Charity governance is increasingly in the spotlight, however all too frequently in a negative, rather than positive light.

Concerns and issues surrounding the recruitment, retention, quality and diversity of trustees aren't new, however continued negative press can only serve to make prospective trustees think twice about taking on the role.

Ultimately in accepting a position as the trustee of a charity, it is one which is unpaid (although a contentious topic itself), voluntary and one that does bear an increasing amount of responsibility and scrutiny - not just by the Charity Commission, but by other stakeholders, such as donors, employees/volunteers, beneficiaries/service users and also the media.

The roles and responsibilities of trustees continue to change and develop (incoming GDPR legislation in May 2018 is another example of this), and the Charity Commission offers a good guide to the duties and responsibilities of being a trustee - called 'the essential trustee'.

The Charity Commission outlines six key areas of trustee responsibility;

These are fairly broad, and it is fairly easy to see that although a trustee may be acting with the best of intentions, it is possible to make mistakes.

Although there are protections in place (where a charity is limited by guarantee, for example), there are still circumstances and situations where a trustee can be personally liable.  Incorporation will provide some protection to individual trustees (and those with managerial responsibility), and some charities will agree to indemnify trustees (i.e. provide payment of claims and legal costs out of charity funds), however some may not and there can also be a conflict of interest.

Although there may be different circumstances leading to a potential claim and conflict of interest, typical examples where I have dealt with claims against an individual trustee or line manager revolve around employment disputes and claims of discrimination - particularly difficult where the parties concerned may still be employed by, or act as volunteers for the charity.

In broad terms, CTI is insurance cover which protects the personal liability not only trustees, but those individuals and managers holding responsibility and making decisions within a charity. An 'entity' extension will also provide protection for the charity itself, although may not be necessary if other cover (professional indemnity and/or employment practices liability) is in place.

It is important to remember that cover will not provide protection for deliberate or criminal acts for example, however it will offer considerable peace of mind for those making decisions with the best of intentions.

Interestingly the Charity Commission themselves have changed their stance and advice concerning this cover over time.  Although not explicitly recommended, The Charity Commission does include a commentary within their own general guidance on taking out CTI cover - 'Charities and Insurance' and a couple of the key factors they highlight for consideration are;

As the cover directly benefits the trustee and not the charity (although it may indirectly), a charity will need a proper legal authority before it can buy it using its own funds

The cost must be reasonable and trustees must be sure that [the cover] is in the best interests of their charity

When you consider these points against whether it would be appropriate to use charitable funds to protect a trustee or manager accused or race, sex or disability discrimination for example, the benefit does become more apparent.

This is very much a brief overview of how and why CTI can be important to both a trustee and their charity, however having been a trustee myself in the past, and intending to become one again in the future, knowing that cover was in place did give me a lot of reassurance.

Please do contact me if you would like to discuss your own charity's insurance and risk management needs in more detail.