A person responsible for administrating assets and property on behalf of a third party is called a trustee.
A trustee can be appointed for various reasons, including managing retirement plans or pensions, managing a trust fund, dealing with a bankruptcy, or managing assets on behalf of a charity. This Lexicon examines the role of the trustee when it comes to businesses and organisations.
What do trustees do?
Trustees will often have a fiduciary responsibility and are expected to act in the best interests of those they represent. They should be able to confirm that all assets are safe, and they should honour any trust agreements in place.
Trustees will also be responsible for preparing any records on behalf of the trust.
Other responsibilities of the trustee include the appropriate recording of income, expenses, distribution of funds, and filing of taxes.
- Trustees should also ensure that the organisation’s vision is clear to everyone.
- They should maintain high standards of honesty and foster an ethical culture.
- The trustee should ensure that appropriate financial, risk management, and data protection controls are in place.
Who can become a trustee?
A suitable candidate would be someone who can follow the trust’s instructions while putting their personal interests aside.
Those who govern charities are also referred to as trustees. Such trustees play an essential role in leadership, ensuring that the organisation remains focused on its vision. They must ensure that the charity operates fairly and transparently and that all legal obligations are met.
If you are a charity trustee, you can refer to the Charities Governance Code, which identifies six principles of good governance. These are as follows:
- Acting with integrity
- Leading people
- Effective working
- Accountability and transparency
- Controlling the organisation effectively
- Advancing the purpose of the charity
A board of trustees can be appointed or elected to take over the running of an organisation. They should seek to ensure the best interests of the stakeholders are achieved at all times. Usually, the board of trustees comprises key individuals within the organisation. There could be a mix of internal and external trustees, with some being hired for their expertise in particular areas.
A board of trustees may be similar to a board of directors. Essentially, however, the board of trustees will be responsible for protecting the assets and property of others.
Boards of trustees may also be found in Universities, hospitals, charities, and government bodies.
The difference between a trustee and a director
Trustees can be paid or unpaid, just like directors. The differences between trustees and other board directors may be that the name takes on a different meaning in law, and trustees can sometimes be held to higher fiduciary standards.
There may also be a greater liability for trustees regarding how they will be held accountable.
However, in terms of the role, trustees share many of the same responsibilities as board directors. Both act as advisors to the company and ensure specific standards are being achieved.
Another distinction that can be made between boards of trustees and boards of directors is that boards of trustees tend to preside over non-profit organisations, while boards of directors are in charge of public or private sector organisations.
How to become a charity trustee – a practical guide
Charity trustees are the group of people with overall responsibility for a charity. They are often called the board or governing body. Have you ever wondered how to become a charity trustee?