Know your Trustees - Holding Trustees

We receive a steady stream of enquiries from people expressing uncertainty about their roles and responsibilities as trustees. This is the third in our series of articles explaining the lines of demarcation are between what trustees are and are not empowered to do. 

Just to re-cap, there are four types of trustee, each with a specific range of functions and responsibilities.  

• Custodian   
• Sole  
• Holding 
• Managing          

This time we’re looking at Holding Trustees. And you are always welcome to talk to one of our experienced Community Development Officers for a one-to-one explanation. You can contact us on 01362 698216 or by emailing  office@communityactionnorfok.org.uk. 

What are Holding Trustees? 

Holding trustees are similar to Custodian Trustees.  Key points to remember are 

• 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 
• Holding Trustees might be appointed when an unincorporated charity owns property or land to hold the title deeds on their behalf. 

Who are the Holding Trustees?

They can be some of the Managing Trustees or other individuals connected to the charity.

Key roles and constraints 

Unless the governing document expressedly states otherwise, the sole function of Holding Trustees is to hold the title to all or part of the property of a charity.  They play no part in the management of the charity (unless the governing document clearly states otherwise).  They must act only on instruction from the Managing Trustees - unless carrying out that instruction would entail a breach of trust.  Providing they adhere to this, they will not be liable for the actions of the administrative trustees. 

But note that

Some governing documents may give the Holding Trustees additional responsibilities.  It is therefore important to check out the governing document closely.  Individuals appointed to be Holding Trustees will need to be replaced from time to time as, for example, when the they resign, retire, or die. Unless it is forbidden by the Governing Document, there is no legal restriction from appointing Hold Trustees as Managing Trustees, but it is not best practice to do so as often the roles become blurred.  

Do they own the property? 

No. Just like Custodian Trustees, they hold the titles on behalf of the charity. Unlike a Custodian Trustee, however, the charity will need to change the title deeds whenever a Holding Trustee steps down or dies.   

Holding Trustees vs Custodian Trustees 

There are pros and cons to each. 

• Holding Trustees can be seen as people who, whilst not interested in running the charity, but care about it and like to help by holding the titles for it. 
• It is important to keep the titles up to date when there’s is a change in the Holding Trustees.  People often forget they are a Holding Trustee; or the charity ‘forgets’ it has Holding Trustees, the individual dies, followed by difficulty in changing the title to ensure it is held by someone else. 
• If the Custodian and Holding Trustees, and also the Managing Trustees, misunderstand the roles, it can lead to them assuming more active roles than they are entitled to. The Managing Trustees may end up thinking they themselves are not liable and encourage more active management by the Custodian or Holding Trustees. 

Do they have any role in running the charity (like a Managing Trustee)? 

It depends, once again, on their governing document. 

All Holding Trustees must – just like the Custodian Trustees - hold the charity’s documents and make them available to the charity when required. This is the full remit of involvement for some, whilst for others the governing document might see them appointed as Managing Trustees or holding a specific role.   If a Holding Trustee is also a Managing Trustee the roles are separate.  Their duty as Managing Trustee is to act in the best interest of the charity and to further its purpose, regardless of other interests.  Their appointment as Holding Trustee is separate.  If – in accord with the governing document  - the Holding Trustee has no role in the managing of the charity, then they have no role in the management of the charity – and this means they cannot make decisions about the charity and have no say in its operations. 

Not sure about all this? 

Talk to us! Our Community Development Officers are highly experienced and skilled in advising on the finer points of Trustee roles and responsibilities. Call us on 01362 698216 or email office@communityactionnorfolk.org.uk