Being a Charity Trustee Thursday 3 May 2012

Agenda • Welcome and Introduction Lesley Stephenson The Financial Times Non-Executive Directors’ Club • The Effective Charity Board Philip Kirkpatrick Bates Wells & Braitwaite & On. Board • Charity Finance Essentials Richard Wilson • A Personal Experience of a Trustee Denis Burn Partner, Ernst & Young LLP Experienced Charity Trustee, currently Chairman, Bristol University

The Effective Charity Board Philip Kirkpatrick, Bates Wells & Braitwaite & On. Board

The effective charity board • The Voluntary Sector Code of Governance • Trustees’ duties • What an effective trustee asks • What a really good trustee knows • The really good trustee’s approach • The chair’s role • Board composition

Voluntary Sector Code of Governance – principles A good board will provide good leadership by: • Understanding their role • Ensuring delivery of organisational purpose • Being effective as individuals and a team • Exercising control • Behaving with integrity • Being open and accountable

Trustees’ duty – a simplified statement To govern the charity so as to help it achieve its purposes and, in doing so, to act: • reasonably • prudently; and • selflessly

Noting that a charity exists: • Not for beneficiaries • Not for staff • Not for trustees • Not simply to continue existing • But for purposes

What are my charity’s purposes? • Not the mission statement • Not the activities it undertakes • Not to be “a company for carrying out an undertaking of great advantage, but nobody to know what it is. ” • The purposes are in the objects clause of the constitution

Questions an effective trustee asks • What does my charity do? • How does it do that? • Is there constitutional power? • Who has what authority? • Has authority been properly delegated? • Is there adequate funding? • What information do I need? • Am I getting it?

Questions a really good trustee asks • Why does my charity do X? • How effective is X? • How expensive is X? • How best can we deploy our resources? • Would it be better to do Y?

The really good trustee’s approach • Being on the board is fulfilling and fun • If there are staff, the board’s job is to consider the big picture • Staff should be: – allowed to do their jobs without interference – held to account appropriately • If the reason is not obvious, the reason should be sought • Expert advice should be taken but questioned • The mind is like a parachute • Common sense is the essential personal quality

The really good trustee’s approach • “If you do what you’ve always done you’ll get what you’ve always got” • Trustees are allowed to innovate • Trustees are allowed to take risks • The unthinkable is thought but the do-able is done

The chair’s role is vital: • to set the tone and provide leadership • to ensure that all engage and have opportunity • to ensure that discussion remain strategic, relevant and useful • to review individual trustee performance • To protect and manage the CEO

Board composition • Selecting for skills and experience is not so hard • Selecting for personal qualities (eg. common sense) is hard • Importance of range and complementarity of skills and experience • It’s hard to make democracy work effectively • Consider introducing a nominations panel • Trustees are never representatives • Large boards tend to be less effective

Contact details Philip Kirkpatrick Bates Wells & Braithwaite London LLP p. kirkpatrick@bwbllp. com Tel: 020 7551 7777 www. bwbllp. com

Charity Finance Essentials Richard Wilson, Partner, Ernst & Young LLP

• Be aware of Applicable Legislation • Understand the Regulatory Framework • Managing money effectively • Investing the funds • Managing Risk • Financial Controls • Understand the Reserves • Understanding Fundraising Laws • Effective Staff and Volunteer Policies • Insurance • Going Concern • Trustee Expenses • Land

Applicable Legislation • All Charities that are Companies – Companies Act 2006 • Charities in England & Wales – Charities Act 2011 • Charities in Scotland – Charities and Trustee Investment (Scotland) Act 2005 • Charities in Northern Ireland – Charities Act (Northern Ireland) 2008 and Charities Act (Northern Ireland) 1964

Regulatory Framework • England & Wales – The Charity Commission • Scotland – Office of the Scottish Charity Regulator • Northern Ireland – The Charity Commission for Northern Ireland

Managing money effectively • Know which funds have restrictions on their use – • Grants, legacies, etc. Prepare annual accounts and trustees annual report in accordance with SORP – Accounting and reporting of Charities – Statement of Recommended Practice 2005 • Trustee Report • Statement of Financial Activities • UK GAAP - not IFRS

Investing the funds • Must be clear on basis of investment. Is it best financial return, furthering the charity’s aims or doing some of both? • Must comply with the relevant powers for standard investments. May be restrictions or additions in the charity’s governing document. • Exercise such care and skill as is reasonable when using power of investment. • Must consider the suitability of any investment and obtain the appropriate advice. • Must ensure that the investment furthers the charities aims and there is a way to end the investment.

Managing Risk • Make a risk management statement in the trustees annual report if the charity is above the audit threshold (income greater than £ 500, 000)

Financial Controls • No legislated requirements but charities expected to follow best practice • All trustees have a duty to protect the charity’s assets and resources and to make sure they are only used to further the aims of the charity

Understand the Reserves • Comply with the annual reporting requirements and set out the charity’s reserves policy. This requirement is to show the level of reserves the charity holds and why it needs to retain them at that level.

Understand Fundraising • Some areas of fundraising are subject to specific regulation • Ensure you understand what regulations beyond charity regulations apply such as taxation, data protection, etc • Ensure there is proper control over funds raised and that they are used for the purposes raised • Ensure general funds are managed distinctly from special funds • Ensure delegated fundraising is appropriately contracted

Effective Staff and Volunteer Policies • Be aware of legal obligations and ensure effective staff and volunteer policies have been established

Insurance • Ensure where insurance is compulsory it is taken out • Be aware of Trustee powers under the Trustee Act to insure any property owned by the charity against loss or damage

Going Concern • Must inform the Charity Commission if the charity winds up or ceases to operate

Trustee Expenses • Disclose any payments made to trustees in the charity’s accounts

Buying and Selling Land • Know and comply with the powers the charity has to buy land • Comply with statutory duty of care as set out in the Trustee Act when investing and disposing of land • Obtain prior authority when disposing to a connected person

Contact details Richard Wilson Partner, Ernst & Young LLP www. ey. com/uk T: 0207 951 2000

A Personal Experience of a Trustee Denis Burn, experienced Charity Trustee, currently Chairman, Bristol University

Q & A Session

Networking Drinks Reception