Dear Aunt Agony

We parted company with a former trustee very acrimoniously and they've since been going around bad-mouthing our organisation to all our funders.

Some of our trustees have suggested suing them for slander but having read the newspaper reports about the Diana Memorial Fund's problems I wondered if there was any danger the same thing could happen even to a small charity like ours.

Stressed of Sinfin

Dear Stressed

The recent publicity surrounding the Diana Princess of Wales Memorial Fund and its failed legal action against the American souvenir company, Franklin Mint, may seem a world away from the affairs of small local charities but there are some significant lessons from the case.

The Charity Commission took the unusual step of issuing a public warning to charities against taking legal action that could endanger the funds of the organisation.

Trustees of a charity are held responsible for safeguarding the assets of the charity and anything that puts those assets at risk could be regarded as acting negligently. This could expose trustees to personal financial liability. The same applies to investing the charity's surplus funds wisely. So think very carefully before putting the lot on the 2.30 at Haydock Park, no matter how much of a 'dead cert' you've been told it is!

Often personal feelings lie behind a decision to take legal action. It's important to remember that as a charity trustee you're always required to act in the best interests of the charity, however strongly you feel you're in the right.

Embarking on legal action carries the risk of losing the case and the financial consequences of this must be weighed up before taking a decision. In this country you have to be very rich indeed to stand the risk of suing someone, as the losing party often ends up paying the entire costs of the case which can run into six or even seven figures. The Charity Commission has made it clear it will take a dim view of charities pursuing reckless legal actions in the future. So no matter how annoyed you may be with some person or organisation, think twice before going down the legal route.

You can always make a wax model of them and stick pins in it if it makes you feel better!

(from Network News, Sept/Oct 2003)

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