Charity: Trouble at Mill?

Yes, there can be a lot of disagreement in a Charity, but some of it can spill over into the seriously unpleasant.  It can adversely affect the good standing of the Charity and can be very difficult to develop an effective strategy to manage it.  This article sets out what “some of” the ingredients for resolution might be.

The problems can be with different aspects of the human relationships between those who are connected with the Charity.  Generally, this can be with trustees and staff, or trustees and other trustees, or the Charity and donors. Disputes within charities can arise between or among trustees, staff and members.

Problems at Board Level (Trustees)

It can come as a shock to people who become trustees as to just how wide ranging the issues, they deal with can be.  Examples can be say personality conflicts on the Board or between the Board and the executive team. Having to tackle staff issues such as discipline or make people redundant.  Anything life can throw at us, generally can crop up for trustee to deal with.  Most people will avoid a conflict if they can and will not welcome either conflict or difficult decisions as part of their role.  Others will enthusiastically (sometimes too much so) roll up their sleeves and try to lay down the law.  Either can be a problem, and an approach which is likely to result in the best outcome for the Charity is what is ideal.

Prevention is often better than cure.  Some things to consider before things go wrong can include:

  • Seek to ensure that there is already in place and properly set out, the standard of behaviour expected of any trustee.  This could be a code and should be made available to all trustees and certainly any new trustees, along with many other essential documents at that point.  An example of such a document is the CC3 which covers the main roles and responsibilities of a trustee and the Board.


  • Constitution. To remove a Trustee (outside of the statutory circumstances which prevent a trustee acting) there generally must be a power in the governing document (sometimes called a constitution).  If there is already a dispute, then it is really too late to try and introduce such a power as questions can be asked about the motive for its introduction and an allegation of “fraud on the power“ could be made which could negate the introduction by the trustees at all.


  • Offer and arrange at an early stage, proper trustee training for all trustees.  This must be on the law and their role in a charity as well as obligations, but also on all internal policies, and in particular the trustee role as a Board and how that fits with the role of the executive team.

Healthy disagreement within a Board is to be encouraged.  However, if a disagreement goes too far, it can be problematic.  It can for example put others attending a meeting as they will be uncomfortable with the acts or sometimes aggression they will witness.  Charities operate on a majority decision making basis.  The Board will not always be at one, and as said above it can actually be healthy and stimulate debate.  If the matter is serious then a disagreement can be recorded in the minutes.  However, once a majority decision is made it is final and binding on all trustees.  An unhappy trustee can resign or if the matter is very serious, make a suitable report and/or then resign.

An example of an issue seen recently is a Board with trustees who became very concerned over the recent dip in the performance of their investment portfolio.  Over a number of years, the value of their funds had reduced.  The Board wanted to understand why this was the case, and what could be done, and the obvious consequences of the current trajectory.

The Charity had an investment policy, but it had not been reviewed in sometime.  The Charity was a limited company and therefore for nearly all investment purposes, had the powers of an absolute beneficial owner.  The Board comprised a mixed range of age and experience, and some trustees had been trustees of other Charities.  When the executive prepared information for discussion, several issues began to emerge.  For example, the investment policy had not been reviewed for several years.  The instructions to the brokers were to deliver a fixed income and maintain capital value.  It quickly became apparent that this issue alone was presenting issues.  There was no appreciation of the concept of total return, and some took the view that maintaining income was the most important issue.  Others believed a balanced approach was appropriate, and some did not really appreciate the difference.  No agreement as to the correct approach could be reached, some making the point to maintain income levels at all costs was a form of preferring current beneficiaries’ interests over potential future beneficiaries.

The issue became heated.  If only at that stage both financial and legal advice had been sought before things became subject of animosity.  The truth was that all points were being made from an honestly held belief in what was right for the Charity and those it served.  Sometimes things can just become out of date, and sometimes external influences force change.  Eventually, a full review of the legal, financial and policy issues was undertaken, and some mediation assisted the Board to learn where things had gone wrong and work together on agreed solutions.

Sometimes the majority Board may decide that the behavior or manner of the dissenting trustee was contrary to the Charity’s interest and seek to use the constitution or policies to remove a trustee.  This can give rise to a dispute that can end up in Court.  However please note such a case would be a “Charity Proceeding”, and therefore require the consent of the Charity Commission to bring such a case.  The best interests of the Charity will weigh heavily here.  Such cases are not cheap, and the Courts generally will not be happy to see trustees squabble in Court spending charity money.  Costs could be awarded against such trustees.

Trustees should therefore take every opportunity to resolve disputes without resorting to Court action.  I will long remember the very unclear dispute I dealt with when employed at the Charity Commission.  Only after I was advised one trustee was romantically involved with another’s wife, did I understand why they could not work together.  There is no room in Charity for such sentiment!

In such cases, every technicality can be called upon to support a case.  It is important that the paperwork is in good order and that proper minutes are in place, especially so when there is disagreement.  It is very unwise to pull the tail of a tiger, so removal of a trustee which is often the flash point, should in my view be done only on proper legal advice.  Remember both parties can take legal advice, so it is often best if all parties agree the Board should take advice and agree to be bound by it.

Problems at staff Level

The executive team are usually employees, and the trustees or Board are the employer.  This carries lots of duties and responsibilities owed to staff and often volunteers. All those actions you would expect in any secure and proper employment should be present within a charity environment.

Things such as staff disputes or disputes with the Board are all possible.  A proper staff handbook should be in place, and strictly adhered to.  Dignity and respect on both sides is always the correct thing.  Just because it is a charity does not mean that staff do not enjoy the same generally rights as employees as they would find anywhere else in the workplace.

The Board is there to set policy and manage the application of that policy through proper budgetary control.  The staff are there to deliver the Board set strategy and policies.  Often there is a blurring of this line, and this is the common cause of many issues.  It is important to recognise this issue.

Having said that, if this is not the cause of the issue then it is important to have the usual disciplinary processes to follow, observing a comprehensive staff handbook in this regard, and ensuring there is transparency about any process pursued.

In circumstances where disputes between trustees and staff arise, it is in everyone’s interest (this includes the Charity) to address this using any proper means available, and where possible avoiding any aggravation of the situation.

Sadly, there will be cases in which the answer is the dismissal of staff.  If, as is sometimes the case, a settlement agreement is appropriate especially on legal advice, then trustees must remember their obligation is to use any money for the purposes of the charity, so if necessary, contact with the Charity Commission before such payments are made may be wise.  It is circumstance specific.  Trustees are expected to ensure the charity is no worse an employer than any non-charity, but finding the correct mix can be complex.

Other Potential Issues

Other potential issues can include contract disputes, donor issues which may also be contractual in some circumstances.  Membership disputes as between groups of members or as between the members and the charity. good governance is very important, as are clear governing documents, so everyone knows the rules.  People often feel unhappy if the rules are not transparent and/or they feel they have not been treated fairly.  Such matters are outside of the scope of this article.

This article is not meant to be a full statement of the law.  It is a general summary. Legal advice specific to your circumstances should always be sought.

Stephen Claus.

These are the views of Stephen Claus, and therefore does not constitute individual legal or financial advice, this article is for information only. If you require guidance or advice, please get in touch.

Click here to go to our Charities and Trusts page to read about our approach when it comes to guiding and advising charity trustees.


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