We understand that trying to make the right decisions about a property can be a minefield for trustees. Get it wrong and potentially, your charity could be facing a huge drain on resources. in the worst case scenario, property can be a major reason why some charities close. For example, we have seen where trustees have economised on basic maintenance to try to cut costs, only to face a large repair bill at the end of a lease, sometimes running into six figures. We help hundreds of charities directly each year with advice and training in this area, and 29% of those we supported in between July and December 2024 said that our expert advice had been critical to their survival.
Property can be a complex issue for trustees. Very often, it can be hard to find the time to seek professional advice about issues like property management, alongside the demands of supporting the cause and communities your charity serves. While an emotional attachment to a building can also play its part. But diverse perspectives, as well as independent expert advice, are crucial to avoid the risk of groupthink among trustees.
Common mistakes to avoid
As a trustee, when it comes to your charity’s property, it is important you understand:
- Your property responsibilities and liabilities, which includes your personal liability. For example, even if you have trustee insurance, it may not cover you for negligence.
- The number of ways in which property can be held and occupied.
- The difference between an asset’s viability versus its liability.
- The property process and the information trustees may need to make informed decisions.
Central to all of this is your ability to assess, manage and mitigate property risk. You need to be asking your colleagues and professionals you consult the right questions, identifying common pitfalls and addressing easily overlooked issues.
The information you gather through these discussions, as well as considerations of where cost savings can be made sustainably, will help you develop a clear property strategy for your charity. This should be easy for your colleagues and funders understand and include Trustees could also consider how to save money and develop a clear property strategy that is easily understood by trustees, employees, and funders, include disposing of property within the new 2022 Charities Act. Here are tips for how you can approach that.
Top ten property tips for Trustees
1. Appoint a named Trustee to oversee all property matters.
2. When you are reviewing your charity budget, do look carefully at all your premises costs, such as maintenance, utilities, security, service charges, etc. Are the calculations based on figures from a reliable source, such as the owner, landlord, survey, rather than guesswork? Is there a budget line for unplanned premises expenditure should an emergency arise?
3. Double check what repair and maintenance obligations your charity has with regard to the building. How do you plan to meet these costs?
4. Has your team taken professional advice on the terms of a lease to ensure they are getting the best possible deal? Are the break clauses in the lease in the diary? Remember, you need to start planning at least a year before you move.
5. If your charity is taking on a building, check if it has commissioned a condition survey to highlight potential problems and advise on the correct planned maintenance.
6. Review your charity’s planned maintenance schedule. When was the last condition survey or risk assessment conducted?
7. Consider how your charity plans to generate income from the building Is the asset being used effectively or are there other potential uses that are being missed? If you are planning to sublet, do not forget to get an agreement from your landlord. Remember, that VAT may apply to rents.
8. Revisit your charity’s business plan. Are the premises’ needs included? Has consideration been given to how these needs may change over time?
9. Assess how your premises reflect your organisation’s culture, team well-being, and success. If not, what measures do your Board need to consider?
10. Remember, the Board must set the strategic direction of your charity and this includes being sustainable. So, make sure you give Board approval for policies on environmental, financial, and employee/contractor management.
The value of professional property advice
Seeking good property advice can be invaluable for your charity. Just like accountancy advice, it is an investment that can save your charity significant sums in the long run and secure its stability and future.
