CCS

How to ensure trustee eligibility

Written by Louise Thomson
23/10/18

There are over 167,000 registered main charities in England and Wales and trustees are central to their success, being responsible for the overall direction, strategy and vision. Inherent in building and maintaining an effective board is having robust systems for recruitment, appointment and induction of trustees, backed up by ongoing support and development.

It is essential that the right people are recruited to the board, not just in terms of skills, attributes and competences, but also in ensuring an individual meets the legal and constitutional eligibility criteria. Appointing a trustee who is not eligible can have serious consequences for the individual, the board and the charity. Robust recruitment methods should be backed up with thorough due diligence by the governance professional, on behalf of the board, to ensure that the prospective trustee is eligible to serve.

Check what your governing document says

Generally, a charity’s governing document will provide details as to who can and cannot be a charity trustee. The common criteria for trustee disqualification include:

• ceasing to be a member (where the charity operates a membership structure);
• being unable to manage their own affairs;
• non-attendance of trustee meetings – normally a set figure or a timeframe;
• being convicted of an offence; and
• bringing the charity into disrepute or not acting in its best interests.

All prospective, and existing, trustees should be aware of those criteria specific to their charity and ensure that they meet the requirements before appointment and whilst in position. It is not unusual for charities to ask trustees to self-declare annually that they are eligible to act.

Legal considerations

The Charities (Protection and Social Investment) Act 2016 introduced new limits on who can be a trustee and, as of 1 August 2018, extended the regime to cover senior managers.

The full list of criteria that would disqualify an individual from becoming a trustee are noted below. Those that came into force on 1 August 2018 are shown in italics.

• Being under age (over 16 years to be a director of a charitable company limited by guarantee or a charitable incorporated organisation, or over 18 years for trusts and unincorporated associations)
Being on the sex offenders register
• An unspent conviction for an offence involving: deception or dishonesty; terrorist offences; money laundering; bribery; misconduct in public office, perjury, or perverting the course of justice; contravention of certain Charity Commission preventative orders; or attempting, aiding or abetting the above offences
Contempt of court
Designated individuals under specific anti-terrorist legislation
Found guilty in the High Court of disobeying a Charity Commission order or direction
• Removed from: trusteeship, or as an officer, agent, or employee of a charity by the Charity Commission or High Court for misconduct or mismanagement; a position of management or control of a charity in Scotland for mismanagement or misconduct; being a director under the Company Director Disqualification Act 1986, including Company Directors Disqualification (Northern Ireland) Order 2002; directorship due to being an undischarged bankrupt; or directorship because of an ongoing composition or arrangement with creditors.

Charity Commission orders can also disqualify individuals from being trustees. In addition, for charities claiming gift aid, HMRC requires trustees and managers to meet the ‘fit and proper persons test’.

Waivers

In certain situations a charity can approach the Commission for a waiver if an individual does not meet the eligibility criteria but the charity believes they can make a valuable contribution to the charity.

Potential penalties

Ultimately, trustees should be aware that it is an offence to act when disqualified. If a disqualified person is appointed, the appointment will be invalid. If problems arise and it emerges that existing trustees failed to follow Charity Commission guidance, the Commission may consider the trustees to have acted improperly.

Trustee recruitment is an ongoing challenge for many charities. Getting the basics right as to who can and cannot be a trustee is a fundamental part of embedding good governance within any organisation.

Louise Thomson is head of policy, ICSA: The Governance Institute



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