Duties of trustees

The overarching duties of the University when acting as trustee of a charitable trust fund are:

  • to act in the best interests of that trust, and
  • to ensure that the fund’s assets are applied only for the particular charitable purposes.

The University, as trustee, accepts ultimate responsibility for directing the affairs of each trust fund, and for ensuring that the trust fund is well-run and delivers the charitable purposes for which it was set up. The University has however delegated responsibility for the investment of trust funds to the Investment Committee; and responsibility for all its other delegable functions as a trustee to the relevant Boards of Management. Therefore references in this section to the duties of trustees should be read as responsibilities of individual Boards of Management of trust funds.

(i) Duty to familiarise oneself with the terms of the trust and to comply with those terms

The first duty on acceptance of office as a trustee is to familiarise oneself with the terms, conditions and history of the management of the trust. This means that Board members must, on behalf of the University as trustee, ensure they are familiar with the terms of the trust, the property of the trust fund, the objects of the trust, any trust instrument, and other relevant information. This information will usually be recorded in the relevant Trust Regulation, Schedule to the Statutes, or OUDT record form.

The importance of the duty to become familiar with the terms of the trust is reflected in a trustees’ obligation to act in accordance with those terms. Unless instructed to act otherwise by the court or statute, failure to obey the terms of the trust will be a breach of trust by the University.

On appointment, members of Management Boards should take reasonable steps to satisfy themselves that funds have been properly administered in the past and if not, take steps to rectify the position.

If the requirements of the governing document of a trust fund create difficulties, the Board members should consider what action can be taken to make changes (see ‘Dealing with difficult provisions’), rather than act outside the governing document.

(ii) Duty of care

Board members must avoid undertaking activities which might place the trust fund’s assets or reputation at undue risk.

Board members must exercise reasonable care and skill in their work, using their personal skills and experience as needed to ensure that the trust fund is well-run and efficient. Board members should consider getting professional advice, initially through the Legal Services Office or Council Secretariat, where appropriate.

An important element of this duty is ensuring that funds are placed in the approporiate investment vehicle, bearing in mind their legal form and the timescale over which they are expected to be spent (see 'Investment of trust funds').

(iii) Duty to avoid conflicts

Board members must act with integrity and avoid any personal conflicts of interest or the misuse of charitable trust funds or assets. They must also comply with the University's Conflict of Interest Policy.

Although Board members can receive payment of expenses, they may only receive remuneration or other benefits if specifically authorised by the terms of the relevant trust, or by the Charity Commission or the Courts.

(iv) Duty to apply income

The assets of each trust fund must be used effectively, and only in furtherance of that trust fund’s objects. The incoming resources of a trust fund should be applied as income unless the trusts attaching to them identify them as endowment or capital.

An underlying principle of charity law is that income should be spent as soon as practicably possible.

It is, however, recognised that some reserves of income may be required. The University’s Statute XVI, s.20(2) specifically allows surplus income to be placed on reserve. But in all cases, trustees are justified in holding reserves only if, in their considered view, it is necessary in the trust’s best interests to do so. If done without justification, the holding of income in reserve may amount to a breach of trust. Putting money into reserve simply in order to generate more income is not generally regarded as being in a trust’s best interests.

Restricted funds which are available for a specific activity should be applied first, before any general departmental or institutional funds are applied.

A Spending plan template (17kb) is available to assist Management Boards in meeting this obligation. Contact the Trusts Administrator if you need any help in completing the template.

(v) Duty to comply with relevant legislation

Special trusts of the University are not registered separately with the Charity Commission, and are included in the University’s annual returns and accounts. There are other requirements which may apply; for example with regard to disposals of land or property, or data protection. These should be addressed as part of the University’s procedures, but Management Boards are asked to contact the Legal Services Office and Council Secretariat if further guidance is required.

Liability for Breach of Trust

Notwithstanding the delegation of the administration of the trusts to the relevant Boards, the University as the trustee of the trust funds will be liable to account for and make good any loss caused to a trust by breach of the University’s obligations as a trustee.

The University will not be liable to make good a loss simply because an investment is unsuccessful. However, the University may be liable if, in making or retaining an unsuccessful investment, the University has acted outside the scope of its powers, or has failed to discharge the duties set out above.

The Courts and the Charity Commission would, however, have discretion to relieve the University from liability for breach of trust if it has acted honestly and reasonably, and ought fairly (in all the circumstances) to be excused.