Charity Insurance | Social Enterprises | Voluntary Organisations | Community Groups

Trustees: The Risks and Responsibilities

There are over half a million trustees in the UK, testament to the goodwill of people to offer their time and skills to support good causes.

Yet, in my experience, a significant number of trustees do not understand the risks that accompany the responsibility and often are financially exposed to things that could go wrong in the charity.

Charity trustees have the ultimate responsibility of ensuring good governance in their organisation.  The board will oversee that the charity is well run, is financially viable and acts consistently with the stated aims of the organisation.

These are significant responsibilities and trustees must comply with regulation and law, which, particularly for smaller boards, would be difficult to stay on top of.  Smaller charities are often in need of trustee support, it could be suggested that they are also not as well positioned to provide support to trustees that they appoint.

Issues for trustees arise when they fail to meet their obligations.  If a board has not discharged their responsibilities fully or has been neglectful, the trustees themselves can find themselves personally liable for losses caused by that neglect.  As an example, if the charity issue a libellous statement.  Trustees are vulnerable though not just from their own actions or omissions but those too of the volunteers and staff that work in the charity.  Ultimately, the board bear responsibility for what they do too.

If someone, perhaps a charity user or a member of the public decides to sue the charity, then it is the trustees who bear that risk.

Trustees Indemnity Insurance is an insurance product designed to protect both the organisation and trustees from some of these situations.  It cannot insure for every possible outcome and it does not substitute the responsibility of a trustee to act with a duty of care and within the law at all times.  Yet it can offer some invaluable protection.

Trustees often do not understand that, if the worst happened, their personal assets are at risk from their responsibilities.

In return for all of that time, skill and good will that volunteer trustees (and the vast majority are unpaid) are willing to provide, it is worth asking the question about what steps the organisation has taken to protect trustees.

For more information about the responsibilities of being a trustee, we would suggest reading the government guidance, and our trustee indemnity guide.