1. Being a Charity Trustee
Thursday 3 May 2012 1

2. Agenda Welcome and Introduction Lesley Stephenson
The Financial Times Non-Executive Directors’ Club
The Effective Charity Board Philip Kirkpatrick Bates Wells & Braitwaite & OnBoard
Charity Finance Essentials Richard Wilson
Partner, Ernst & Young LLP
A Personal Experience of a Trustee Denis Burn
Experienced Charity Trustee, currently Chairman, Bristol University

3. The Effective Charity Board
Philip Kirkpatrick, Bates Wells & Braitwaite & OnBoard 3

4. The effective charity board
The Voluntary Sector Code of Governance
Trustees’ duties
What an effective trustee asks
What a really good trustee asks
What a really good trustee knows
The really good trustee’s approach
The chair’s role
Board composition

5. Voluntary Sector Code of Governance – principles
A good board will provide good leadership by:
Understanding their role
Ensuring delivery of organisational purpose
Being effective as individuals and a team
Exercising control
Behaving with integrity
Being open and accountable

6. Trustees’ duty – a simplified statement
To govern the charity so as to help it achieve its purposes and, in doing so, to act:
reasonably
prudently; and
selflessly

7. Noting that a charity exists:
Not for beneficiaries
Not for staff
Not for trustees
Not simply to continue existing
But for purposes

8. What are my charity’s purposes?
Not the mission statement
Not the activities it undertakes
Not to be “a company for carrying out an undertaking of great advantage, but nobody to know what it is.”
The purposes are in the objects clause of the constitution

9. Questions an effective trustee asks
What does my charity do?
How does it do that?
Is there constitutional power?
Who has what authority?
Has authority been properly delegated?
Is there adequate funding?
What information do I need?
Am I getting it?

10. Questions a really good trustee asks
Why does my charity do X?
How effective is X?
How expensive is X?
How best can we deploy our resources?
Would it be better to do Y?

11. The really good trustee’s approach
Being on the board is fulfilling and fun
If there are staff, the board’s job is to consider the big picture
Staff should be:
allowed to do their jobs without interference
held to account appropriately
If the reason is not obvious, the reason should be sought
Expert advice should be taken but questioned
The mind is like a parachute
Common sense is the essential personal quality

12. The really good trustee’s approach
“If you do what you’ve always done you’ll get what you’ve always got”
Trustees are allowed to innovate
Trustees are allowed to take risks
The unthinkable is thought but the do-able is done

13. The chair’s role
The chair’s role is vital:
to set the tone and provide leadership
to ensure that all engage and have opportunity
to ensure that discussion remain strategic, relevant and useful
to review individual trustee performance
To protect and manage the CEO

14. Board composition
Selecting for skills and experience is not so hard
Selecting for personal qualities (eg. common sense) is hard
Importance of range and complementarity of skills and experience
It’s hard to make democracy work effectively
Consider introducing a nominations panel
Trustees are never representatives
Large boards tend to be less effective

15. Contact details
Philip Kirkpatrick
Bates Wells & Braithwaite London LLP
Tel:

16. Charity Finance Essentials Richard Wilson, Partner, Ernst & Young LLP16

17. Be aware of Applicable Legislation
Understand the Regulatory Framework
Managing money effectively
Investing the funds
Managing Risk
Financial Controls
Understand the Reserves
Understanding Fundraising Laws
Effective Staff and Volunteer Policies
Insurance
Going Concern
Trustee Expenses
Land

18. Applicable Legislation
All Charities that are Companies – Companies Act 2006
Charities in England & Wales – Charities Act 2011
Charities in Scotland – Charities and Trustee Investment (Scotland) Act 2005
Charities in Northern Ireland – Charities Act (Northern Ireland) 2008 and Charities Act (Northern Ireland) 1964

19. Regulatory Framework England & Wales – The Charity Commission
Scotland – Office of the Scottish Charity Regulator
Northern Ireland – The Charity Commission for Northern Ireland

20. Managing money effectively
Know which funds have restrictions on their use
Grants, legacies, etc.
Prepare annual accounts and trustees annual report in accordance with SORP
Accounting and reporting of Charities – Statement of Recommended Practice 2005
Trustee Report
Statement of Financial Activities
UK GAAP - not IFRS

21. Investing the funds
Must be clear on basis of investment. Is it best financial return, furthering the charity’s aims or doing some of both?
Must comply with the relevant powers for standard investments. May be restrictions or additions in the charity’s governing document.
Exercise such care and skill as is reasonable when using power of investment.
Must consider the suitability of any investment and obtain the appropriate advice.
Must ensure that the investment furthers the charities aims and there is a way to end the investment.

22. Managing Risk
Make a risk management statement in the trustees annual report if the charity is above the audit threshold (income greater than £500,000)

23. Financial Controls
No legislated requirements but charities expected to follow best practice
All trustees have a duty to protect the charity’s assets and resources and to make sure they are only used to further the aims of the charity

24. Understand the Reserves
Comply with the annual reporting requirements and set out the charity’s reserves policy. This requirement is to show the level of reserves the charity holds and why it needs to retain them at that level.

25. Understand Fundraising
Some areas of fundraising are subject to specific regulation
Ensure you understand what regulations beyond charity regulations apply such as taxation, data protection, etc
Ensure there is proper control over funds raised and that they are used for the purposes raised
Ensure general funds are managed distinctly from special funds
Ensure delegated fundraising is appropriately contracted

26. Effective Staff and Volunteer Policies
Be aware of legal obligations and ensure effective staff and volunteer policies have been established

27. Insurance
Ensure where insurance is compulsory it is taken out
Be aware of Trustee powers under the Trustee Act to insure any property owned by the charity against loss or damage

28. Going Concern
Must inform the Charity Commission if the charity winds up or ceases to operate

29. Trustee Expenses
Disclose any payments made to trustees in the charity’s accounts

30. Buying and Selling Land
Know and comply with the powers the charity has to buy land
Comply with statutory duty of care as set out in the Trustee Act when investing and disposing of land
Obtain prior authority when disposing to a connected person

31. Contact details
Richard Wilson Partner, Ernst & Young LLP T:

32. A Personal Experience of a Trustee
Denis Burn, experienced Charity Trustee, currently Chairman, Bristol University 32

33. Q & A Session 33

34. Networking Drinks Reception34