stuck on commitee of local pre school

charity92

Hello
I was asked to help out at my daughters local pre-school and found myself on the committee. Now it seems that we as committee member are financially responsible for Pre-school as it is a uncorporated charity! i have not signed anything but apparently the chair signed the Constitution on our behalf!!!

Now Pre-school is low in numbers and after some digging i realized that we have no reserves and we as the committee are financially responsible for redundancy all £5,000 pounds!

Not sure how i got myself into this mess or how to get out if it! cannot get anyone to come on committee unless i lie about being financially responsible! feel like i have been cheated! i would never have agreed to be on the committee if i new what it entailed!

Any advice/help/ (we are currently low on numbers despite advertising)

chunkychocky

Goodness me! Until September I had been on the committee of our registered charity pre-school for the previous 4 years. I'd have been horrified if they told me I'd be financially responsible for anything.

Hopefully someone with legal knowledge will be along shortly. Sorry I can't help.

antrobus

charity92 wrote: »

... Now it seems that we as committee member are financially responsible for Pre-school as it is a uncorporated charity!..

That's correct. The trustees of an uncorporated charity are personally liable for the debts of the charitable trust. See:-

http://www.burges-salmon.com/Sectors/Charities%20and%20Social%20Enterprise/Publications/Information_for_Trustees_of_unincorporated_charities.pdf

november

Here is a link to the Essential Trustee by the Charities Commission http://www.charitycommission.gov.uk/publications/cc3.aspx#i1.

and here is the section you want for charities that are not also a company where the members of the committee are actually trustees of the charity.

I If things go wrong

The Charity Commission offers guidance to charities to help them operate as effectively as possible and to prevent problems arising. In the few cases where serious problems do arise, we have wide powers to look into these problems and to help resolve them. Trustees may also be personally liable for any debts or losses that the charity faces as a result. This will depend on the circumstances and the charity’s governing document. However, personal liability of this kind rarely occurs and trustees who have followed the requirements in this guidance will generally be protected.
I1. What are the liabilities of charity trustees?

The short answer
As stated above, a conscientious and committed trustee need have few worries about personal liability. But it is important for all trustees to understand their position.
In more detail
The normal position: If trustees act prudently, lawfully and in accordance with the governing document, then any liabilities (ie debts or financial obligations) that they incur as trustees can normally be met out of the charity's resources. However, if trustees incur liabilities or debts that amount in total to more than the value of the charity's assets they may not be able to cover themselves in full out of the charity's property, even if the liabilities have been properly incurred.
If trustees act imprudently: If the trustees act imprudently, or are otherwise in breach of the law or the governing document, the position is different. Here, trustees may be personally responsible for liabilities incurred by the charity, or for making good any loss to the charity. Since trustees act collectively in running a charity, they will usually be collectively responsible to meet any such liability.
Our powers: We can take proceedings in court for the recovery, from trustees personally, of funds lost to charity as a result of a breach of trust by the trustees. However, there is only a small likelihood that trustees will have to pay out of their own pocket towards a financial loss suffered by the charity, or towards compensating a third party who has suffered a financial loss as a result of their dealings with the charity. In cases where a breach of trust causes a loss to the charity, we can relieve trustees of their liability to pay, provided they have acted honestly and reasonably. Despite this, we appreciate there are genuine concerns about the risk of personal liability.

(my colouring in red)


If a registered charity is in difficulties I suggest the trustees contact the charities commission for advice. Urgently!


If you are a trustee of a charity I suggest you look into the issue of insurance for trustees. Do you have it already? If not it may be worth raising this at a meeting.


Hope that was some help. Sorry the copied text above is rather messy!

charity92

Well its is as i expected. We are ok at present but do not have any money for redundencys if we need to make them.Hopefully going to save some money over the next couple of months.

The main problem is September. We ave lots of children leaving and not enough coming in so that will be the crunch point plus me and the other member of the committee will stand down as out children are leaving for school. If we do not find over committee members then pre-school will shut! hence redundancy

The manager is looking into taking pre school on as a business but this needs investigating more, has anyone converted from a charity to a business?

november

charity92 wrote: »

The manager is looking into taking pre school on as a business but this needs investigating more, has anyone converted from a charity to a business?

Do you mean incorporating the existing charity? Yes I was involved many years ago in a charity that was becoming a company. Its not as simple as just converting the charity 'as a business' as a company is an entity in its own right. So you form a company and register that as a charity and preferably time things so you do annual reporting (to the charities commission and companies house) at the same time!

Having employees is one good reason for incorporating as charity trustees have personal liability (as in the previous post) by company directors have limited liability.

Here's the page from the Charities Commission http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_governance/Good_governance/incqanda.aspx#c1

Pennywise

Can you not simply resign from the committee? The longer the period between your resignation and the closure of the pre school, the better I would have thought. I can't imagine you being forced to stay on the committee against your will. You can't change history and you may end up liable, but the longer it carries on without you, the more chance you may escape liability or have reduced liability.

Savvy_Sue

Can the Pre School Playgroup Association or whatever umbrella group you have give any advice? Or google volunteer plus your local are to find your local voluntary services council, if it's just a short term blip then they may be able to help with making funding applications.

The council's CYPS may also be of use.

Worth noting that the new CIO may be a better structure for you than going limited, but I don't know if it will be right for you. The Independent Examiners website is worth a look for that.

Uncertain

chunkychocky wrote: »

Goodness me! Until September I had been on the committee of our registered charity pre-school for the previous 4 years. I'd have been horrified if they told me I'd be financially responsible for anything.

So, you were on an elected body with decision making powers yet you felt you should have no responsibilities for the financial consequences of those decisions?

Who did you think were responsible?

Charityworker

I would simply just resign from the committee. Dont worry about the implications of the pre school closing down. Surely your bank balance is more important than that. Also are you a committee member or a trustee? You can have committee members that are not trustees. Look on their charity commission page and see if you are one of the named trustees. If they haven't taken any of your details such as date of birth and address you probably arnt as they need that for the site.

charity92

Wish it was as simple as resigning. You need a certain amount of people ( in think five on the committee) and someone needs to take over your position. If i resign before someone takes my role Pre-school will shut and i will still be financially involved. So stuck!

Only hope i think is to try and raise some money over the next couple of months and try to increase children numbers. We have exhausted all free forms of advertising, we have a charity website/Facebook page advert in local village magazine on yell/Google Thompson local. I have dropped loads of leaflets in the local town and villages.

The manager i think can form a business or separate community organisation and take on the staff so we don't have to pay redundancy or at least hers! it would be separate to the charity. There are many ways of doing this!

As for not knowing i was responsible! the manager asked if i could help i thought the committee was just like a friends group etc that just helped with fundraising. I thought the manager was in charge! It seems like such a rubbish was of technically running a business :(with people swapping over every couple of years and none of us with any experience.

I am not a trustee but safeguarding officer