Trustees are the people responsible for managing and overseeing the work of a charity. Depending on the terminology used in the charity’s constitution, the trustees may be referred to by any number of other names, such as “governors” “stewards” or “custodians”. If the charity has been incorporated and operates through a company then the trustees will also be the directors of that company.
Who can become a trustee?
Anyone who is over the age of 18 can become a trustee of a charity. However, the operation of charities is regulated by the Charity Commission and charities which are registered with the commission will have to file a list of trustees. The Commission may prevent someone for acting as a trustee if it considers them to be unfit for the role for any of the following reasons:
- The trustee is an undischarged bankrupt;
- The trustee has been convicted of a serious criminal offence, especially if it was an offence of deception or dishonesty;
- The trustee has been disqualified or banned from acting as a company director
It is also possible that the constitution which governs the charity imposes restrictions on who can be a trustee. For example, the constitution may increase the age restriction to 21 or require the trustees to have experience or qualifications in a specific field (e.g. a religious charity which requires trustees to be ordained ministers).
What are the responsibilities of a trustee?
Trustees are responsible for making decision about the running of a charity and are charged with the stewardship of its property and assets. If the day-to-day activities of the 扶貧計劃 charity are controlled by a paid manager or chief executive, then the trustees may have to approve or authorise any action which the manager takes.
At the bare minimum, trustees will have to attend board meetings every few months, but trustees are often appointed because they have special skills which are useful to the charity. For example, a trustee who is an accountant may act as treasurer and a trustee who is a builder may supervise construction projects. However, even specific functions are delegated to individual trustees, it is important to remember that all of the trustees share responsibility for decisions.
Regardless of whether the charity is unincorporated or not, its trustees also owe a “fiduciary duty” to the charity which is the highest standard of care that the law recognises. Simply put, a trustee is expected to be absolutely loyal to the charity, completely open in all his dealings, not to put his own interests before those of the charity and not to allow anything to interfere with his ability to perform his duties to the charity. When dealing with any property or assets which belong to the charity, the law requires a trustee to take the same level of care as a “reasonably prudent man” would take with his own assets.
Can a trustee be liable for the charity’s debts?
This depends on the structure which the charity has adopted. Where a charity operates in the traditional way, as an unincorporated trust then the trustees can be liable for debts or liabilities which the charity incurs, although it is very rare for court claims to be made against charities.
However, if a charity has been incorporated and operates through a limited company, the trustees will usually be members and directors of the company. They are protected from debts and liabilities which the charity incurs in the same way as shareholders and directors of businesses which operate through a company.
If a trustee breaches his fiduciary duty and causes a loss to the charity, then the Charity Commission can order the trustee to reimburse the charity, although action of this type would usually only be taken where there was some wrongdoing on the part of the trustee.