{"id":12113,"date":"2024-05-10T10:42:52","date_gmt":"2024-05-10T09:42:52","guid":{"rendered":"https:\/\/www.policybee.co.uk\/blog\/?p=12113"},"modified":"2024-06-17T13:56:54","modified_gmt":"2024-06-17T12:56:54","slug":"trustees-insurance-why-you-need-it","status":"publish","type":"post","link":"https:\/\/www.policybee.co.uk\/blog\/trustees-insurance-why-you-need-it","title":{"rendered":"Trustee insurance and why you need it"},"content":{"rendered":"\n

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\"Trustee<\/figure>\n<\/div>\n\n\n

Although the coronavirus pandemic took its toll on the not-for-profit sector, most recent figures<\/a> show it’s bounced back, with more than 184,000 charities registered with the Charity Commission.<\/p>\n\n\n\n

That\u2019s quite a figure. But it only accounts for charities in England and Wales. Plus, there are many other organisations that aren’t even registered because they’re simply too small. Some put the actual number of charities across the whole of the UK at closer to 400,000<\/a>.<\/p>\n\n\n\n

That\u2019s an awful lot of charitable activity going on up and down the country. Which, of course, is a good thing.<\/p>\n\n\n\n

It’s also an indication of just how many people are involved in setting up and running charities, social enterprises and community interest companies. Anyone, it seems, can be in charge of a charity.<\/p>\n\n\n\n

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What you don’t know can’t hurt you?<\/h2>\n\n\n\n

The problem is that many of these people probably won’t realise what that actually means. In other words, that they’re a trustee. And that they should be thinking about trustee insurance.<\/p>\n\n\n\n

There’s evidence<\/a> suggesting that over half the general public don’t know what a trustee is. If that’s to be believed, it’s reasonable to assume that a significant number of trustees don’t actually know they’re trustees either.<\/p>\n\n\n\n

And there’s a lot of you out there. About 924,000<\/a> in England and Wales alone, according to the Charity Commission. Plus, 120,000 new trustees are recruited each year to replace those stepping down.<\/p>\n\n\n\n

The thing is, not knowing and understanding your true status or responsibilities can be risky.<\/p>\n\n\n\n

Because if something goes wrong, all those good intentions could be forgotten. A claim of wrongdoing against you or your charity isn’t a good time to find out that your personal assets, as well as your charity’s future, are at stake.<\/p>\n\n\n\n

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What are trustees, and why do they need trustee indemnity insurance?<\/strong><\/h2>\n\n\n\n

So, what are<\/em> trustees? Put simply, they’re the people who bear overall legal responsibility for your charity. They guide the direction and make decisions, including funding.<\/p>\n\n\n\n

You could be running your own local-interest micro-charity. Or you could be one of several trustees on the board of an international aid agency. Often, the work you do is unpaid.<\/p>\n\n\n\n

You don’t even need to be called a ‘trustee’ as such. You could be a governor, director, committee member, officer, or any other kind of key decision-maker.<\/p>\n\n\n\n

What’s common to all trustees, however, is the responsibility to run your charity correctly. Allegations that this hasn’t happened can and will be levelled at individuals concerned. Trustees, you see, are personally liable<\/strong> for the consequences of their decisions.<\/p>\n\n\n\n

The fact is that, in legal terms, a charity is no different to a business. And a trustee’s duty of care is no different to a company director’s.<\/p>\n\n\n\n

Just because you’re in it for the good of others makes you no less vulnerable, unfortunately.<\/p>\n\n\n\n

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What risks do trustees face?<\/strong><\/h2>\n\n\n\n

So, what sort of risks could you be liable for? Unfortunately, it’s not that unusual to see headlines<\/a> about mismanagement of charity funds. Think Kids Company<\/a>, for one.<\/p>\n\n\n\n

And that\u2019s certainly one of the most common reasons for claims against trustees. If funds are used for purposes not outlined in a charity’s governing documents it can, quite rightly, attract all the wrong kind of attention.<\/p>\n\n\n\n

Here are a few other examples:<\/p>\n\n\n\n