, providing the request is obviously reasonable. You are allowed to charge
the requester for the cost of providing that information, that may be
postage or maybe photocopying something like that. As I mentioned earlier and we’re actively
encouraging all charities to publish their annual report and their accounts on
their website if they’ve got a website. And if you’re doing that then potentially
someone who’s interested and wants that information has easy access to it anyway. So let’s just pause a minute then and ask what does all of this then mean? We’ve
looked at all these legal duties, we looked at general duties, specific things,
what does all that actually mean? As I said earlier, being a charity trustee
can be an immensely rewarding experience. Contributing to a great cause that you
are really enthusiastic and passionate about can give you a lot of satisfaction
as an individual but there will be difficult times – I would say be in no
doubt about that. But with your fellow trustees, you can get through those
difficult time,s you can get through the tricky pieces of work, and you can get
through those tough discussions. Work together for the very purpose that
brought you together in the first place and remember that when times gets tough, remind each other of
that as well and be kind to each other in that process too. I
mentioned earlier that I was going to do a little bit of reflection on some of
the key challenges we often see trustees struggle with and I’m going to take
just take a couple of slides to do that. Conflicts of interest are one I mentioned
earlier. It’s got to be the first one I talk about because it is the
issues that seems to come up time and time again. As I said earlier, that is
regardless of shape or size of the organisation. Top tips here I would say
it would be to have a conflict of interest policy that’s really easy to
understand and make sure that every
charity trustee really understands it properly – as I said earlier, it’s no good
having a policy that is either too complex and too difficult to understand or actually
no one’s read it anyway. Make sure the policy is applied and practice, have
proper procedures to deal with conflicts when they arise and manage them
appropriately. The next point here is about mission
creep again. I alluded to this earlier. Bear in mind that when we talked earlier
about the charities governing document, the charity’s purpose has to be kept
firmly in the minds of charity trustees at all times because they have to act in
line with that purpose and in the interest of the charity – so it all flows
from the purpose. Make sure that you’re not creeping away from what that
purpose is as an organisation. Disagreements among charity trustees are
another really common thing that we see. I have to tell you that, unfortunately, I
have seen far too many Boards of charity trustees completely
fall out with each other, almost at the point where they cannot sit in the
same room as each other – they’ve reached absolute stalemate. I think
that’s quite a sad situation because, ultimately, what they all really want to
do is what’s best for the charity but they probably just have different views
and different ideas about how best to achieve that. Where a Board has ended
up in that type of situation I would always really encourage them to try
and take a step back to where there were before they fell out and examine what
has actually happened to see if they can maybe take a more dispassionate view of
the situation and find a way forward. Sometimes an external facilitator, or
maybe a mediator, can be a really helpful resource in that situation and
it’s potentially going to be a very worthwhile investment if that’s the
situation that trustees are in. Lastly, I would say that it’s really easy
for trustees to sometimes lose sight of the importance of good
governance in their organisation. Governance has got to be one of those
words you’re going to hear time and time again. I think sometimes charity trustees are
understandably focused on actually what the charity is trying to
do in terms of its charitable activities that, sometimes, they forget about the
importance of having really robust governance in terms of strong
decision-making, comprehensive policies and procedures, and really good oversight
and monitoring. All of that working well together helps to protect the
charity’s reputation and ultimately should make the job of being a charity
trustee a wee easier. I know you all like some sort of top tips, so
the next couple of slides are going to be sort of your top tips to
take away with you. In terms of good decision-making, I’ve got
four key tips here. Number one is to have the right information
on which to base a decision – don’t try and make a decision with only half of
the information of what you actually need to know. The second one is bear in mind
what your governing document says about decision making – for example,
how many trustees do you need at a meeting to make a legitimate decision.
Be clear about that. Three is keep a good record of the
decisions that you make – you never know when you might need to go back to check
when you made a decision, or maybe some particular detail of the decision that
you’ve taken. Lastly, I would say be prepared to explain the reasoning behind
a decision if you’re asked. Good governance will actually really equip
you to do this because it ensures you have the
proper information to hand when you’re making the decision in the first place. So rounding up the key points
then that we’ve covered here about the role of the trustee number. One – think
about that passion and enthusiasm. Harness it and use it for your benefit
as a trustee and for the whole boards benefit. Don’t lose it, because you’re
going to need it when times are tough. Secondly remember your legal duties as
charity trustees. Act the interest of the charity with due care and diligence
in line with the purposes and manage the conflicts of interest appropriately.
Thirdly, challenges can be overcome but don’t shy away from them. Don’t
expect them just to go away or to be solved by other people. Trustees
remember, are the ones with the ultimate responsibility for the organisation so
try to work through the tough times and the challenges. Number four, seek help from others
when you need it. Don’t be nervous about getting help from outside of your
organisation because that can be really valuable and it can save you a lot
of time if you’re struggling with something internally. You can use somebody to have a
different perspective or a fresh pair of eyes and this can be massively
massively valuable. Lastly, I would say good governance of your charity is
absolutely critical. Don’t lose sight of it and don’t forget how important
it is – it’s really important, I would say, to keep thinking about how the
organisation is functioning as well as actually what it is doing and what it’s
actually delivering. Think about how it’s actually running. Finally, just a
reminder of some key tools that we have available on our website and
that might actually might actually help you. So the first thing is guidance and
lots of it. In the main our guidance is in bite-sized chunks so that it’s quite
focused and it’s quite to the point and we’re trying hard to use quite simple
language that everyone can understand. You don’t need a degree hopefully to
understand the guidance! I would particularly highlight the
document that you all have on your seats today, “Guidance and good practice for charity trustees”. It’s got a lot more detail for instance about all the legal
duties that I’ve can took you through and it’s got some really good practical best practice tips for getting your governance spot-on. Next would be
our smaller booklet here. “BEING A CHARITY IN SCOTLAND” It provides
a really good quick reference point to understanding the key requirements of
being a charity in Scotland both in terms of the tests that you have to meet
to come onto the register and, indeed, that’s the same test that you have to
meet to stay on the register. The second half of the booklet
covers again the charity trustees duties. My particular favourite bit is right
in the inside back cover. It is sort of the top ten key points to running a charity properly. If
nothing else I would say you could photocopy that and put it on your pin
board in your charity’s office if you have one. There’s some really
valuable stuff there. And finally our registration logo which
every charity is now able to download from their entry on the Scottish charity
register. There’s a little link you can click on. The logo is a real asset I
would say for any charity to be able to actually show others that you are
properly registered and regulated organisation and this ultimately
contributes to that public trust and confidence that in the sector that
we’re also immensely proud of and we all work tirelessly to maintain. Thank you.