In Scotland, there has been a long tradition of professionals and those with specific expertise being appointed to the boards of charities. The charitable sector relies on the goodwill of those who provide their time and expertise for free. Charity trustees must be aware of the duties and responsibilities which come with the position.
Four general duties:
Act in the interests of the charity
Essentially this means to put the interests of the charity before your own. It is recommended that charities should keep an up to date register of the interests. This should highlight as soon as possible any potential conflicts of interest.
Charity trustees are under a general duty to disclose any conflicts. This may result in them not taking part in the decision making on particular matters.
Where a charity trustee is also on the board of another charity which is applying for the same grant funding or where the charity is entering into a contract with a company in which the charity trustee or their family have a connection.
Ensure that the charity operates in a manner that is consistent with its objects or purposes
A charity’s constitution sets out the objects/purposes of the charity and the powers it has to act. The charity trustees must ensure that the charity’s assets are used only for those charitable purposes.
The charitable objects as set out in the constitution should be reviewed regularly. This will ensure that the trustees are not acting out with their powers as this may result in personal liability for charity trustees.
To act with care and diligence
The expectation of care and diligence is within reasonable expectations of a person who is managing the affairs of another person. As such it is your responsibility to consider:
- The charity’s is solvency
- That the board is fit for purpose
- Act to protect the charity’s assets
- Regularly review the strategy and policies
- Monitor financial performance
- Take professional advice where appropriate
In comparison with company law, the charities legislation in Scotland does not impose a higher standard on professionals such as accountants and lawyers when dealing with their area of expertise. However, as the final point suggests very rarely are all the skills required to run a charity represented on the board.
Ensure that the charity complies with legislation
The principal legislation for charities in Scotland is set out in The Charities and Trustee Investment (Scotland) Act 2005. If your charity is a Scottish Charitable Incorporated Organisation (SCIO) then you would also need to be aware of The Scottish Charitable Incorporated Organisations Regulations 2011.
In addition to the charities legislation itself, other legislation such as health and safety law, employment law, data protection law etc. may be relevant in respect of your charity.
If you are a charity trustee and have any questions regarding your duties or responsibilities, please speak to our experienced corporate team:
Steven Wicks saw@business.co.uk
Alan D Stalker WS ads@businesslaw.co.uk
Angus McGuire alm@businesslaw.co.uk
