Trusteeship without fear: managing your legal exposure as a charity trustee

The Charity Commission distils trustees' responsibilities into six core duties:

1. ensure the charity carries out its purposes for the public benefit;
2. comply with the charity's governing document and the law;
3. act in the charity's best interests, making balanced, informed decisions and avoiding conflicts of interest;
4. manage the charity's resources responsibly;
5. act with reasonable care and skill; and
6. ensure the charity is accountable.

These duties are owed to the charity and its beneficiaries, not to individual donors or third parties.

The same duties apply to trustees of exempt charities, although they may have a principal regulator instead of being regulated directly by the Charity Commission.

In addition, if the charity is a company limited by guarantee, trustees are also directors and owe both director duties and trustee duties, although in practice the two are largely aligned.

Whether you serve for a fee or pro bono makes no difference to the legal analysis: the duties are the same.

Trustees of incorporated charities (charitable companies and charitable incorporated organisations) generally have limited personal liability because the charity is a separate legal entity, except in cases such as wrongful or fraudulent trading, or a breach of duty causing loss to the charity.

Trustees of unincorporated charities (trusts and associations) can be personally liable for the charity's contractual obligations and third-party claims if its assets fall short.

Across all structures, the real exposure comes from misapplying funds, acting outside the charity's objects, or letting the charity incur liabilities it cannot meet, not from honest decisions that simply turn out badly.

In many cases, the courts and the Charity Commission have the power to relieve a trustee from liability for breach of duty if the trustee acted honestly and reasonably and ought fairly to be excused.

Trustee bodies act collectively. A majority decision binds all trustees, and a dissenting trustee remains associated with it unless they take active steps. The escalation options are to:

1. ensure your dissent is accurately recorded in the minutes;
2. circulate a written note to the trustee body setting out your concerns;
3. insist that independent legal advice is commissioned;
4. escalate to the chair or, if the chair is the problem, to the full trustee body;
5. resign, with a written letter recording your reasons; or
6. report a serious incident to the Charity Commission (or principal regulator).

Resignation and external reporting are serious steps requiring careful consideration and, ideally, legal advice before action.

1. Before accepting a trustee role, do your due diligence: read the governing document, review the last three years' accounts, ask about litigation or regulatory issues, check the trustee indemnity insurance (an important practical protection), gauge the realistic time commitment and the board's culture. Most liability cases arise not from technical gaps but from ignored warning signs and cultures that discourage challenge.
2. Attend meetings and engage actively; absence does not protect you.
3. Disclose conflicts promptly and fully.
4. Ensure minutes accurately record decisions and, where relevant, your dissent.
5. Monitor the charity's financial health and take advice at the first sign of difficulty.
6. Do not drift into operations. The trustee body sets strategy, approves significant decisions, holds management to account, and provides independent challenge and oversight; it does not run the organisation day-to-day.

The legal duties applicable to charity trustees are real and should be taken seriously. But they are also manageable. The law does not expect you to be perfect, to be involved in day-to-day management, or to prevent every organisational failure. It expects you to engage genuinely, to bring your expertise and independent judgment to bear, to ask the right questions, and to act honestly and reasonably. Those who do those things – and who have the right protective framework in place – are very rarely exposed to personal liability.

• The essential trustee: what you need to know, what you need to do (CC3)
• Charities and insurance (CC49)
• How to report a serious incident in your charity
• Improving your charity’s finances (CC12)