The International Day of Charity, marked each year on 5 September, highlights the importance of global charity work in addressing humanitarian crises, alleviating poverty and responding to a range of social issues.
Whilst the day celebrates the positive impact of charities, their ability to deliver that impact depends heavily on effective governance.
The International Day of Charity therefore serves as a timely reminder of the responsibilities carried by charity trustees, who govern them, and offers trustees an opportunity to consider their governance arrangements.
Trustees hold a unique and important position within every charity.
Whilst the role can be highly rewarding, bringing opportunities to make a difference to a charitable cause or the community, trusteeship also carries significant responsibilities.
Failure to comply with these legal duties can expose the charity to financial, regulatory, and reputational risk and may expose the trustee to personal liability.
Our Charity Solicitors examine the key responsibilities of charity trustees and the governance risks they should be aware of.
The Essential Duties of Charity Trustees
The Charity Commission for England and Wales has provided detailed guidance on the key duties of trustees, including ‘The essential trustee: what you need to know, what you need to do (CC3)’.
In broad terms, trustees should act in the charity’s best interests, manage its resources responsibly, act with reasonable care and skill, and ensure the charity complies with its legal and regulatory obligations.
In short, the Charity Commission expects trustees to:
- Manage the charity’s finances and wider resources responsibly: this includes ensuring that appropriate financial safeguards are in place, budgets are adhered to, and funds are used exclusively to promote the charity’s stated purposes
- Act with reasonable care and skill: consider taking legal, financial, governance, or other professional advice where appropriate
- Ensure that the charity complies with its legal and regulatory obligations, including under statutory reporting regimes such as statutory accounting and filling requirements
Additionally, trustees may wish to review the charity’s governing documents, such as its constitution, articles, or trust deed, to confirm any specific duties they are subject to.
Trustees should regularly review the applicable governing documents to ensure they act in accordance with the charity's stated charitable purpose or objects and comply with relevant procedures.
Acting in the Charity’s Best Interests: Dealing with Conflicts of Interest
A key aspect of a trustee’s duty is to act in the charity's best interests and to exercise independent judgment free from personal, professional or financial conflicts of interest.
Trustees should identify actual, potential and perceived conflicts of interest, declare such conflicts and manage them appropriately in accordance with the procedures set out in the charity’s governing documents.
Conflicts and the steps taken to manage them should be properly recorded, including in meeting minutes where appropriate.
Depending on the nature of the conflict and the charity's governing arrangements, a conflicted trustee may be required to withdraw from discussions and refrain from voting on the matter.
Furthermore, trustees should declare any known conflicts before appointment and on an ongoing basis thereafter.
Having a robust conflict of interest policy is a key aspect of strong governance, helping preserve the charity’s integrity and protecting it from potential regulatory scrutiny or broader reputational harm.
Private Benefit and Connected Parties
As trusteeship is typically a voluntary role, trustees are not usually entitled to payment unless authorised by the charity’s governing documents or by legislation.
Additionally, a trustee’s duty to act in the charity’s best interests includes specific requirements regarding personal benefits received from the charity, including those received by persons or organisations connected with a trustee.
This includes private benefits to individuals or organisations connected to the trustee, such as a spouse, partner, child, or business in which they have an interest.
Equally, trustees should be mindful of other private benefits gained in the course of acting as trustees, including personal benefits received by a trustee and benefits obtained by a connected party.
These benefits should be properly authorised under the procedures set out in the charity’s governance documents, and the trustees should properly consider and record why the benefit or transaction is in the charity’s best interests, subject to any applicable conflict procedures.
Failure to properly evaluate transactions involving private benefits or connected parties can result in regulatory scrutiny and reputational damage.
Speak to Our Charity Solicitors
Our charities and not-for-profit team provides practical legal advice to charities.
If you require advice on trustee duties and governance risks, please contact a member of our team.
0161 941 4000
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James Banks
Trainee Solicitor
James joined as a Trainee Solicitor at Myerson in 2024. Prior to joining the firm, James graduated from Durham University with a First Class Honours LLB. He is currently completing the SQE qualification with BPP University in Manchester.
About James Banks