Trustees in a Harder World: Has the Job Changed?

Ask whether the role of a charity trustee is harder today than it was five years ago and most boards would probably answer yes, although perhaps only after a brief discussion about whether the question itself should be minuted.

However, the underlying legal duties of charity trustees have not been radically rewritten over the past five years. Trustees are still expected to act in their charity’s best interests, exercise reasonable care and skill, manage resources responsibly and make properly informed decisions. What has changed is the environment in which those responsibilities now sit, because charities are operating through greater financial pressure, more visible public scrutiny, faster-moving reputational risk and an increasingly complex regulatory backdrop.

Decisions that might once have remained within the boardroom can now be examined almost instantly by donors, beneficiaries, employees, journalists and regulators, which means the job has changed less in principle than in practice. Good charity governance today requires trustees to understand a wider range of risks, ask better questions and, increasingly, be able to show how important decisions were reached.

The trustee’s field of vision has widened

A competent trustee board has always needed to understand financial sustainability, delivery against charitable objectives and the principal risks facing the organisation. Those responsibilities remain at the heart of good governance, although the range of issues sitting around them has expanded considerably.

Trustees may now find themselves discussing cyber security alongside safeguarding, inflation alongside fundraising, investment risk alongside liquidity, and organisational values alongside reputational exposure. Add the occasional regulatory update, geopolitical shock or social media storm and that’s quite a lot to get through in a short amount of time.

That broader remit doesn’t mean every trustee needs to become an expert in every subject, nor would that be realistic. It does mean, however, that trustees need enough understanding to recognise where the important questions lie, what information is needed to answer them and when professional advice should be sought.

The strongest boards I work with tend to understand this distinction instinctively - they are not trying to replicate the work of management or professional advisers, because their value lies elsewhere. Good trustees understand the framework within which decisions are being made, they test the assumptions beneath those decisions and they know when something deserves a little more interrogation before everyone moves on.

For Chairs, that means creating a board culture in which sensible challenge feels entirely normal. Complexity can make boards more dependent on specialists, and specialist language can make complicated subjects sound reassuringly impenetrable, which is not always the same thing as being well understood.

A trustee who asks, “What would have to go wrong for us to regret this decision?” may sometimes add rather more value than the person who has confidently absorbed all 86 pages of the board pack.

Good governance increasingly depends on the quality of the process

Greater scrutiny has also placed more emphasis on how trustees reach decisions, because boards will inevitably make choices whose outcomes are uncertain. Investment markets fall, fundraising plans disappoint, costs rise and strategies occasionally encounter the inconvenient habit reality has of ignoring a five-year business plan.

Good governance cannot remove that uncertainty, but trustees can control the quality of the decision-making process around it. The important questions are whether the board was sufficiently informed, whether the relevant risks were understood, whether alternatives were considered, whether appropriate professional advice was taken and whether there is a clear record of the reasoning behind a significant decision.

That focus on process matters because trustees are generally judged with the benefit of hindsight, while they make decisions without it. A well-governed charity should therefore be able to show that a major decision was reasonable on the information available at the time, even where circumstances subsequently changed.

It also means revisiting significant decisions when the assumptions behind them change. A reserves policy, investment strategy or long-term plan that was perfectly sensible three years ago should not acquire a sort of constitutional protection simply because everyone has become used to seeing it in the same folder every year.

Minutes have an important role here too, although this need not mean producing a near-verbatim account of every board meeting. What matters is that they capture enough of the discussion to show how a material decision was reached, including significant challenge or alternatives considered. “The paper was noted and approved” may be accurate, but it can feel a little thin when somebody is trying to understand the decision three years later.

Investment oversight is part of charity governance

Investment is one of the clearest examples of how trustee responsibilities have evolved in practice.

For charities with reserves, permanent endowments or other invested assets, investment was historically quite easy to compartmentalise. An investment committee might oversee the portfolio with support from an adviser or investment manager, while the wider board received regular reports on performance and, provided nothing looked alarming, largely left them to it.

That structure can still work very well, but investment governance increasingly needs to sit within the charity’s wider governance framework because investment decisions affect the organisation’s ability to fund its work, maintain adequate reserves, withstand financial shocks and meet future commitments. They can also intersect with questions around values, charitable purposes and reputation.

Trustee investment oversight therefore needs to extend beyond asking whether the portfolio has risen or fallen over the last quarter. The more important question is whether the assets are still doing the job the charity needs them to do.

That starts with a clear understanding of what the portfolio is there to achieve, including the level of return required, the spending it may need to support, the appropriate timeframe, liquidity requirements and the degree of investment risk the charity can reasonably tolerate. Trustees should also understand how the investment strategy fits with the organisation’s wider objectives and any material reputational considerations.

None of this requires the board to debate individual equity holdings over coffee. Technical implementation belongs with investment professionals, while trustee responsibility lies in setting the framework, understanding the risks within it and satisfying themselves that it remains suitable for the charity.

This is where a good investment policy becomes a valuable governance tool rather than simply another PDF awaiting its annual resurrection. An effective review should ask whether anything meaningful has changed. Has expenditure risen? Is the charity drawing more heavily on reserves? Has its capacity for investment risk altered? Does it require greater liquidity? Have its objectives, beneficiaries, donor expectations or reputational considerations evolved?

If the charity has changed, there is at least a reasonable chance that the investment policy deserves more than a change of date at the top.

Reputation and financial risk increasingly overlap

One of the more significant shifts for trustees has been the growing connection between reputational and financial risk.

For a charity, reputation is rarely an abstract concept because a loss of confidence can affect donations, partnerships, staff recruitment, volunteer engagement, beneficiary relationships and access to funding. Reputational risk can therefore become financial risk surprisingly quickly, which is why it increasingly needs to form part of trustee decision-making, including around investments.

The challenge, as ever, is proportionality.

Boards now operate in an environment where issues ranging from climate change and defence to energy, executive remuneration and corporate behaviour can generate strongly held views. Trying to protect a charity from every possible criticism would leave trustees with an impressive risk register and very little time to do anything else.

A more useful approach is to bring the discussion back to the charity itself. Would the decision create a meaningful conflict with its charitable purposes? Could it materially affect the confidence of beneficiaries, donors or other important stakeholders? Is there credible evidence of a significant reputational risk, or simply the possibility that somebody somewhere might object?

That last distinction matters rather more than it once did. The internet has made finding somebody who objects to almost anything remarkably efficient.

Where a genuine issue exists, trustees should consider it carefully and document the reasoning behind the decision. Where it does not, the board should be equally comfortable proceeding.

Governance gaps are usually less dramatic than people expect

Weak charity governance rarely begins with a board consciously deciding to neglect its responsibilities. More often, small habits build up over time and eventually become part of the furniture.

Board reports become familiar enough that trustees stop asking what is missing from them. Investment meetings devote substantial time to recent performance while spending rather less on whether the original objectives remain appropriate. Responsibility gradually gravitates towards one particularly experienced trustee, a subcommittee or an external adviser, leaving the wider board a little less engaged than anyone intended.

Policies continue to appear on the annual governance calendar, where they are reviewed, approved and then returned safely to their natural habitat until the following year.

These are rarely signs of poor intentions. They are simply examples of familiarity reducing scrutiny, which is why one useful test for any trustee board is to imagine a capable new trustee joining tomorrow.

Could they understand why the charity has chosen its current strategy? Could they see how its principal financial and investment decisions connect to its charitable objectives? Would they know where authority has been delegated and which responsibilities still sit with the whole board? Could they follow the reasoning behind the most important decisions made during the past few years?

If the answer would require several lengthy conversations and an archaeological expedition through old board papers, there may be room to strengthen the governance framework.

Stronger trustee oversight without micromanagement

The answer to increasing trustee responsibility is unlikely to be longer board packs, more committees or greater involvement in operational decisions. In many cases, the strongest boards are those that are clearest about where their attention genuinely adds value and where it does not.

Trustees should periodically return to a handful of fundamental questions. Are the charity’s objectives still clear? Does the board receive the information it needs to understand the important risks and decisions? Are responsibilities delegated clearly? Do major policies reflect the charity’s current circumstances? Can significant decisions be explained and evidenced? And, perhaps most importantly, is board time being directed towards the issues that could materially affect the organisation?

Investment governance offers a useful example. Trustees do not need to monitor every transaction within a portfolio, but they should understand whether the investment strategy remains aligned with the charity’s financial needs and risk tolerance. They should know what they expect from their investment manager or adviser, what good performance looks like over the relevant timeframe and what circumstances would prompt a review.

The same principle applies more broadly across charity governance. Strong oversight is usually achieved by asking fewer, better questions, being clear about the answers the board needs and resisting the temptation to confuse volume of information with quality of governance.

So, has the job of a trustee become harder?

In practical terms, yes, because the fundamental responsibilities of charity trustees remain recognisable while the environment in which those responsibilities are exercised has become more complex, more visible and less forgiving.

Trustees are expected to understand a broader range of risks, exercise stronger oversight and feel confident challenging increasingly complex information, all while recognising where their role ends and management’s begins. They are also operating in a world where financial, operational and reputational risks overlap far more frequently than they once did.

None of this means boards need perfect foresight, and nor should trustees expect to eliminate every risk facing their charity. Their responsibility is to understand the organisation they govern, seek appropriate information and advice, apply judgement and maintain a decision-making process that can stand up to sensible scrutiny.

For trustees and Chairs, that is perhaps the most useful way to think about how the role has evolved. The world around charities has become harder, faster and considerably noisier, so good governance increasingly comes down to knowing what matters, asking the right questions and making sure the board spends its time on the things that genuinely deserve it.

Which, on most boards, is probably a healthier ambition than trying to read every appendix.