Liability

Provided a legal document has been discussed and minuted the member signs ‘on behalf of the organisation’.  All Committee/Board members are jointly and equally responsible for the proper use of finances.  Also for ensuring that the activities and spending of the organisation are within the terms of its aims and objectives and charity law.  Accurate minutes are therefore VITAL for the legal and proper operation of a Committee/Board.  

Personal financial risk to voluntary management committee members is minimised by ensuring an appropriate organizational structure.  If the financial risk is high company status may be worthwhile to limit liability.  Where an organisation uses loan finance personal guarantees should be avoided.

Even if the governing body is a Company Limited by Guarantee (which limits individual financial responsibility to an agreed amount, usually £1) if the Board has been operating illegally or while insolvent this protection may be removed and the directors will find themselves jointly and severally liable for the financial responsibilities of the organisation.

Source:  Dave Davies, STEGO Training and Consultancy

It is important to make yourselves aware of legal requirements – see sections 11 and 12 for sources of information.

The Committee/Board should ensure that all appropriate policies are in place AND ARE FOLLOWED – this will help you avoid problems.  It is also important that all the relevant insurances are in place (the SCVO website contains guidelines on what insurances are necessary – www.scvo.org.uk).  If you have staff, you might also want to consider subscribing to a human resources/legal service – ask around other local organizations who may be able to suggest services to approach for quotations).

 

Further information

Further information can be found on the excellent Governance section of the Scottish Council for Voluntary Organisations (SCVO) website www.scvo.org.uk/governance/Home/Home.aspx

 

See Also:

 

Note:  all the information on this website applies to organisations based in and/or operating in Scotland.

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