As a charity trustee, how you make decisions is essential for protecting beneficiaries, safeguarding assets and managing regulatory risk.
In this insight we provide a breakdown of the practical guidance available to charity leadership teams.
The seven decision-making principles
Under the Charity Commission’s seven decision-making principles – which interlink and reinforce each other – trustees must:
1. Act within their powers
Only make decisions that are within your legal and governance powers, with your charity’s purpose in mind.
2. Act in good faith
Make decisions with genuine, honest intentions that support the best interests of your charity.
3. Be sufficiently informed
Demonstrably base your decisions on enough relevant information – about risks, cost, complexity, controversy and urgency. Be diligent in getting professional advice as needed, and in consulting with your charity’s stakeholders.
4. Take account of all relevant factors
Relevant factors in your decision could include significance, costs, risks, impact on beneficiaries, and available funds.
5. Identify and disregard irrelevant factors
Whether a factor is irrelevant may vary, depending on:
- the decision you are making
- the impact of the decision
- your charity’s purposes
Irrelevant factors must be assessed on the basis of each decision, its impact and your charity’s purposes. They could include personal prejudices or feelings.
6. Manage conflicts of interest
Your decisions must not be influenced, or seemingly influenced, by any trustees’ personal interests, or by people connected to the trustees.
Learn more in our article about conflicts of interest in academy trusts, which can also be applied to other not-for-profit and charity trustees.
7. Ensure their decision is within the range of decisions that a reasonable trustee body could make
Following the first six principles will give you confidence in meeting this principle. Use reasonable care and skill, case by case, to conclude which option is in your charity’s best interests.
Practical recommendations
Prepare well
- Read briefing papers in advance
- Ensure conflicts of interest are declared and managed
- Seek professional advice on complex issues (e.g. finance, property, safeguarding)
Run effective meetings
- Encourage challenge and debate
- Ensure decisions are minuted clearly
- Allow time for reflection, not rushed approvals
Evaluate the impact
- Review outcomes of major decisions
- Learn lessons for future governance
- Record rationale so decisions remain defensible if challenged later
Keep good records
- Treat decision-making processes with the same importance as the outcome
- Records should show the issue, information relied on, advice taken, options, risks assessed, and the final decision and rationale
- This helps you to demonstrate regulatory compliance and protects trustees if concerns arise
Key points
- Strong governance is rooted in process, not just judgement
- Boards should strive for transparency, objectivity, and accountability
- Taking time to document decisions properly reduces risk and builds trust
- This guidance can be used as part of trustee inductions, annual governance reviews, or board training sessions
How BKL can help
Our charities and not-for-profit specialists are experienced advisers on the running of charities of all sizes.
They apply not only technical expertise in governance and regulatory issues, but personal experience of being charity trustees and volunteers, including BKL’s own charitable foundation.
If you wish to discuss this further please speak to your usual BKL contact or contact Ed using the form below.
