Trustees and the art of governance

Governance is defined by The Governance of Voluntary Organisations, Cornforth 2003, as "The systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation." Essentially, governance ensures that a charity is run effectively, responsibly, and in line with its charitable purpose. 

 

Trustees are "the persons having the general control and management of the administration of a charity", as set out in Section 177 of the Charities Act 2011. While trustees are individuals who make decisions on behalf of the charity, trustees must work collectively as the board of trustees. All trustees have the same duties, which are set out in a charity’s governing document or constitution.

 

Good governance is not simply about compliance. It’s about leadership, stewardship, and ensuring the charity makes a meaningful difference to society. Strong governance helps trustees make sound decisions, use resources wisely, and help maintain public trust in the sector.

 

On the other hand, poor governance can lead to financial mismanagement, reputational damage (for both the charity concerned and the wider sector), or even regulatory intervention from the Charity Commission.

 

 

Understanding your legal duties as a trustee

 

Trustees operate within two formal sets of rules – the charity’s governing document and the law. The Charity Commission outlines six main legal duties of trustees, as set out under the Charities Act 2011. 

 

Trustees must:

• Ensure the charity is carrying out its purposes for the public benefit
• Comply with the charity’s governing document and the law
• Act in the charity’s best interests
• Manage resources responsibly
• Act with reasonable care and skill
• Ensure the charity is accountable

Understanding these duties – and how they apply in day-to-day decisions – helps trustees act confidently and consistently. It’s good practice for boards to review these principles, at least annually, and discuss how they are embedded in the charity’s governance culture.

 

 

Ensuring compliance and accountability

 

Compliance is about more than just ticking boxes. Trustees must make sure their charity adheres to all the relevant laws, regulations, and reporting requirements. These can range from data protection and safeguarding to fundraising and employment law.

 

All registered charities in England and Wales must keep proper financial records and prepare and submit annual accounts to the Charity Commission.

 

Publishing information about the charity’s activities and finances not only demonstrates responsible use of funds but creates transparency.

 

Charities must report any serious incidents to the Charity Commission so maintaining clear policies on key issues such as conflicts of interest, safeguarding, and whistleblowing is important.

 

Accountability goes hand in hand with transparency. Trustees should ensure that all their stakeholders, and the public, understand how the charity is run, and how decisions are made.

 

 

Overseeing financial governance

 

Sound financial management is at the heart of good governance.

 

Trustees have a collective responsibility for safeguarding the charity’s assets and ensuring financial sustainability. Trustees do not need to be finance experts, but they must be able to understand key financial information and ask the right questions. Where needed, professional advice should be sought early, not as a last resort.

 

Best practice includes:

• A finance committee or working group, made up of charity staff and some trustees
• Approving and monitoring budgets
• Reviewing management accounts and financial reports and addressing any concerns or irregularities
• Ensuring proper financial controls are in place. For example, having dual authorisation for payments
• Reviewing the reserves policy and investment strategy and adjusting if needed
• Planning for the long term and not just the next financial year 

 

Identifying and managing risks

 

Every charity faces risks. These could be financial, operational, reputational, or strategic risks. Trustees are responsible for identifying, assessing, and managing these risks to protect the charity’s assets and beneficiaries.

 

But trustees should also agree what their appetite for risk is. For example, how much would they be willing to invest in a rebrand or in a new fundraising campaign concept.

 

Trustees need to:

• Be aware of potential threats (e.g. loss of funding, data breaches, compliance failures) through the risk register
• Assess the likelihood of each risk and the potential impact
• Implement mitigating actions against each risk
• Talk through any risks which have increased in terms of likelihood
• Review and update the risk register regularly, together with the charity’s senior leaders

 

Effective risk management supports better decision-making and helps trustees remain proactive rather than reactive.

 

 

Building an effective board

 

Good governance depends on a strong, skilled, and diverse board made up of trustees with a mix of relevant skills, different experiences, and different perspectives.

 

Charities should provide their trustees with an induction, handbook, and ongoing training. You may want to consider ‘buddying’ up new trustees with those who have served for a number of years on the board, for the first year of their trusteeship.

 

Board meetings should be well-structured, with clear agendas and decision-making processes. And constructive challenge should always be encouraged, not avoided.

 

Review the board’s structure and effectiveness from time to time, including external evaluations where appropriate, as this can help identify strengths, weaknesses and areas for improvement.