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How well do you know your constitution?

A trustee of a charity is responsible for the activities the charity undertakes and can be held legally accountable for their decisions. It is crucial that a trustee understand his duties and in order to do this he needs to understand the charity’s legal structure and its governing document. This sets out the powers of the trustees and the rules and regulations that govern the charity in addition to the general law.

Each charitable structure has its own governing document; one type of constitution does not fit all. For example, unincorporated associations, charitable incorporated organisations, companies limited by guarantee and industrial and provident societies can all be charities, but have different types of constitution. As a trustee you should therefore check that your constitution is suitable for your charity.

In general terms, the document should typically set out;

  • its charitable purposes (“objects”). All of the charity’s activities should be focussed on achieving those objectives
  • what it can do to carry out its purposes (“powers”) such as buying or leasing property, engaging staff and borrowing money
  • who runs it (“trustees”) and who can be a member (if applicable)
  • how meetings will be held, decisions made and trustees appointed
  • any rules about paying trustees (if this is required), making investments and holding land
  • whether the trustees or members can change the governing document, including its charitable objects (“amendment provisions”)
  • how to close the charity (“dissolution provisions”).

Trustees must have a copy of their constitution, understand it, refer to it and review it regularly as it tells them how to run the charity. They should be regularly asking themselves the question ‘do the charity’s current and future plans fall within the current objects?’. If not then a charity should take legal advice on whether it may be possible to amend its objects before proceeding with such plans. The consent of the Charity Commission would be required.

Having undergone significant change in the last few years the Charity Commission has been focusing more on its formal role as a regulator and, as a result, charity trustees need to educate themselves on their responsibilities. The starting point should be the charity’s constitution and the Charity Commission website. It is vital to know your governing document, use it as a reference point when making decisions, and question whether it is still suitable and up-to-date.

Kate Hickey is a corporate lawyer with a charities & not-for-profit focus. Working alongside partner Margaret Austen, she handles a range of matters, including regulatory and constitutional issues. She also works with colleagues in the firm's property and employment teams to advise charities on contractual matters.