As a board member, you have duties and responsibilities to your charity. Even though most board members of charities are volunteers, you still have legal duties that you must meet to ensure your charity is well-governed, as well as an important responsibility to put the interests of the charity ahead of your own personal interests.
The specific duties of board members vary depending on a charity’s legal structure. Generally, you need to be careful and conscientious in your role and act with common sense and integrity.
Your charity can, in some situations, be liable if you don’t follow your duties. In particular, one of the Governance Standards (Standard 5) requires that charities take reasonable steps to make sure that their board members know and understand their more significant legal duties and that they carry out these duties.
The more significant duties of board members of registered charities are:
1. To act with reasonable care and diligence
As a board member, you must show a standard of care and diligence that a reasonable person would use if they were in your place. In practice, do your best to participate. Before meetings, read and try to understand any materials you have been given about topics the board will be considering. Try to turn up to meetings on time. If you are unable to attend a meeting, give reasonable notice and try to catch up afterwards.
If you have any questions about any of your board’s business, always ask the other board members or staff and make sure to leave time for thinking about your decision. If you do not feel comfortable making a decision on something, it may be worth asking for more time. You should feel confident to independently make decisions and not just follow the crowd. Sometimes you should request that your separate view be recorded in the minutes.
Ask yourself – would someone who was observing me think that I was being careful and conscientious in my duties?
2. To act in the best interest of your charity and for a proper charitable purpose
When acting as a board member you must make decisions that are in the best interest of your charity and to further its charitable purpose.
If you are on the board as a representative or nominee of another organisation, you will generally have to make decisions that are in the best interest of the charity (rather than, for example, the organisation that nominated you).
Ask yourself – is this decision in the best interest of my charity and does it further its charitable purpose?
3. Not to improperly use information or your position
Sometimes as a board member you will come across information that could be used for your personal or other interests. Any special knowledge that you gain as a board member must only be used for the benefit of the charity and never to further personal or other interests.
For example, you might learn about the details of a tendering process or the private details of staff or clients. Keeping this information private is one of your responsibilities as a board member and this information must not be used except in the interests of your charity.
Ask yourself – am I using information I have obtained as a board member for the benefit of my charity?
In your role as a board member you may also come across times where you could use your position for personal gain or to benefit someone else such as a family member or friend.
For example, using your position as a board member to get services for a friend or family member who otherwise isn’t eligible.
Ask yourself – am I using my position as a board member for the benefit of my own interests or the interests of my family or others I have a relationship with?
4. To manage financial affairs responsibly
Many charities receive donations from the public, government and taxation concessions or exemptions, and must have financial management practices to ensure that their resources are used effectively and protected from misuse.
Charities should have appropriate and tailored financial systems and processes. They should be suitable to the size and circumstances of the charity and the complexity of its financial affairs.
Ask yourself – are there systems and processes to ensure that my charity’s resources are being effectively put towards its charitable purpose and are protected from misuse?
5. To disclose and manage conflicts of interest
Conflicts of interest occur when your duty to act in the best interests of your charity is or may be in conflict with the opportunity or potential to get a personal benefit (or a benefit for a person or organisation you have a relationship with).
If you have a conflict of interest (or even a perceived conflict), inform the charity board as soon as possible. Generally, it is best (and often required by your rules or any legislation that applies to your charity) not to take part in discussion or decision-making where you have a conflict of interest.
Conflicts of interest are common and do not have to be a serious problem. However, if a conflict of interest is not managed properly, it may damage your charity’s reputation and, in serious cases, even break the law. Even simply the perception that a conflict exists requires you to take steps to ensure you do not breach your obligations.
For more information, consider reading our guide on Managing conflicts of interest.
Ask yourself – would an independent observer be sure that I was only acting in the best interests of my charity? Or might they think I was acting in some way for my own interest?
6. Not to allow a charity to operate while insolvent
You must ensure that your charity can pay its debts when they are due. This is called being solvent. If your charity is unable to do this then it will be insolvent. As a board member, you must not allow your charity to continue to take on new debts (for example, wages, rent, equipment lease payments) if you know it will not be able to pay the bills when they are due.
Ask yourself – will my charity be able to pay its debts when they fall due?