Charity trustees, governance and positive risk taking
Charity trustees may have high profile or controversial decisions to make and it’s a big responsibility to bear.
A trustee sitting on a charity board carries the same responsibility as a director in a commercial organisation. They are subject to ‘joint and several liability’, meaning they can also be held responsible for the actions of their co-trustees.
This pressure can lead to a risk-averse charity board and a reluctance to take positive risks. There should be confidence to make big, bold decisions and help the charity deliver impactful campaigns.
Advice to charity trustees
Strong structure and governance should be enablers of positive change, but it’s important to back those decisions up with logic written evidence. Below are some simple steps charity trustees can take to back up their decisions:
Beware of delegation
Be cautious of delegating management or operational responsibilities. Even where there is a paid management team in place, the ultimate decision-makers are at board level. Trustees should therefore ensure due diligence is exercised.
Be confident when making decisions
Although trustee liability insurance is not a legal requirement, this particular insurance cover is often considered essential by charities when seeking to recruit high-calibre trustees. Trustee liability insurance protects trustees against having to pay personally when legal claims are made against them in the capacity of their role.
Keep detailed meeting notes and a proper audit trail
It may sound simple but detailed meeting notes and thorough audit trails which outline decisions, appointed persons and any delegated authority, are a source of evidence. Should an issue arise these files will evidence why the decision was made and by whom.
Conduct thorough risk assessments
Charities have a duty of care to protect both their volunteers and the public from situations where they could be considered at-risk due to the charity’s activities. Planning not only helps to protect all parties but will provide evidence that the risks were considered and mitigated where possible. If a liability claim were to be brought against the charity, this risk assessment can often be used as evidence to defend the case.
What does charity trustee insurance cover?
Charity trustee insurance protects trustees against personal liability when claims are made against the board for; a breach of trust, a breach of duty, or negligence committed in their capacity as a trustee. The main difference between charity trustee insurance and other types of insurance taken out for the benefit of the charity, is that it can directly protect an individual trustee.
- fines imposed in criminal proceedings or penalties arising from regulatory action
- where a trustee is convicted of fraud, dishonesty
- wilful or reckless misconduct; or for conduct which the trustee knew, or should have known, was not in the interests of the charity.