Guidance

Local authorities (or councils) as trustees of charities – a guide for councillors

Updated 8 August 2024

Applies to England and Wales

This guide has been written by the Charity Commission for England and Wales with the contribution of the Local Government Association.

Overview

Many local authorities – or councils – hold assets that are charities.

Often this is because a donor has left land or property to a council on condition that it is used for a charitable purpose such as a museum, art gallery or recreation ground.   

This means that the local authority is the trustee of the charity and is responsible for managing it in a way that complies with the law.

The local authority might be a trustee of different types of charitable assets, such as land or a school prize fund.

Where a local authority is trustee, it is the local authority itself and not individual councillors, who is trustee.

Common issues that can arise

Local authorities can have the expertise needed to manage charities. But issues can arise – and these can attract significant local attention.

For example, the local authority:

• not being aware that it is the trustee of a charity
• not keeping separate accounts for the charity
• not submitting accounts or annual returns to the Charity Commission when they fall due
• unknowingly using charity property for its own local authority purposes
• not following the rules when disposing of charity property
• not identifying when there is a conflict of interest
• not managing small funds, which become dormant

These issues can result in public criticism for the local authority, financial loss for the charity and breach of trust. 

It is important that local authorities that are trustees understand what their legal responsibilities are.

Find out more:

• read Charity Commission guidance about local authorities acting as trustee
• speak to relevant officers at your council, for example the legal team or officers who are responsible for the asset in question

Case studies

These are fictional case studies to show how local authorities may face conflicts of interest or other difficulties when making decisions as charity trustee.

Case study 1

Highton District Council (which is also the planning authority) is trustee of a recreation ground and children’s play area located in one of its wards, which is held on charitable trust. The council has been paying out of its corporate funds the maintenance and upkeep of the land. A decision to close the play area and sell part of the land will provide the charity with the funds it needs to maintain the recreation ground. This means the council can stop subsidising the charity from public funds. The council must manage the conflict of interest that exists:

• because it stands to benefit from the disposal – disposing of the land will enable it to stop subsidising the charity
• because it is the planning authority which will make decisions on how the land can be developed

If it cannot manage the conflict of interest, the local authority will need authority from the Charity Commission if it wanted to go ahead with the disposal.

Case study 2

Southbeach Borough Council plans a major refurbishment of the sea front Pavilion Rooms to include a tourist information centre for people visiting from outside Southbeach. The council’s solicitor has checked and the Pavilion Rooms building was left to Southbeach Council in 1948 on charitable trusts for the benefit of the people of Southbeach.

The council faces a conflict of interest between its desire as a public authority to promote tourism and its duty to further the charity’s purpose and act in its best interests. In addition, the promotion of tourism is not a charitable purpose and the council should take legal advice before going ahead.

Case study 3

Touchline District Council is trustee of a recreation ground which was gifted in 1967 as a public recreation ground within the meaning of the Recreation Charities Act 1958. Last year the council leased the site to Touchline Football Club to facilitate its expansion plans and the football club has now laid out new pitches and spectator areas. The council has so far used the proceeds from the lease to replace the equipment in a neighbouring children’s playground.

Under the 1958 Act, the recreation ground must be available to members of the public at large, which has been affected by the granting of the lease to the football club. The issue is increasingly being reported about in the local media.

The council should take legal advice on:

• whether, in granting the lease, Touchline Council acted outside its trustee powers and in breach of trust; and
• how it can restore open public access on the site, or whether it can provide a suitable replacement instead

If the council decides to provide replacement land, it is likely to need authority from the Charity Commission.

Read our guidance about local authorities as trustees, which sets out the requirements when disposing of land and managing conflicts of interest .

If the local authority has appointed you as trustee

Local authorities can have the right (under the terms of a governing document) to appoint trustees. Your local authority may have appointed you – a councillor – to be a trustee of a charity. If so:

• you, rather than the local authority, are responsible for the administration of the charity, along with your fellow trustees
• you and your fellow trustees are personally liable for the decisions you make
• you must act in the interests of the charity, not those of the local authority
• you do not ‘represent’ the council on the trustee board

Read guidance about:

• trustee duties
• trustee decision-making
• managing conflicts of interest