The regime governing charities has been progressively tightened up over the years, making the sort of scandals that were once not uncommon much more of a rarity. This means that trustees now have to adopt a more professional attitude to the management of a charity’s affairs than was necessary in the past.
However, the Charities Act 2006 also contains provisions which will assist many charities by providing clarity on matters in which trustees are paid by charities or have commercial links with them
The Charity Commission has published guidance for the trustees of charities. This states that they must:
- have and accept ultimate responsibility for directing the affairs of the charity and ensure that it is, and remains, solvent and well-run and that it delivers the charitable outcomes for which it has been set up;
- ensure that the charity complies with charity law and with the requirements of the Charity Commission as regulator – in particular to ensure that the charity prepares reports on what it has achieved and annual returns and accounts as required by law;
- ensure that the charity does not breach any of the requirements or rules set out in its governing document and that it remains true to the charitable purpose and objects set out therein;
- comply with the requirements of other legislation and other regulators (if any) which govern the activities of the charity;
- act with integrity and avoid any personal conflicts of interest or misuse of charity funds or assets;
- use charitable funds and assets reasonably and only in furtherance of the charity’s objects;
- avoid undertaking activities that might place the charity’s endowment, funds, assets or reputation at undue risk;
- take special care when investing the funds of the charity, or when borrowing funds for the charity to use;
- use reasonable care and skill in their work as trustees, using their individual skills and experience as needed to ensure that the charity is well-run and efficient; and
- consider getting external professional advice on all matters where there may be material risk to the charity, or where the trustees may be in breach of their duties.
In 2013, the Charity Commission published updated guidance for charity trustees called 'It's Your Decision'.
The Charity Commission also has a comprehensive range of downloads for charity trustees and prospective trustees. In particular, guidance on avoiding conflicts of interest has been provided. Conflicts of interest are a common issue, particularly in smaller charities.
From 2014, the Charity Commissionhas progressively accelerated the number of investigations into charities it suspects are not being properly managed. One of the criteria it uses to determine whether an investigation is warranted is the late filing of accounts. In 2015, the closure of 'Kids Company' following financial irregularities was widely reported. It was announced in 2017 that banning orders agains former directors of the charity would be sought.