15 essential questions for charity trustees

There are more than a million trustee positions in England and Wales and most of those who fill them are volunteers, often juggling their role with jobs, childcare or other commitments. Between reading board papers and attending trustee meetings, reviewing the charity’s effectiveness may slip down the priority list.

However, as the people responsible for running your charity, it is really important that the board makes time to give it an “MOT” and review its effectiveness. No charity is immune to financial problems and sadly there are occasions when, despite the best efforts of the trustees and staff, a charity encounters issues so serious that it has to close. One such example is the BeatBullying Group, which went into liquidation in November 2014 after experiencing serious grant funding problems.

Many charities face similar financial problems. Their funding situations mean they live a risky hand-to-mouth existence, and as many grants come with conditions attached, it can be difficult to set aside money for reserves. BeatBullying’s lack of reserves meant it was quickly affected by the loss of funding. Despite the trustees’ actions to renegotiate contracts and investigate the possibility of a buyer, the loss of funding was too great for the charity to continue operating.

BeatBullying’s situation shows that even with experienced and conscientious trustees at the helm, it’s not easy to keep a charity’s financial future secure, particularly in a difficult and competitive economic climate. That’s why it’s so important that you and your fellow trustees ask yourselves tough questions from the outset and regularly consider how your plans are going.

The Charity Commission’s Big Board Talk, a series on trustee decision making, helps you do that. It includes a checklist of 15 key questions that you can refer to when you meet as trustees to make decisions about the way your charity operates. It covers all stages of the financial cycle and is designed to help you respond appropriately to change, by developing plans and timetables for action. It supports general good practice as well as how to deal with situations like that faced by BeatBullying.

The checklist includes the following questions:

1. What effect is the current economic climate having on our charity and its activities?
   
2. Are we financially strong enough to sustain our operations?
   
3. Do we know what impact the economic climate is having on our donors and support for our charity?
   
4. Do we have any reserves?
   
5. Have we reviewed our banking arrangements and, where relevant, our investments?
   
6. Have we reviewed our contractual commitments, for example office leases, rental agreements, equipment hire?
   
7. Have we reviewed any contracts to deliver public services?
   
8. If we have a pension scheme, have we reviewed it recently?
   
9. How can we make best use of any permanent endowment investments we hold?
   
10. Are we an effective trustee body?
    
11. Do we have adequate safeguards in place to prevent fraud?
    
12. Are we making the best use of the financial benefits we have as a charity?
    
13. Are we making the best use of our staff and volunteers?
    
14. Have we considered collaborating with other charities?
    
15. Are we making the best use we can of our property?
    

Remember: even if things seem to be going well, don’t become complacent – take time to consider your charity’s financial resilience regularly.

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