New governance documents published by the Charity Commission say charities must use mediation to resolve disputes between trustees before they resort to legal action.
The documents, published this week, include a new clause that says: "If a dispute arises between trustees… and the dispute cannot be resolved by agreement, the trustees party to the dispute must first try in good faith to settle the dispute by mediation before resorting to litigation."
The clause is part of a new model trust deed, which can be used when setting up a new charity. It was not included in the previous version, although the commission has previously encouraged mediation. Charities must have permission from the regulator before becoming involved in litigation.
Robert Nieri, a senior associate at the law firm Freeth Cartwright, said charities did not have to use the commission’s model and could choose to omit the mediation clause from their own, but the commission’s decision to include it was a way of emphasising the importance of mediation.
The new model documents also say trustees can be paid for supplying goods to their charities. Previously, trustees could be paid for supplying goods to their charities only if those goods were linked to a service that the trustee was also supplying.
The documents also allow a minority of trustees to receive financial benefits as beneficiaries of their charities.