Trustees of international charities face a complex landscape when it comes to decision-making, especially amid the pressures of a challenging financial environment.
When making decisions, trustees are required to comply with their legal duties. Charity Commission guidance set out in CC27 includes seven key principles which underpin its guidance on decision-making.
The principles include the need to be sufficiently informed, and the importance of managing conflicts of interest. Taken together, the principles underpin the commission’s guidance on decision-making. As part of its programme of refreshing its guidance, the commission has recently revised its guidance on trustee decision-making.
This guidance is key reading for all trustees, who should be familiar, or familiarise themselves, with its core principles. This can be more challenging for international charities where the board is drawn from a range of locations or jurisdictions, but it remains important that all trustees are well-placed to fulfil their duties.
The underlying principles included in the guidance have not changed. However, the guidance has been shortened such that it is now more succinct, focused, and easier to digest. It has also been enhanced to address certain areas where the commission has seen charities fall short, such as the need to make decisions collectively and recording of trustee decisions.
For international charities, where boards often consist of members from various locations, implementing collective decision-making can be particularly challenging. Despite these challenges, it is crucial for trustees to ensure decisions are made collectively.
Many charities have the power to delegate decision-making. Subject to having the power to do so, decisions can be delegated to staff, sub-committees, or individual trustees. Where decisionmaking is delegated, there should be clear terms of reference, and robust reporting procedures. Even if decisions are delegated, the trustee board must remain responsible and accountable for all decisions.
High-risk decisions
The guidance is clear that “high-risk or novel decisions” should not usually be delegated. For international charities, this is a significant consideration, as the contexts in which they operate may involve high-risk decisions. Trustees should not avoid all risk but should manage it effectively.
In essence, while trustees can delegate many operational and administrative tasks, they cannot delegate their overall responsibility for the charity’s governance, strategic direction, compliance, and financial oversight. They must personally ensure that these areas are properly managed and in line with the charity’s mission and legal requirements.
One common issue highlighted in commission investigations is the inadequate documentation of decisions. Accurate record-keeping is crucial, including decisions made outside of formal meetings. For international charities, where decisions may need to be made rapidly, especially during crises or when working in a fragile context, maintaining a clear and comprehensive record is vital. This ensures transparency and accountability, while providing a clear audit trail for future reference.
Decision-making for international charity trustees can bring some complexities that are not relevant for trustees of UK-focused charities. As international charities work in varied environments, understanding the local context is critical. Where appropriate, the expertise of local partners, staff and beneficiaries should be leveraged to facilitate effective decision-making. One of the key duties of a trustee is to be “sufficiently informed”. The use of local expertise is one way that this can be achieved.
If any trustees have not consulted CC27 recently, I would strongly recommend they familiarise themselves with the revised guidance. For those boards which have an international basis, it can be particularly helpful to cover new guidance as part of board updates, which can help draw attention to the key changes in a way which is accessible to an overseas audience.
In summary, trustees of international charities must navigate a range of decision-making challenges, balancing legal responsibilities with the practicalities of operating across diverse environments. By adhering to the principles outlined in the commission’s guidance, embracing collective decision-making, and ensuring appropriate documentation of decisions made, trustees can uphold their legal duties and effectively steer their charities towards fulfilling their missions.
Steve Harper is a partner at haysmacintyre
Related articles
