Trustees and board members of incorporated charitable trusts or societies can be personally liable if the trust or society has not kept proper accounts that give a true and fair view of the affairs of the entity.
They can be liable of that failure if:
- they contributed to the inability to pay debts
- resulted in substantial uncertainty as to assets and liabilities
- impeded an orderly liquidation, or
- for any proper reason.
In their defense trustees and board members can say
- they took all reasonable steps to ensure compliance, or
- they believed on reasonable grounds that a responsible person had done it.
Trustees and board members can also be liable on liquidation if they were a person involved in the formation, promotion or governance of a charity and they misapplied, retained or became accountable for money or property.
A court will take into account the degree to which:
- the person caused the loss
- the person was culpable
- and how long it went on for.
You can’t rely on staying ignorant. You have a duty to get involved. If you can’t or won’t do that then you should decide whether you should continue as a board member or trustee.
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