Primary navigation:

QFINANCE Quick Links
QFINANCE Topics
QFINANCE Reference
Add the QFINANCE search widget to your website

Home > Corporate Governance Checklists > The Responsibilities of Trustees

Corporate Governance Checklists

The Responsibilities of Trustees


You have recommended this article

Checklist Description

This checklist outlines the responsibilities of trustees.

Back to top

Definition

A trust or charity can be set up either to benefit particular persons or for any charitable reason. “Trustee” is the legal word that bestows on a person or institution legal title to hold property on behalf of a recipient, such as a trust or charity. Trustees are generally selected because of their personal reputation or professional status. They are given independent authority to make decisions according to their best judgment or professional criteria, and are empowered to act on behalf of the beneficiary.

The great majority of trustees serve as volunteers, and receive no payment for their work. Their responsibilities and duties are generally to:

  • accept ultimate responsibility for directing the trust’s affairs, and ensure that it is solvent, well run, and delivers the outcomes and benefits for which it was set up;

  • ensure that the trust complies with law, and prepare reports on what it has achieved, and annual returns and accounts as required by law;

  • ensure that the trust does not breach any of the requirements or rules set out in its governing document and that it remains true to its purpose and goals;

  • comply with the requirements of legislation and other regulations that govern the activities of the trust;

  • act with integrity, and avoid any personal conflicts of interest or misuse of funds or assets;

  • ensure that the charity is and will remain solvent (duty of prudence);

  • use charitable funds and assets reasonably, and only in furtherance of the trust’s objectives;

  • avoid undertaking activities that might place the trust’s funds, assets, or reputation at any undue risk;

  • use reasonable care and skill in the role of trustee, using personal skills and experience as needed to ensure that the trust is efficiently managed (duty of care);

  • obtain independent professional advice on all matters where there may be material risk to the trust, or where the trustees may be in breach of their duties.

As a rule, all the trustees—acting as a team—take all decisions. However, decisions need not be unanimous, and a majority decision is sufficient unless the charity’s governing document states otherwise.

Different jurisdictions regard a trustee’s duties in different ways. Normally, however, the legislation follows the general body of elementary fiduciary law that is found in most common-law jurisdictions.

Back to top

Advantages

  • Trustees are chosen for their independence, personal repute, and professional standing.

  • Most trustees serve as volunteers, receive no payment for their work, and are collaborating for altruistic reasons.

  • Because of their commitment to create positive change in society, trustees should do their utmost to ensure that the charity or trust succeeds in its aims.

Back to top

Disadvantages

  • As trustees are volunteers and receive no recompense, it may sometimes be difficult to find people with the management skills necessary to run what may be a complex organization.

Back to top

Action Checklist

  • Look for an in-depth analysis of particular jurisdictional differences between countries before setting up a trust or charity and consult independent specialists in fiduciary law.

  • When selecting trustees, find out what specialist skills they can bring. Most modern charities need skilled support in areas such as management, advertising, public relations, and fund raising, which are highly specialized.

  • Set up a professional, formal selection procedure when looking for trustees to ensure that you have the right balance of skilled candidates.

  • Seek legal advice from specialists when setting up the charters or governing documents.

Back to top

Dos and Don’ts

Do

  • Spell out in clear terms the goals of the trust, their probable impact, and the effort that may be required.

Don’t

  • Don’t take on the job of a trustee unless you are sure that you have skills to offer and the time required to do the job properly.

Back to top

Further reading

Books:

  • Claricoat, John, and Hilary Phillips. Charity Law A to Z: Key Questions Answered. 2nd ed. Bristol, UK: Jordan Publishing, 1998.
  • Gaudiani, Claire. The Greater Good: How Philanthropy Drives the American Economy and Can Save Capitalism. New York: Times Books/Henry Holt, 2003.
  • Thompson, Kenneth W. (ed). Philanthropy: Private Means, Public Ends. Lanham, MD: University Press of America, 1987.

Report:

  • Charity Commission. “The essential trustee: What you need to know.” February 2008. Online at: tinyurl.com/36d93um

Websites:

Back to top

Share this page

  • Facebook
  • Twitter
  • LinkedIn
  • Bookmark and Share