If an NHS body holds charitable funds as sole corporate trustee the board members of that body are jointly responsible for the management of those charitable funds.

The charitable funds linked to an NHS body are independent of the “exchequer” funds of that body and must be managed separately, even though they are mainly to be used to support the work and services of the NHS body.   The Charity Commission has regulatory responsibility for ensure the proper management of these charitable funds.

Some NHS bodies have a separate trustee body which manages the charitable funds linked to the work of the NHS body.  Where this applies the Board of the NHS body does not have responsibility for the charitable funds.

This question and answer sheet is intended to help individual Board members to understand how responsibility for managing the charitable funds (if vested in the Board) will work in practice:

Q1: How do I find out more about the charitable funds in question?

A: Any charitable funds that are administered by the NHS body are registered together under a single charity registration number.  There may be a single charity or several registered under that number. The NHS body should be able to advise you of that number and provide details of the funds that are held.  It should also be able to advise you whether the funds are managed by a separate trustee body.  If they are the remainder of this guidance will not apply to you.  Details of the fund balances appear in the charity’s(ies’) accounts.  You can also view the registered details of the funds via the Commission’s website.

Q2: As a result of my appointment will I be a “charity trustee”?

A:No. The NHS body is the sole charity trustee of the charitable funds in its corporate capacity. It is the NHS body that would be liable for any misapplication or mismanagement of those funds (see Q4). Many NHS bodies, however, appoint a sub-committee to administer their charitable funds (the “Charitable Funds Committee” or “CFC”). Those serving on the CFC are acting as “agents” of the NHS body. In the case of NHS Trusts the use of such an agency arrangement is permitted under regulation 16 of the NHS Trusts (Membership and Procedures) Regulations 1990 and the CFC reports back to the Board. PCTs have similar power to appoint committees arising from regulation 12 of The Primary Care Trusts (Membership, Procedure and Administration Arrangements) Regulations 2000. In the case of Foundation NHS Trusts acting as corporate trustees of charitable funds, the Trust has powers under the section 11 of the Trustee Act 2000 to appoint and delegate to agents. This power includes appointing a charitable funds committee, whose members are not confined to its board members. .  

As the NHS body is the trustee it must retain direct control of key decision making.  In particular it must set the strategy and policy for the charitable fund(s) and set the budget(s).  In practical terms the trustee (acting through its Board meeting) should set spending priorities and criteria for individual spending decisions for each fund.  Within this framework the CFC (and others involved in managing the funds) can be permitted to make day to day spending decisions, all of which should be reported back to the trustee.  It is recommended that thresholds are set above which the trustee must be directly involved in making the spending decision. It is the responsibility of the trustee to ensure that spending decisions taken by its agents are proper decisions that comply with the trustee’s framework.

If guidance is required on the application of the Membership and Proceedings Regulations this should be sought from the Department of Health.

A few NHS bodies do not appoint agents but directly manage the charitable funds through the NHS body’s Board meetings.   If your NHS body operates on this basis you will, by virtue of being a Board member, automatically share the equivalent responsibilities to CFC members (as outlined below).

Q3: What would be my responsibilities towards the charitable funds if I join the Charitable Funds Committee?

A:  As a member of the CFC you would share responsibility to ensure that the NHS body fulfils its duties as a charity trustee when it manages the charitable funds.  In practical terms this means that you need to be aware of the duties of a charity trustee.   Basic guidance on those duties is set out in the Commission’s booklet The Essential Trustee: what you need to know (CC3) which can be downloaded from our website. 

You also need to be aware of the NHS body’s established practices and policies in the management of its charitable funds.  Important information to seek from the Board includes:

• The objects and scope of each of the charities, as set out in the respective governing documents of those charities.
• The spending priorities set for the charitable funds for the current financial year.
• The agreed criteria for deciding whether or not to spend the charitable funds to meet any particular funding request.
• The delegation arrangements for the charitable funds.  Typically much of the spending of specific funds (within defined thresholds) is delegated to “fund advisers” (also sometimes called “fund holders”).   Day to day administration of the funds is often delegated to the NHS body’s finance department.
• The basic accounting arrangements that enable the Board to oversee and monitor the spending of the charitable funds.

Overall, before accepting appointment to a CFC, we would recommend that you spend a little time establishing the position in relation to the areas mentioned above.  You may wish to consult with the main administrator of the charitable funds and ask whether there is induction training available from the NHS body covering the management of the charitable funds.   If you require further information or guidance concerning the correct management of a specific charitable fund you can seek advice from the Charity Commission’s NHS Unit (please see Contact Us).

Q4:  Will I be liable if the charitable funds are incorrectly managed?

A:  If charitable funds have been lost as a result of mismanagement the immediate liability to make good the losses falls upon the NHS body acting in its corporate capacity.  The claim would be against the corporate property of the NHS body: in this context “corporate property” does not extend to the charity funds.  The regulator responsible for taking action against the NHS body in such circumstances would be the Charity Commission.

Where the losses to the corporate property of the NHS body resulted from inappropriate action or inaction by the CFC (or, where there is no CFC, by the Trust Board members) the NHS body might have a claim against individual members of the CFC (or Board members where there is no CFC).