Right now many charity trustees will be making some of the most challenging decisions that they have had to make. Many will be worried about making the "right decision".
By way of comfort for charity trustees, it is not necessarily a question of if their decision is the "right" or the "best" one. It is a question of whether the decision made was within the range of decisions that a reasonable body of charity trustees could have made and whether the charity trustees have followed proper process.
In any situation there is likely to be more than one option that charity trustees can choose. However, charity trustees must decide which option is in the best interests of the charity at the time and not with the benefit of hindsight.
In its guidance the Scottish Charity Regulator (OSCR) underlines the importance of good decisions and suggests that charity trustees should:
- Have the right information to make decisions
- Make decisions in line with rules set out in the charity's governing document
- Record the decisions
- Be able to justify decisions, if necessary
The right information
Having the right information will depend on circumstances. Currently, charity trustees must consider any government guidance published on COVID-19 and importantly keep up to date with that guidance. In addition, factors such as cost and value, complexity of the issue, any controversy affecting the issue, the impact of the decision, how far reaching it is and how urgent it is may all be relevant. Charity trustees should also consider consulting stakeholders as their views may be vital – e.g. membership organisations may wish to consult the members in relation to matters which might affect them.
It may also be necessary for charity trustees to decide whether to obtain specialist or professional advice, eg in relation to the terms of contracts, employment matters, borrowing and insolvency. It is essential that that advice is taken from a suitably qualified person.
Make decisions in line with the charity's governing document
Charity trustees must check the terms of their governing document and be certain that they are taking decisions which are valid. That will generally mean having the minimum number of charity trustees "present" which in the present circumstances will mean by telephone or virtually. OSCR has already published guidance on COVID 19 issues which covers holding virtual meetings and charity trustees should ensure that is allowable under the governing document and if unsure take advice. It is important when calculating the minimum number that the effect of any charity trustee with a conflict of interest is also considered – that person cannot be counted in the quorum so care should be taken. OSCR's guidance on COIVD 19 issues mentioned already states that it will be "proportionate when assessing any concerns raised with us about decisions made without a quorum." It also makes the point that "…others affected by those decisions may take a different approach." "Others" could include members, funders and creditors. So before taking decisions without a quorum, charity trustees should consider carefully the implications and if necessary, take advice.
Record the decisions
Keeping a good record of the decisions made is vital if a decision comes under scrutiny or is questioned later.
Charity trustees should include in any minutes the date of the meeting and who attended; whether or not a quorum was present in line with the charity's governing document should also be recorded; any conflicts of interest, and whether anyone withdrew from discussing any items. Also consider including in the minutes the information or factors the charity trustees took into account, what was decided together with the main reasons for the decision; whether the charity trustees took advice, from whom and where appropriate their reasons for not following any advice they took; key points of any discussion; if the matter went to a vote, the results of the vote; and whether any charity trustees strongly disagreed with the decision and asked for their disagreement to be recorded.
The level of detail should be in proportion to the significance and potential impact of the decision. Once drafted, the minutes should be distributed shortly after the meeting. If professional advice is obtained, it is useful to keep a copy of it with the minutes for future reference.
Be able to justify decisions if necessary
If charity trustees have considered the correct information, made the decisions in line with the governing document and recorded that decision fully and accurately in the minutes then they will be well placed to justify the decision if called upon to do so at a later date.
Don't forget reputation!
And of course, now more than ever, charity trustees must be mindful of and consider reputational issues of any course of action and if there are steps that can be taken to manage or mitigate them. As Warren Buffett the American investor, business tycoon and philanthropist said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”