Constitution Part 5 - Guidance for Elected Members and Officers serving on outside organisations and other bodies

Many outside bodies with which Elected Members or Officers will be involved will be charities.  A charity is not a separate form of legal entity rather it is a legal status and may take the form of an unincorporated association, company or Charitable incorporated Organisation.

A charitable organisation is one which is formed for one or more of the following charitable purposes:  

• the relief of poverty and human suffering  
• the advancement of education  
• the advancement of religion  
• another purpose for the benefit of the community.  

It must operate for the public benefit and have exclusively charitable purposes. When required by law it must be registered with the Charity Commission. The Charity Commission oversee the operations of all charities and grant consent to various transactions involving charities where the law requires this.  

The law relating to charities imposes a number of duties and liabilities on those controlling the organisation. They are normally referred to as ‘trustees’ which will include the directors (of a company limited by guarantee) and the management committee of an unincorporated association.  

3.1 Trustees’ Duties

Trustees have the following duties:  

1. A duty to act in accordance with the charities governing instrument and to protect the charity’s assets.
2.  A duty to comply with the Charities Acts and other legislation affecting the charity including having regard to guidance issued by the Charity Commission. 
3. A duty not to make a private profit from their position (unless authorised by law).
4. A duty to act with the standard of care which an ordinary, prudent business person would show. Higher standards are required of professionals, and in relation to investment matters.  
5. A duty to ensure that the information relating to the trust and trustees is registered with the Charity Commissioners and that annual accounts and returns are completed and sent.  
6. Where charitable income exceeds £10,000, a duty to ensure that letters, adverts, cheques etc. bear a statement that the organisation is a registered charity.
7. A duty not to put themselves in a position where their interests, whether personal or as a fiduciary, conflict (or may conflict) with their duties as trustee. 

3.2 Trustees’ Liabilities and Indemnities  

Trustees have the following liabilities:

1. To make good any deficiency where trust property has been used for the trustee’s own purposes, or for purposes not in accordance with the purposes of the trust.
2. Personal liability for losses or claims where the trustee has acted outside the scope of the trust deed.  
3. Personal liability where the trustee has not shown the required standard of care.

An indemnity may be given from the trust fund provided the trustee has acted properly and within his/her powers. Trustees may take out insurance to protect themselves against personal liability but not for criminal acts. If premiums are to be paid out of the charitable funds the trustees will need the consent of the Charity Commissioners unless the trust deed allows it.

Further guidance and advice can be obtained from the Charities Commission. A trustee who seeks advice from the Charity Commissioners in a particular situation and acts on that advice will generally avoid personal liability.