Trustees’ Legal Duties: The Governing Document

How exciting is it when a new project is developed within a charity?

Perhaps, it is a huge development project and epic grant funding is available or the charity can apply for a loan at a fantastic interest rate. Maybe you’ve managed to recruit a trustee or consultant with a particular skill set to oversee a project. Or, the charity has the opportunity to merge with another charity with great resources.

The trustees and volunteers are full of enthusiasm, funders are available or lenders are accessible. Everyone is on board but unexpectedly, it grinds to a halt and the opportunity is missed. Why? An outdated governing document governs your charity.

You’ve realised that you lack a power you need to undertake that project or the charity’s objects don’t align with the plans. The disappointment sets in and it’s back to the drawing board.

Stay ahead with these helpful tips:

• Understand when Charity Commission consent is needed (for regulated clauses and third-party rights changes);
• Make administrative changes – Charity Commission consent is not needed provided those changes do not impact on any regulated clauses or third party rights;
• Review the objects clause;
• Do you have the power to borrow, merge, incorporate, accept or disclaim gifts?;
• It is a members’ decision rather than a decision of the trustees to amend the governing document;
• Adopt an appropriate Scheme of Delegation for committees; and
• Make sure conflicts of interest are managed.

What are some best practices to ensure the governing document is up to date?

• Periodic reviews – our recommendation is that trustees should review the governing document in depth every three years (although this can be longer or shorter depending on the charity), but certainty if the trustees are thinking of embarking on a new project – forward planning is key!
• Regularly review the Objects Clause – is your charity still achieving its stated charitable objects or has the charity evolved overtime?

Announcement

We are very excited to announce Trustees’ Week also marks the launch of HEY Charity, a new podcast dedicated to spotlighting local charity leaders and providing legal insights for the not-for-profit sector.

In partnership with the HEY Smile Foundation, this podcast will delve into the Voluntary and Community sector, featuring interviews with visionary charity leaders who are making a significant impact in their communities. 

The first episode features an interview with Smile’s Chair, Trish Dalby, discussing the vital role of trustees.

"HEY Charity" will be available on all major podcast platforms, including Spotify, Sound Cloud, Mix Cloud, YouTube, and Apple Podcasts.