New guidance for charity trustees on the way

Recent consultation outlines new approach to the role of trustees but does this act as a deterrent?

Posted by Graeme Hughes

Graeme Hughes is a solicitor in the Charities and Social Enterprise Department at Brabners LLP.

  • T: 0151 600 3079
Wed 15th, Apr

Towards the end of November last year, the Charity Commission published a consultation on a replacement for its core guidance for trustees, “CC3, The Essential Trustee”.

The consultation ran until February of this year. 114 responses were received.

Putting that into context, there are approximately 165,000 charities registered with the Commission as well as an estimated 190,000 unregistered charities (exempt or excepted from registration). There are an estimated 900,000 charity trustees in England and Wales. Approximately 40 of the 114 respondents to the consultation identified themselves as being trustees.

Of the 114 responses, 53 said the guidance was an improvement on the existing CC3. The Charity Commission has taken the view that the results of its consultation demonstrate that the revised guidance is “overwhelmingly welcomed by the people for whom it is designed – trustees”. It is not entirely clear how a response rate amongst trustees of less than 0.05% corresponds with this view.

Despite the Commission’s upbeat mood, the guidance was not universally liked. Umbrella organisations such as NCVO, the Association of Charitable Foundations and the Charity Finance Group have been critical of the revised guidance stating that it “takes an excessively prescriptive tone in various sections, and misrepresents the scope and nature of the duties that in fact apply to trustees”.

Particular concerns have been raised in relation to the Commission’s approach to the distinction drawn between the “must do’s”, being legal requirements; and the “should do’s”, which are simply standards of good practice.

In the existing guidance, “must” means legal requirements that charities or trustees have to abide by. “Should” means good practice that they should follow unless there is a good reason not to.

In the revised CC3, “should” now means good practice that trustees are expected to follow. Trustees are warned that if they do not follow the stated good practice they may be in breach of their legal duties, and be guilty of misconduct or mismanagement.

In relation to this, the Commission has stated that trustees need to understand “that ‘should’ means ‘really should’ - not ‘maybe, if you feel like it’”.

In addition to this, concerns have been raised as to the negative tone of the revised guidance and the impact that this may have on the numbers willing to become charity trustees.

The final version of the guidance is expected in the summer,

Comment:

The Commission has a very difficult job putting together accurate, concise and readable guidance on matters behind which there are a great many legal principles, cases and pieces of legislation. However, the publication of such guidance is a key element in the delivery of its general functions, as set out in section 15 of the Charities Act 2011.

The Commission has moved away from providing charity trustees with advice and has now positioned itself as the sector’s “policeman” and the revised CC3 is a further indication of the very different regulatory landscape.

The new regulatory powers to be introduced by the Protection of Charities Bill will reinforce the Commission’s position further and it will be interesting to see the effect of this on the numbers of both trustees and charities.

40 responses from charity trustees to the Commission’s next consultation might represent a much better return.

If you would like to discuss any of the points raised in this blog, please do not hesitate to contact Graeme on 0151 600 3079 or graeme.hughes@brabners.com.

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