Maximising your income, ensuring you have a future and delivering your objectives in the best way possible are standard requirements for a charity trustee board. How you achieve these is where it can get difficult.
If you have assets, you want them to work for you. I don’t mean those wonderful, essential, most important assets of your staff, volunteers, supporters and reputation, but the physical assets you might own. It is an aspiration of many trust boards to own a property, for direct use by the charity, as an investment or to protect the community. Many will look at asset transfers from public stock or accept deals from local authorities to have a property on a long lease and low rental. If you have the finances, the best legal and property advice and the time and energy to make this a reality, that is just the beginning of making your asset work for you. As you move through to utilising that asset, it might not be as straightforward as you think, and your asset might become a liability.
Steps to acquiring a property
I have worked with a number of boards that have been keen to acquire a property. They see this as a form of security, much as we do with our homes, and as a means to make the delivery of their particular services easier to manage. When sitting on the other side of the board and running a charity, I have even carried out the research and drawn up the plans to get my hands on such an asset. It is only at the point that the board gets involved that this can become a reality. Trustees need to be mindful of their duties to do their best to ensure the continuing prosperity of the charity.
I have also worked with boards investigating whether this is a viable option for them and with those that have found their long-anticipated, used and loved property asset has become a liability and is in danger of bringing an end to the whole charity enterprise. In these situations, time is of the essence – and, as we know, time is often the rarest commodity for a trustee board.
Making the investment
Over the years, I have become wary of gift horses and I do look them in the mouth. I advise all trustees to do the same. That approach from a local authority or private property owner for you to have their property can be very appealing if you have wanted a base or an asset. Think long and hard about what is being offered. Is it in the right location? Is it the right size or type of property for your needs? How much will you have to invest to bring it up to standard for your use? Are you taking on a lease or the freehold in its entirety? If it is a lease, how long is it for and what are you responsible for? It also pays to be a little suspicious and to ask if the gift is a generous, philanthropic or community benefit offer, or a way of offloading a troublesome property to someone else. If a local authority has not made the property work, then how will you?
The funding source for the property acquisition might also come with particular strings attached, which you need to check out. If the money has come from a public source through a long-past grants programme, the grant agreement might have stipulations about the use and disposal of the property. Does the agreement give you the freedom to use the property as you wish or will you be limited to the use for which you applied for the funding? If you cease to deliver a particular service that has been delivered from that property, will that affect the agreement? If the worst should happen and you find that your day-to-day core activities are affected by the costs of having and running the property, and you decide to realise the asset as cash, are you allowed to do so?
If you are new to an existing trustee board, make sure you know what the assets are and revisit the discussion with the rest of the board. A good review of your assets should happen, along with your audit, but it does no harm to make sure you know exactly where you stand - just in case.
Elizabeth Balgobin was formerly chair of Voice4Change England and is a charity governance consultant