Keeping the conflicts out

Running a charity, like any other activity, is subject to changes in fashion, and its own species of political correctness. In recent years two competing fashions have come into conflict. It will be interesting to see how the trendiest charities resolve it.

The enactment of the new charities legislation in the early 1990s heralded a stricter approach by the Charity Commission and greater consciousness on the part of charity trustees of the constraints which their trusteeship placed upon them. Suddenly, trustees of all kinds of charities became aware of the principle that trustees should not benefit from their trust and should not place themselves in a situation where personal interests could come into conflict with their duties as trustees. Declaring an interest has become de rigeur. It is far more common for trustees who feel they could not be seen to be unbiased, to withdraw from decision-making which could be embarrassing to their co-trustees. There have been cases where trustees have even resigned in a situation of conflict.

Concurrently, there has been an opposite movement, where those with a clear and obvious personal interest in a charity's work through membership of the beneficiaries, have increasingly been chosen as trustees. The Housing Corporation is currently urging the appointment of residents to the management committees of housing associations (social landlords). Many are exempt charities. The Charity Commission is currently seeking views on a draft leaflet entitled User Trusteeship in Charities.

Many modern charities have welcomed this new spirit. They have discarded the Victorian values of the old Lady Bountiful. The latter-day Sir Ruddy Bountiful is unlikely to allow any consideration he may feel for the charity's beneficiaries to show, if Ms J Bloggs is sitting opposite him and ready to vote against his pet project. Trustees are likely to be better informed about the needs of beneficiaries and their public face is likely to be less irritating. There are dangers.

Obviously there are some cases in which user-involvement at trustee level will not work. It is unreal to expect children, people living abroad, the very old, the seriously ill or the severely mentally disabled to accept appointment as trustees in any real sense. It would be a mistake to offer them a watered-down form of “trusteeship” giving the appearance of power without the legal responsibility – an essential part of trusteeship. Trustees must be equal or the rule that the majority prevails is liable to be distorted. There are workable alternatives whereby the trustees can obtain better information about, and develop a closer relationship with, beneficiaries. For example, the trustees can obtain advice from bodies set up especially for consultation, without creating any legal burden.

When a user can reasonably be appointed as a trustee, there is a delicate balancing act. It is necessary to ensure the user-trustee makes the maximum contribution to the charity's decision-making. Their experience as a beneficiary is often directly relevant, together with their views on proposed activities. However, the input such trustees can provide comes extremely close to their personal interests in most cases. For example, a resident in a charity's housing accommodation may be the best person to provide information about what rent would be acceptable to the residents in general, but it is unlikely to be wholly unbiased. Responsible presentation to the outside world necessitates transparency.

Trustees could, for example, provide information and contribute to the discussion, yet not take part in decision-making, if it impinges upon them as individuals. The number of conflicts constraining user-trustees is likely to be far more numerous than the conflicts affecting other trustees. Two-tier trusteeships might emerge. This could cause ill-feeling, as could only some of the beneficiaries being appointed as trustees. It will be most enlightening to watch what creative solutions emerge.

Francesca Quint is a barrister at 11 Old Square.