If you spoke to me 5 years ago about where I see my career progressing, being a Trustee would not have been on my radar. What was on my radar was (and still is) quality and governance being at the top of the agenda for any business I work with.
When the opportunity came up last year to join the Chartered Quality Institute Board of Trustees, I was excited and nervous at the same time. Everything I know or familiar with all of a sudden appeared to be so little compared to what is expected from a Trustee. So the journey of exploring, understanding and educating myself began.
I attended a webinar titled ‘What Every Trustee Should Know’. The webinar was 3 hours long and covered all the key areas that a trustee should be familiar with. At the end of the webinar, I felt like I know where to start. The sense of being overwhelmed did not go away, but this time it was being married with excitement rather than anxiety. In this article, I will share my top 3 takeaways from what it means to be a trustee alongside a link to the very useful webcast.
So for everyone who is interested in finding out what being a Trustee means, let me start with what a Trustee is NOT, and that is a rule of thumb.
A Trustee is not an executive manager. By executive, I mean a Trustee is not here to get operationally involved in how things should take place at a charity. In other words, the Trustee should not dictate the ‘How’.
I recognise that the rule of thumb above is more likely to be applicable for larger charities. Stick with me for now and let’s see if this still holds true. So what does it actually mean ‘a trustee is not an executive’? For years and years, up until recent history, Trustees and Non Executive Directors are seen to be positions taken by individuals who are ready to retire and would like to dip into the world of work without the day to day stress. In recent history though (only few years back), that perception started to shift a lot. This shift is not dissing those who are ready to retire at all. It is in fact highlighting the efforts they put in place for such duties, while opening up the door for a more diverse and inclusive way of thinking. Women, LGBT+, BAME representation are bringing that diversity and inclusion to Boards. What is more exciting is that now adays, diversity is also generational. Young Professionals have a say in how things should evolve, not just those with decades of experience. It is no longer only millennials working with millennials. Cross generational pollination is accentuated and new takes on key values are being presented. That is why there is a need to up-skill many professionals into the role of Trustees and NED roles.
The webinar I attended covered:
- Trustees duties
- Public benefit
- Trading and fundraising
- Decision making
- Cash and investments
- Accounting and financial reporting
In this blog, I will cover my top 3 takeaways in the areas of duties, public benefit and cash and investments.
Takeaway 1: A Trustee must act in the interest of the charity’s purpose
A charity’s purpose can be causes that contribute to health, education, saving lives, arts, etc. It can be set up by a Royal Charter, by a will, or by an unincorporated association to name a few. Therefore, a Trustee must ensure that a charity fulfils its purpose. This is at the heart of what each trustee must know: the purpose of their charity. So why did this statement stick with me? The presenter was highlighting this as an important area to understand and differentiate the purpose of the charity from its actual existence (or operational model). Fulfilling the charitable purpose can sometimes mean that it is for the best interest to close a charity down. And this is a tricky subject as Trustees may think that they must act in the interest of keeping the charity running. So a key question should always be reviewed: Is the charity fulfilling its purpose?
Takeaway 2: A Trustee must be aware of the Charity Commission’s Guidance while making decisions
There are three statutory requirements for running a charity, as highlighted during this webinar. These are the public benefit requirement, running a charity, and reporting (PB1, PB2, & PB3 respectively). In essence, they highlight what is needed for charities to exist and how they should ensure serving society (or benefiting public). In this area, the expectation is to benefit the public as a whole, or a wide portion of the public. This is crucial to be clear as it differentiates against any initiatives that might be aimed at personal gains. The Charity Commission is the body that regulates charities, and can therefore investigate them, their management, and/or their trustees. The Charity Commission issues guidance for charities which Trustees are expected to read and be aware of while making decisions for their charities. Great news: the Charity Commission has just started their marketing/content campaign releasing ‘5-min guides’ to go through before diving into the detailed documents.
Takeaway 3: A Trustee Cannot Authorise Charity Investments in everything and anything
‘An investment is an asset you buy today in the hope to give you return in the future’ the presenter highlighted. Trustees must consider the social and environmental impact of investments made along with other factors. There is a full guidance on investing for charities known as CC14. This is something that is added to my reading list. The key takeaway is that Trustees must ensure their charities have an investment policy, and that they are aware of how to balance the act of spending. The policy must outline the purpose of the portfolio the charity are investing in, the objectives, the risk tolerance, liquidity requirements, time horizon, and responsible investment. The policy must also define how management will monitor the investment and report on it, and review and approve this policy as a whole. What was very clear to me is that Trustees are encouraged to consult experts in every area of running their charities. While such matters require subject matter experts, and can most likely be delegated to a sub committee, it is still the responsibility of the Trustees to sign off on such policies, i.e. awareness and educated decisions that can be justified in the years to come is essential.
And finally, to all the Trustees and Trustees to be: we are not expected to get it right all the time. We are expected to justify and present evidence to how we make a certain decision at a certain point, keeping the charity’s purpose in mind. But mistakes are not forbidden! [insert a sigh of relief here].
As you can see from the outline of the webinar, other topics were presented, and the topics I chose to write about had a lot more in-depth information. I will hopefully be writing more about them as I read the guidance and progress with my own education journey. But for now, I do hope you found this article useful.
You can register on BrightTalk and subscribe to the channel and view the webinar on here. You will get a nice certificate once you complete the webinar.
The Project EDIT 