Charity Trustees…it’s your decision
It’s your decision
In the current economic and operational environment, charity trustees are required to make difficult decisions regarding the future activities and scope of their charities. The Charity Commission have recently released guidance on what needs to be considered as part of the decision making process to ensure that trustees are meeting their duties and obligations.
As an overlying principle, decisions need to be made in a way that means that trustees are ready to be accountable for their decisions and can demonstrate that the principles outlined in the guidance have been followed.
Principles for good decision making
Trustees should be able to demonstrate that they have:
– Acted within their powers
– Acted in good faith and only in the interests of the charity
– Adequately informed themselves
– Taken into account all relevant factors
– Disregarded any irrelevant factors
– Managed conflicts of interest
– Made decisions that are within the range of decisions that a reasonable trustee body would make.
Acted within their powers
Trustees must only make decisions that advance or support their charity’s objects for the public benefit. Trustees must also ensure that they are acting in accordance with Charity law and their charities governing document.
Acting in good faith and only in the interests of the charity
Trustees must ensure that decisions are made with genuine, honest intention or motives. If a decision is deemed to be in bad faith it could be challenged by law, the Charity Commission may get involved or trustees may be required to repay any losses occurring as a result.
Adequately inform themselves
Trustees must decide whether external professional advice is required. It is also suggested that trustees can properly inform themselves by doing a risk assessment for their charity. It may also be appropriate for trustees to consult stakeholders when making decisions.
Take into account all relevant factors
Trustees must consider a wide range of factors before making a decision including:
– Risks/benefits of the proposed decision
– Costs and whether the charity has sufficient funds.
– Is it in accordance with the Commission’s public benefit guidance?
– Are there alternative solutions?
– Do trustees have sufficient professional advice?
Disregard irrelevant factors
Trustees must make the best decision they can based on sound information. They should not allow their personal views or opinion to sway their judgement. They should always consider the charity’s objects and what it is trying to achieve.
Managed conflicts of interest
It is useful for the charity to have a policy on conflicts of interest to ensure that trustees are aware of their obligations in disclosing and interests and how these are managed within the charity. This may include removing the trustee involved from the decision making process and ensuring that all discussions and decisions are documented.
Made decisions are within the range of decisions that a reasonable trustee body would make.
Trustees should take time to stand back from their decision and consider if sufficient advice has been taken. They will also need to consider if a reasonable person would consider the decision sensible and whether it is the kind of decision that beneficiaries or supporters would expect them to make.
Further guidance can be found on the Charity Commission website.