Resolving charity and trustee conflicts
Charities, like other organisations, may be involved in a wide range of potential disputes, from contractual arguments with their suppliers, insurers or landlords, to issues regarding their intellectual property.
However, charities, unlike commercial entities, are also subject to specific rules concerning bringing or defending legal action, which, if not followed, can have serious consequences for the charity and its trustees.
At Nelsons , we understand the unique challenges faced by charities and their trustees. Our dedicated team of charity law experts in Derby, Leicester and Nottingham provides comprehensive legal support to navigate complex disputes while upholding your organisation’s values and reputation.
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Understanding charity and trustee disputes – how our solicitors can help
At Nelsons, our expert team of dispute resolution solicitors can provide specialist advice on charity litigation matters and trustee disputes, including:
- Internal disputes between trustees
- Making applications to the Charity Commission to commence legal proceedings
- Beddoe applications – an application made to the Court by the trustees of a charity to become involved in litigation
- Disputes between charities and their suppliers, insurers, clients or landlords
- Defamation claims and remedies
- Fraud and asset recovery
- Debt recovery
- Insolvency and restructuring
- Intellectual property disputes
Our team work with charities across the country to resolve disputes at the earliest possible stage through negotiation or other forms of alternative dispute resolution, such as mediation.
Court action is a last resort but, if a case gets there, our team puts forward the best possible case, never losing sight of the charity’s objectives.
Meet the team
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Daniel Brumpton
Partner & Solicitor
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Simon Waterfield
Partner & Solicitor
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Emma Toes
Partner & Solicitor
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Chris Chan
Partner & Solicitor
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Adrian Slater
Partner & Solicitor
Why choose Nelsons?
- Sector expertise – Our team has extensive experience in charity law and governance. We are also ranked in tier one by the independently researched directory, The Legal 500.
- Pragmatic approach – We focus on practical, cost-effective solutions tailored to your charity’s needs.
- Regulatory knowledge – We stay up-to-date with the latest charity regulations and Charity Commission guidance.
- Alternative Dispute Resolution – We prioritise mediation and negotiation to resolve conflicts amicably where possible.
- Litigation experience – When necessary, we provide robust representation in Court proceedings.
Our approach
We understand that every charity dispute is unique. Our process typically involves:
- Initial consultation – We listen to your concerns and assess the situation.
- Strategy development – We work with you to develop a tailored approach that aligns with your charity’s values and objectives.
- Implementation – We execute the agreed strategy, whether through negotiation, mediation, or litigation.
- Ongoing support – We provide continuous guidance to help prevent future disputes and strengthen governance.
Preventative measures
In addition to dispute resolution, we offer proactive services to help charities avoid conflicts:
- Governance reviews and updates
- Risk management advice
- Policy development and implementation
If your charity is facing a dispute or you need advice on governance matters, don’t hesitate to reach out.
To arrange a confidential discussion with our Charity team, please contact us on 0800 024 1976 or via our online enquiry form.
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Charity & Trustee Disputes FAQS
Below, we have answered some frequently asked questions concerning charity & trustee disputes
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What are common types of charity disputes?
Charity disputes can take various forms, often involving different stakeholders within the organisation:
- Conflicts between trustees: These may arise due to disagreements over strategic direction, resource allocation, or personal differences. Such conflicts can paralyze decision-making and harm the charity’s operations if not addressed promptly.
- Disagreements over charity administration or finances: This could involve disputes about budgeting, investment decisions, or the allocation of funds to different programs. Financial mismanagement or lack of transparency can also lead to disputes.
- Disputes with donors or beneficiaries: Donors may claim that their funds were misused or that the charity didn’t fulfil agreed-upon conditions. Beneficiaries might dispute the fairness of resource distribution or the quality of services provided.
- Issues with regulatory compliance: Charities must adhere to various regulations, and disputes can arise if there are allegations of non-compliance with charity law, tax regulations, or other relevant legislation.
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When might trustees face legal action?
Trustees can face legal action in several scenarios:
- Breach of fiduciary duty: Trustees have a legal obligation to act in the best interests of the charity. If they fail to do so, whether through negligence or deliberate action, they may face legal consequences.
- Misuse of charity funds: This could involve using charity resources for personal benefit, making unauthorized payments, or allocating funds to purposes outside the charity’s remit.
- Failure to follow proper governance procedures: This might include not holding required meetings, failing to maintain proper records, or making decisions without proper authority.
- Conflicts of interest: If trustees fail to declare and properly manage conflicts of interest, particularly if these conflicts result in decisions that benefit the trustee at the expense of the charity.
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How can charities resolve internal disputes?
Charities have several options for resolving internal disputes:
- Mediation: A neutral third party can help facilitate discussions and find mutually agreeable solutions. This can be less costly and adversarial than formal legal proceedings.
- Board intervention: The board of trustees may need to step in to resolve conflicts, potentially by creating special committees or bringing in external advisors.
- Seeking advice from the Charity Commission: The Commission can provide guidance on governance issues and may offer a formal advice service for complex matters.
- Legal action as a last resort: If other methods fail, legal proceedings might be necessary. However, this should typically be viewed as a last resort due to potential costs and reputational damage.
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What role does the Charity Commission play in disputes?
The Charity Commission plays a crucial role in overseeing charities and can become involved in disputes in several ways:
- Provides guidance on charity law and governance: The Commission offers extensive resources and can provide specific advice on legal and procedural matters.
- Can intervene in serious cases of misconduct: If there are allegations of serious mismanagement or misconduct, the Commission has powers to investigate and take action.
- May appoint interim managers in extreme situations: In cases where there’s a significant risk to a charity’s assets or beneficiaries, the Commission can appoint temporary managers to take control.
- Offers a complaints process for issues with charities: The public can raise concerns about charities to the Commission, which may then investigate if warranted.
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Can donors take legal action against a charity?
The ability of donors to take legal action against a charity is generally limited:
- Specific conditions of a donation were breached: If a donation was made with explicit conditions and these were not met, a donor might have grounds for legal action.
- Legal standing may be limited without direct involvement: Generally, once a donation is made, the donor no longer has control over those funds. This limits their ability to take legal action unless they have some ongoing involvement with the charity’s operations.
- Potential for reputational action: While not strictly legal action, donors might publicly voice their concerns, potentially damaging the charity’s reputation and future fundraising efforts.
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How can trustees protect themselves from liability?
Trustees can take several steps to protect themselves:
- Maintain thorough records of decisions and actions: Detailed minutes of meetings and clear documentation of decision-making processes can provide crucial evidence of proper conduct.
- Ensure compliance with charity’s governing document: Trustees should be familiar with and adhere to the charity’s constitution or articles of association.
- Seek professional advice when needed: On complex matters, particularly those involving legal or financial risks, trustees should not hesitate to seek expert advice.
- Consider trustee indemnity insurance: This can provide financial protection for trustees in case of legal action, although it typically doesn’t cover cases of wilful misconduct.
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What are the potential consequences of losing a charity dispute?
The consequences of losing a charity dispute can be severe:
- Financial penalties or repayment orders: Trustees found to have misused funds may be required to personally repay the charity.
- Removal from trustee positions: The Charity Commission or the Courts may disqualify individuals from serving as trustees.
- Reputational damage to the charity: Public disputes can harm a charity’s reputation, potentially affecting donations and support.
- Potential criminal charges in severe cases: In instances of fraud or serious misconduct, trustees might face criminal prosecution.
Get in touch
Speak to us now on 0800 024 1976Email Us