Thoughts on good trustee practice.
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Hi ,

Keep your ducks in a row

A relative was recently recounting their experience as a Trustee of a charitable trust.
Their charitable trust was operated by a service club and used for fundraising and making grants to support worthy charitable causes and projects in their community. 
Last year the trust was deregistered because of a simple error – the Annual Return hadn’t been filed with Charities Services within 6 months of balance date. 
The trustees received no warning they were about to be deregistered.  Reminders had been sent to a former trustee who was no longer a member of the club.   
The consequences for a charitable trust being deregistered can be significant.  The trust immediately loses its charitable status.  That affects its tax position.  It can mean the proceeds of fundraising are taxable. 
However, there can be unforeseen consequences.  In this case, the trustees found:

  • People who were no longer members of the club were still trustees of the trust
  • Some current trustees found they hadn’t been validly appointed
  • Capable people volunteering as trustees were exposed to unnecessary risk
  • The deregistration triggered a huge amount of work, angst and frustration
  • It took just over 15 months from start to finish to reregister the trust

Essentially the club concerned had to start again in setting up their charitable trust and applying for charitable status.  It was a distraction from all the good things they would normally be doing.
In New Zealand there’s about 27,000 registered charities.  I read this week that 1,146 charities were deregistered in 2014-15 just because they didn’t file their Annual Return.  That’s over 4%!
So what are the lessons?  Five good practices I’d suggest for trustees are:

  1. Understand the rules, your obligations and responsibilities
  2. Document procedures so trustees have a reference point for good practice (especially if there are regular changes in the turn-over of trustees)
  3. Implement controls to ensure key dates don't get overlooked (e.g. dates for the vesting of the trust, when minors are of age, when leases expire or rent is reviewed, when returns are due, etc.)
  4. Regularly check that the controls established are being used and are effective
  5. Induct trustees so they know their responsibilities and what’s expected
Thank you for all your feedback this year.  All the best to you and yours for the coming festive season.  Catch you again in 2016.

Trust good practice.


Trustee Support Ltd

Lindsay Pope

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