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How Charitable Are You?

28 October 2013

Almost anyone can be a trustee of a charitable trust. Generally the trust will look to appoint people who are a good fit with the skill set of the current trustees and who can bring relevant experience, or particular expertise, to the trust.

Being a trustee of a charitable trust shouldn’t be a role undertaken lightly. It‘s very nice to be asked, and it’s an opportunity to give back to the community. These can be good reasons to take on the role. Alternatively, you may have been persuaded to take the role because “we need more people, and it’s a very small time commitment from you.”

Whatever the reason you are asked to become a trustee, before you take that step you should do your homework. All trustees have legal obligations, whether they are trustees of a family trust or trustees of a charitable trust. Due to the public nature of charitable trusts in New Zealand, being a charitable trustee can expose you to public scrutiny to ensure that you meet those obligations. This is because the “beneficiaries” of a charitable trust will be members of the general public, and because the Charities Register contains a public record of all charitable trusts, including the trust deed, annual financial statements of the trust, and a list of the trustees.

One of the most important obligations for a trustee is to comply with the terms of the trust deed. You will need to understand what the trust has been established to do, what it’s allowed to do, and what restrictions are placed on the trust. You must then act to ensure that the trust operates within those parameters. As a trustee, the only way you can fully understand these parameters is to read and understand the trust deed. You shouldn’t rely solely on someone else’s interpretation of what the trust is about, or on a website or any other type of publication issued by the trust.

As mentioned above, the deeds of charitable trusts are public documents, so you don’t have to be a current trustee to see the deed. Before taking on the trustee role, read and familiarise yourself with the deed. Find out the actual objects or purposes of the trust. The objectives or purposes of a charitable trust provide the boundaries for the operation of the trust, or more simply, who are its audiences and to whom can it or should give money and support. As a trustee it will be your role to ensure that the trust complies with and carries out its objectives or purposes as set out in the trust deed.

Another important obligation for a trustee is to take an active role in the trust. You cannot just be there to make up the numbers. As a trustee you’re responsible, whether you have been actively involved in the decisions or not, for all decisions made by the trustees. If the charitable trust operates outside its objectives or purposes, you will be equally liable for the incorrect decisions made by the trustees, whether you knew about those decisions or not.

It’s not all doom and gloom though. The charitable sector in New Zealand makes a significant contribution to the country's social fabric. Being a part of this sector can be a rewarding and exciting experience. There are numerous resources to help you fulfill your obligations as a charitable trustee.

An excellent starting point is the Charities website (www.charities.govt.nz), which contains information and checklists for trusts and trustees, and links to other helpful websites.

Dan Moore is a partner at Norris Ward McKinnon. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.