Know your trustees: Custodian Trustees

Many charities, keen to resume their activities and functions as effectively as possible, are planning ahead for cautious resumption of service delivery as the Coronavirus lockdown eases.  Here at CAN we are receiving a steady stream of enquiries from trustees for whom the situation has prompted some uncertainty about their precise roles as trustees. ‘Trustee’ is often seen as a generic word – but It’s not.

There are four distinct categories of trustee, each with a specific range of responsibilities and obligations.

• Custodian
• Sole
• Holding
• Managing

And it’s helpful to know what the lines of demarcation are between what trustees are and are not empowered to do.

So this is the first in a series of articles looking in detail at each category of trustee. We’ll start with:

Custodian Trustees

Unincorporated charities do not have their own legal identity. They ‘borrow’ the legal identities of their trustees to enter into contracts and to own assets. When an unincorporated charity owns property or land it might appoint a Custodian Trustee to hold the title deeds on their behalf in perpetuity. The Custodian Trustee is a corporate body, such as a Parish Council or the Official Custodian of Charities. Whilst the Custodian Trustee holds the title to all property on behalf of the charity, it does not take part in the day-to-day management and operation of the charity.

So the Custodian Trustee owns the property?

No. The property is owned by the charity. The Custodian Trustee functions as a sort of long-term ‘safety box’. It means the charity’s Managing Trustees can change over time without having to worry about changing the title deeds.

Is the Custodian Trustee in charge then?

Again no. The Managing Trustees (they will have a later article all to themselves) are responsible and liable for the running of the charity and decision-making. The Custodian Trustee has no part in this; their one role is to hold on to those title documents for the life of the charity, and provide them if requested.

What powers do Custodian Trustees have?

• Custodianship of the property title – note that the Managing Trustees have right of access to study or copy the documents
• Furnishing the documents as required by the Management Trustees to, for example, sell or add to the property.
• Depending on the charity’s governing document, they might be able to appoint new Managing Trustees; this is uncommon however
• They can charge for their services.  Parish Councils tend not to do this.

Issues that we get asked about

Q. Our Parish Council is specified as the Custodian Trustee.  Where do our trustees representing other charities fit in?

• A representative trustee from the Parish Council could be appointed (If the governing document allows) - but the Custodian Trustee has no say in the management of the charity.  The Parish Councillor attending would be there as a Managing Trustee, not as anything to do with the Custodian Trusteeship.  
• Any trustee, whether elected or representative, should only be operating in the interests of the charity. Sometimes, representative trustees feel they are there to represent the voice of another group or organisation. This is not so. Their ‘other’ organisation might have an interest in the charity; for example, a village hall might have representative trustees from groups that regularly hire the premises – but those trustees should concentrate only on the interests of the charity. You need a conflict of interest policy to clarify and manage this.

Q. We’re 'just' the management committee. Doesn’t the Custodian Trustee hold liability and responsibility?

• No. The Managing Trustees are responsible for management of the charity’s assets and property. As an Unincorporated Charity the Managing Trustees are singularly and collectively liable and responsible for the charity and its assets.
• Some charities wish to move towards Charitable Incorporated Organisation (CIO) status, limits liability by according the charity its own legal identity. And that means you no longer need a Custodian Trustee!  CAN’s Community Development Officers are very experienced in advising on that process; give us a call.
• Unincorporated charities should have a Trustee Indemnity / Liability Insurance Policy.

Q. Our charity profile on the Charity Commission Register has the name of the Custodian Trustee listed. Does this mean we are not trustees?

• ​It’s a simple mistake. The only names should be the Managing Trustees who have been appointed in accordance with the governing document.  It could be that the corporate body listed is a ‘sole trustee’ (and we’ll talk about them in a later article). Again, our Community Development team can help clarify that for you!

Not sure? Need some advice and clarification?

Talk to us. Call us on 01362 698216 or email office@communityactionnorfolk.org.uk.  You don’t have to be a CAN member to ask for some basic advice and clarification – but membership opens up a whole vista of benefits and in-depth services that help support the work of voluntary, community and social enterprise (VCSE) groups across Norfolk. Find out more here.