I currently serve as a trustee for several different voluntary organisations in Cumbria. In some cases, I am a member of the board of a limited liability company. The voluntary organisations have chosen to take that legal route because they were beginning to find that recruiting new trustees had become very difficult.
A charitable limited company has a legal identity of its own, and members and trustees have limited liability on the rare occasions that something goes wrong. For those reluctant to become trustees, this status offers protection in relation to future possible financial liabilities.
Some charities may not find the limited liability company an appropriate route to follow - it is often expensive to set up, can involve a great deal of administration and requires information to be in the public domain.
The Charity Commission has been looking at this, and proposals are under consideration at the moment to make this route easier and more appropriate for charities.
Horror stories abound of how an individual trustee can carry personal financial liability for the potential redundancy payments to staff, or even to cover the disappearance of funds from the charity. These are very rare occurrences, but given existing charity legislation they are a possibility.
However, serving with a charity that is incorporated as a charitable limited company can help to dispel some of those fears.
It does not remove the community responsibility that trustees have to work in the best interests of the charity, but it should mean that you need not be threatened with the loss of your home at some future date for actions over which you personally have not had any control.
- Pat Black is also vice-chair of Eden Council for Voluntary Service.