These are the individuals responsible for the management and administration of a charity or association. They are usually identified under the charity’s governing document (rules) for controlling the management of the charity. For instance, in the case of an unincorporated association the executive or management committee are its charity trustees, and in the case of a charitable company it is the directors who are the charity trustees.

A vast range of commercial work is undertaken by charities and associations, activities including research and development, property management, sports organisations such as football clubs and golf clubs, welfare services, care in the community, design consultants, training and many more.

These are summarised in the publication CC3 produced by the Charity Commission of England and Wales. The document sets out the rules concerning the application, protection and investment of the charity’s property, supervision of the charity’s employees and preparation of the charity’s accounts. Trustees’ duties are also usually set out in the rules or ‘deed’ governing the trust. The Charity Commission will not allow any indemnity to be provided by the charity where trustees knew or recklessly disregarded the fact that they were committing a breach of trust or duty.

Trustees may find themselves in a position of having to prove that they made an ‘honest’ mistake. Failure to demonstrate that they acted honestly may result in a personal liability and in the absence of adequate cover their personal assets would be on the line. Even trustees who acted honestly and reasonably will often require expensive legal advice and representation before ultimately being relieved of personal liability or being indemnified from charity funds.

What do Insurers look for?
Insurers will want a proposal form but will usually indicate terms on the basis of the latest accounts. Business activity and financial status are major underwriting criteria, whilst the number of trustees/directors is a relatively unimportant factor.

• Clearly the activity of the charity/association will have a bearing on the risk. The trustees of a bird watching club will be less exposed than those of a medical research charity.
• The size of donations and funds managed is an important factor. A small charity supporting local community projects will have far less exposure than a large charity with a multi-million pound income.
• What is the financial status of the charity/association? Most organisations are not run for profit but Insurers do look at the accounts in order to establish that the organisation is properly financially managed.

A proposal form is available in Adobe Acrobat format by clicking the links below.

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