Ensure that your trustee decisions are legal

How well do you know the legal parameters around your charity’s decision making? Here is a refresher on what you need to consider when making decisions for your charity.

Charity trustees have a fiduciary duty to act in the best interests of the charity and its beneficiaries. This duty encompasses making decisions that further the charity's objectives while ensuring compliance with relevant laws and regulations. Understanding your legal responsibilities is essential for fulfilling your role effectively. If you are new to charity governance, our free Trustee Training Modules will help you understand what the role entails.

Charities in England can have different structures, including charitable incorporated organisations (CIOs), charitable companies, trusts, and unincorporated associations. The governing document of the charity outlines its structure and rules for decision-making. Its name may vary depending on your charity’s legal structure – for example, you may know it as the charity’s trust deed, constitution or memorandum and articles of association. 
It's essential for charity trustees to be familiar with their charity's governing document and to ensure that decisions are made in accordance with its provisions and any relevant legal requirements

Decisions within charities are typically made by the board of trustees. The governing document should specify rules for charity meetings: how and when they should be organised, if online or phone meetings are valid, and the minimum number of trustees required at a meeting to make decisions (i.e. the quorum).
Furthermore, the decision-making process may vary depending on the charity's structure and governing document. For example, charities with members may be required to involve members in certain decision-making processes, such as approving changes to the charity's constitution. Finally, it’s crucial that any conflicts of interests are managed effectively – read our 6 questions to help you manage conflicts of interest.

There is a distinction between members and trustees, each with specific roles and responsibilities. Members may have voting rights and participate in key decisions such as electing trustees, approving changes to the charity's constitution, or closing the charity. Trustees, on the other hand, are responsible for the overall management and strategic direction of the charity. The charity’s governing document will clarify if your organisation has voting members and what their role is. 
In some cases, the trustees and the members may be the same individuals. However, it's essential to ensure that proper procedures are followed. Additionally, it's crucial to maintain transparency and accountability in decision-making processes, even when the same individuals serve as both trustees and members.

• Annual General Meetings (AGMs): AGMs are a common feature of charities with members. They provide an opportunity for members to receive updates on the charity's activities, elect trustees, and approve important decisions, such as changes to the charity's constitution.
• Board Meetings: Board meetings are where trustees come together to discuss and make decisions on matters affecting the charity. It's essential to follow proper procedures during board meetings, such as providing notice of the meeting and keeping accurate minutes.
• Special Resolutions: Certain decisions, such as amending the charity's constitution or winding up the charity, may require a special resolution. A special resolution typically requires a higher threshold for approval than ordinary resolutions and must be documented accordingly.

Keeping accurate records of decisions is essential for demonstrating compliance with legal and regulatory requirements. Minutes should be taken at all meetings, documenting key discussions, decisions made, and the reasons behind them. Minutes serve as a vital record of the charity's decision-making process and may be requested by regulators or stakeholders. Read our article on the importance of board minutes to find out more.

Charity trustees may delegate certain decision-making responsibilities to executive staff and committees to efficiently manage the charity's operations. When delegating decision-making, trustees should establish clear guidelines and procedures to ensure accountability and transparency. It’s important to document delegated authorities to provide clarity to all parties. This is often outlined in a Scheme of Delegations, and templates (such as this free template from Inspiring Scotland) can serve as a useful starting point if you are documenting your delegated authorities for the first time.
Executive staff may be delegated authority to make day-to-day operational decisions, while committees may be tasked with specific areas of decision-making. However, trustees retain ultimate accountability for decisions made on behalf of the charity and should regularly review the delegated authorities to ensure they have sufficient oversight.

Navigating the legal aspects of decision-making as a charity trustee can be complex, but it's essential for fulfilling your responsibilities effectively. By understanding the structure of your charity, following proper decision-making processes, and documenting decisions accurately, you can ensure that your charity operates within the bounds of the law while furthering its charitable objectives. 

Please also refer to the Charity Commission’s 5-minute guide on Charity meetings: making decisions and voting.