“The Charity Commission recognises that most trustees are volunteers who sometimes make honest mistakes. Trustees are not expected to be perfect – they are expected to do their best to comply with their duties. Charity law generally protects trustees who have acted honestly and reasonably.”

As a trustee, the three key areas which may expose a trustee to personal liability are:

• Governance – not complying with charity law (an example: when the trustees or an individual trustee decides to spend the charity money on something that sits outside the charity purpose)
• Operational – spending restricted funds or spending, in general, more than the charity can fund (an example: knowingly overspending and unable to pay claims from a third party)
• Other statutory requirements – not complying with PAYE, data protection or health and safety as examples (these should normally be mitigated by having your policies in place and ensuring they are followed)

The examples above highlight that these key areas would not be applicable if acting in the charity’s best interests, these are examples of how an individual being reckless with the charity’s assets.

What actions should trustees take to minimise risk?

• Provide effective induction for new trustees
• Have clear roles and responsibilities
• Plan regular training for trustees
• Review Indemnity Insurance
• Provide clear policies and procedures
• Refer to your governing document
• Keep good records of decision-making
• Provide board-specific policies (conflict of interest, expenses, code of conduct etc)
• Acting carefully and thinking about risk
• Build healthy financial reserves
• Knowing when to take professional advice
• Effective risk management procedures
• Self-reviews by the board to review performance and seek continuous improvement

Further reading:    CC3 The essential trustee: what you need to know, what you need to do (publishing.service.gov.uk)