Trustees need confidence and clarity to meet obligations

Training is not always offered. Insurance gives trustees a safety net in case of honest mistakes.

Any charity's success is partly down to its board's effectiveness. Our research¹ suggests that many charity trustees may not be fully aware of the extent of their responsibilities. It finds that others may lack the training to carry out the full breadth of their duties.

The day-to-day role of trustees can depend on the size and sector of the charity, but fundamentally it is their responsibility to make decisions in a wide range of areas. These include fundraising, finances and strategy. Other responsibilities include safeguarding, equality and diversity and the environment.

Of course, every decision must in some way contribute to delivering the charity’s purpose.

The majority (59%) of our respondents - who are all current charity trustees - said they fully understood their responsibilities. But only 8% realised their duties extended as far as they do.

Only 38% of respondents thought they were responsible for fundraising, 34% for delivering the charity’s purpose, and 30% for finances. These are core obligations, but many trustees don’t realise they are part of their duties.

This knowledge gap could have major consequences. Poor decision making can lead to reputational damage. That in turn might impact fundraising. The liability for decisions that lead to someone suffering a loss can all lie with the board of trustees. Defending legal claims can be expensive for hard-pressed charities.

That said, if they act in good faith and record decisions properly, the chances of an honest mistake affecting trustees personally are very low.

For trustees to have the confidence to make important decisions, they need to fully understand their role. However, our research found that only 42% had received training when they became a trustee. Of those, 42% had been mentored or taken training courses and 38% had completed on-the-job training. Two thirds (36%) had taken e-learning courses.

Given that, it’s not surprising that many respondents considered training a priority. When we asked what they thought would improve the value of boards, nearly half (48%) chose more training.

Being a charity trustee is a responsible and rewarding role, akin to being a director of a company. Proper training is in the interest of both trustees and their charities.

The reputation of charities can be hard won and easily lost. Our 2023 Charity Barometer found that leaders in the sector are worried by reputational risk.

That said, a large majority of respondents to our current survey (74%) believe the public perception of trustees is positive. Two fifths (40%) think it is very positive. Good governance is crucial to keeping it that way. Alongside training, trustees should lean on experts to help advise them whenever they feel out of their depth.

“Charities will not be well governed if trustees don't understand what they are there to do,” says Penny Wilson, CEO of Getting on Board, a charity that raises the awareness of trusteeship. “I urge all trustees to read up on their responsibilities. Buy a book, look at the regulator guidance or attend some training. It will help you to serve your organisation and its stakeholders more effectively. It will also give you more confidence in and fulfilment from your role."

There are several ways charities can prepare their trustees for the role. Communicating the extent of a trustee’s responsibilities when they first come on board is one solution.

Training is another, and it needn’t be expensive. Being mentored by a more experienced trustee is often the most effective way of learning the ropes. There’s also a growing body of useful online tools. For example, Getting on Board offers a free Trustee Learning Programme. That includes a free monthly session on trustee responsibilities.

Another important consideration is trustee and management liability insurance. This is a safety net for trustees who make an honest mistake.

Ecclesiastical’s cover can be provided for trustee liability only (covering just trustees - if, for example, a charity is unincorporated). Or we can provide full trustees and management liability cover for charities that need cover for the entity too. Brokers can help advise charities on the right cover for their needs.

“Charities have to comply with many areas of regulation and law. It’s the responsibility of the trustees to make sure they do,” says Laura Carter, Ecclesiastical’s Customer Segment Director. “Trustees can make honest mistakes. Trustee and management liability insurance gives everyone peace of mind. They then know that, if mistakes happen, the trustee and the entity are covered.”

In a volatile world, the trustee role is vital for the smooth running of charities. Trustees who are aware of their responsibilities and equipped to act decisively are a priceless asset.

More about Ecclesiastical’s trustee and management liability insurance

¹ Data Source: Online research was conducted on behalf of Ecclesiastical by OnePoll between 12 to 26 October 2023 with 250 Trustees