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The Kids Company charity has featured in many news stories recently after reports of financial turmoil and issues relating to government involvement. The charity suddenly closed earlier this month, according to the trustees because it was unable to pay its debts. According to their website, the charity is expected to be placed into compulsory liquidation after court action. Individuals reliant on the charity are being signposted to other charitable organisations and local authority services in their areas.

No doubt it will take time for the answers to be found as to what caused the charity’s problems. It does however highlight the need for those involved in running a charity to make the right decisions.

What is the framework for decision making by charity trustees?

The Charity Commission provides guidance for charities to understand how trustees should approach making decisions affecting their charity. Trustees must

  • act within their powers
  • act in good faith and only in the interests of the charity
  • make sure they are sufficiently informed, taking any advice they need
  • take account of all relevant factors
  • ignore any irrelevant factors
  • manage conflicts of interest or loyalty
  • make decisions that are within the range of decisions that a reasonable trustee body could make in the circumstances

Can trustees take legal advice?

Yes. As seen above, part of the framework guidance for charity trustee decision making includes taking any advice they need. There are a number of law firms with charity sector expertise.

When can trustees be personally liable?

It’s extremely rare, but not impossible, for charity trustees to be held personally liable

  • to their charity, if they cause a financial loss by acting improperly
  • to a third party that has a legal claim against the charity which the charity can’t meet

Ultimately, charity trustees have the sole responsibility of always acting in the interest of the charity. If you are in any doubt when making key decisions, you should seek professional advice.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.