Being a trustee – your role and responsibilities
The role of the trustee
Charity trustees are the people who are ultimately responsible for the governance of the charity. They can have a variety of roles including ministers, custodians, governors, members of the management committee or the leadership team.
As a church trustee, you make a real difference to your local church, being responsible for making sure the church is run properly and uses its charitable funds and assets wisely. You ensure that the church doesn’t do anything to put its property, funds, assets or reputation at risk, and takes care when investing or borrowing money. And ultimately, for making sure it delivers on its charitable objectives.
All sounds straightforward, but what if the trustees don’t meet some or all of those duties and responsibilities?
Responsibilities of a trustee
It could be anything from a breach of authority on the trustees’ part; or an omission by an individual trustee; even neglect; or maybe a misleading – perhaps libelous or slanderous – statement issued by the Board of Trustees. It could even be about one of your employees or volunteers because as a trustee you are responsible for what they do – or don’t do. And what if someone believes they’ve suffered a loss of some kind or another - whether financial or otherwise - and decides to sue?
Ask yourself, ‘what do I know about the charity to which I am to serve’? For example what is the financial position, is the charity solvent, are there liabilities I should know about? Have I received a copy of the latest audited or independently examined accounts and a current budget?
Key areas of responsibility:
Complying with charity and church law
Many churches incorrectly believe that, because they are a church or a place of worship, they do not need to be registered with the Charity Commission (in England and Wales), the Office of the Scottish Charity Regulator (OSCR) in Scotland.
If you are an ‘excepted’ charity with an income of less than £100,000 you don’t need to register at the current time.
Not being registered means that churches risk losing out on some or all of the charity tax reliefs that they are used to receiving, (excluding ‘excepted’ charities which qualify for tax reliefs in the same way as registered charities). Your status as a registered charity should be included on your letterheads and financial documents.
As a registered or excepted charity there are certain things that churches are required to do including preparing accounts and reporting on your work – copies of these and annual returns need to be lodged with the Charity Commission for registered charities only. Failure to submit annual documents for registered charities to the Commission is a criminal offence. The Commission says that it also amounts to mismanagement and/or misconduct in the administration of a charity and can often be associated with wider mismanagement and poor governance, including the misapplication or abuse of charitable funds.
As a trustee you have a duty of prudence and must:
Ensure that the charity is and will remain solvent by keeping yourself informed of the church’s activities and financial position.
Use charitable funds and assets reasonably and only in furtherance of the church’s objects.
Avoid undertaking activities that might place the church's endowment, funds, assets or reputation at undue risk.
Careful discernment is required when stepping out ‘in faith’.
Take special care when investing the funds of the church or borrowing funds for the church to use.
As a trustee you have a duty of care and must:
Use reasonable care and skill in your work as trustees, using your personal skills and experience as needed to ensure that the church is well-run and efficient.
Consider getting external professional advice on all matters where there may be material risk to the church, or where the trustees may be in breach of their duties.
Church trustees should make sure that they keep up to date with what the church is doing. As well as making sure you are able to commit enough time to the church’s business it is essential that the board of trustees, leadership team or elders meet frequently enough to make the governance decisions needed.
Trustee indemnity cover
Although not a legal requirement, trustee indemnity insurance is often considered essential by charities when seeking to recruit high calibre trustees.
A claim could arise as a result of improper investment of the church’s’ funds. For example, if a trustee unintentionally invests funds in an organisation that subsequently goes into liquidation and as a result all of the church’s investment was lost.
Trustee indemnity cover can provide cover for liability claims arising from a wrongful act by a trustee, including the cost of defending such claims, which can be significant. It brings peace of mind for the church and its trustees that if a trustee makes an honest mistake trustee insurance is there to protect them.
Trustee Indemnity cover is automatically included in Methodist Insurance Church Shield policies for a limit of £100,000. Higher limits are available upon request for an additional premium.
Practices of good governance
Clear direction about its purpose, missions and values which inform all aspects of its work.
Agreed structures, policies and procedures that help it to effectively achieve its mission and meet its objectives.
Recognising the importance of governance in its stewardship of the church.
Planning and managing budgets and resources effectively to achieve the church’s full potential.
Effective communication and recognising accountability.
Flexibility to adapt to change appropriately.
Acting with integrity and in accordance with the values of the Association and whole mission of the Church.
Further sources of advice and guidance
Methodist Church guidance - There is a dedicated section on the Methodist Church website with a whole range of guidance documents for churches including: the role of a trustee, managing money and an example of a trustee annual report and trustee annual return.
The Charity Commission has a wealth of information to help trustees.