You, as a trustee, can be personally liable to your charity for a loss you cause by acting improperly, whatever the charity's legal form. If it is unincorporated (not a company or a CIO, a charitable incorporated organisation), a third party it cannot pay can also claim against you. In a company or a CIO, that claim is usually against the charity. Resigning does not wipe a breach from your time in office: the notice, not a release, is the trustee resignation letter template.
What can make you personally liable
CC3, The essential trustee, updated on 16 September 2026, says personal liability is extremely rare, but not impossible. It names two routes. One is to your charity, for a financial loss caused by you acting improperly. The other is to a third party whose claim against the charity the charity cannot meet.
Trustee Meetings is a governance tool, not a law firm. This is information, not legal advice.
CC3 says you can be held liable to the charity for any financial loss you cause or help to cause, whatever the legal form. A company or a CIO does not move that claim off you.
CC49, Charities and insurance, defines a breach of trust as "a breach of any duty imposed on a trustee". It says those duties can come from the governing document (the constitution, the articles, or the trust deed), from the law, or from an order of the court or the Commission. CC49 says a duty is something trustees have to do. A power is something they may choose to use.
CC3's third-party examples are an employee's terms, an unpaid contract, an injury on the premises, and a staff pension. Those are not the charity asking you to repay a loss you caused.
Incorporated or unincorporated
CC3 says an incorporated charity is a legal person. It can own property and enter contracts in its own name. Incorporation gives you more protection, and some forms can limit your liability to third parties. CC3 also says: "The law places duties on board members to prevent the abuse of limited liability."
An unincorporated charity cannot hold property or enter contracts in its own name. CC3 says your personal liability is unlimited, that you sign contracts personally, and that any claim falls on you. The charity can normally meet liabilities you incur as a trustee if you have acted honestly and reasonably. If the liabilities exceed the assets, CC3 says you could be liable for the amount the charity cannot cover. Some charities can also indemnify you, meaning meet the bill from charity assets, for an honest mistake.
This ladder is CC3's section 11 table, in plain rows.
| Legal form | Who meets a third-party claim? | Is that liability limited? |
|---|---|---|
| Trust | You, personally, for the charity | No |
| Unincorporated association | You, personally, for the charity | No |
| Company | The charity | Yes. Extra duties come from company law |
| CIO | The charity | Yes. Extra duties come from the Charities Act and the CIO regulations |
| Community benefit society | The charity | Yes. Extra duties come from the Co-operative and Community Benefit Societies Act 2014 |
| Royal charter body | The charity | CC3's phrase is "incorporation gives some protection" |
| Corporation created by Act of Parliament | The charity | Yes, unless that Act excludes the limit |
A worked gap, labelled as ours, not a Commission case. An unincorporated hall has £4,000. The trustees sign a £12,000 repair contract in their own names, and the builder is not paid. The £8,000 gap is the shortfall CC3 describes.
If that hall were a CIO, and the contract were in the CIO's name, CC3 says the charity itself would meet the third-party claim. You could still owe the CIO for a loss you caused by acting improperly.
What limits that liability
Relief for a breach, if you qualify. CC3 says: "The law generally protects trustees who have acted honestly and reasonably from personal liability to their charity." Section 191 of the Charities Act 2011 applies to a person who is, or has been, a charity trustee. If the Commission considers that the person "is or may be personally liable for a breach of trust or breach of duty" in that role, but "has acted honestly and reasonably and ought fairly to be excused", it may relieve them wholly or partly, on such terms as it thinks fit.
Section 191(4) says this does not apply to any personal contractual liability. The contract you signed for an unincorporated charity stays with you.
Section 61 of the Trustee Act 1925 is the court's power, and section 191(6) says the Commission power does not affect it. The court may relieve you wholly or partly if you "acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the court". That order is not a line in a resignation letter.
CC3 uses its own words. It says the courts and the Commission can relieve trustees who "have acted honestly and reasonably and have not benefited from their actions". "Have not benefited" is not the test in section 191 or section 61. CC3 also says liability is rarely enforced on an unpaid trustee who made an honest mistake, and that higher standards are expected of a professional or paid trustee. It says there is no legal protection where you have acted dishonestly, negligently or recklessly.
A benefit you were not allowed to take. CC3 says you have a duty to account for an unauthorised payment or benefit, which it explains as repay. It says the Commission cannot relieve that duty. Section 191 is not a way to keep the money.
Insurance. Section 189 lets the trustees buy trustee indemnity insurance out of charity funds. CC49 describes it as cover for a legal claim against you personally, brought by the charity or by someone outside it, for breach of trust, breach of duty, or negligence in the role. You may not buy it under section 189 unless you are satisfied it is in the charity's best interests. Section 189(5) applies the Trustee Act 2000 duty of care to that decision. CC49 says the cost must be reasonable.
Section 189(2) says the policy must exclude a criminal fine, a regulatory penalty, the defence costs of a criminal case ending in a conviction for fraud, dishonesty, or wilful or reckless misconduct, and a liability to the charity from conduct which you "knew (or must reasonably be assumed to have known) was not in the interests of the charity", or where you did not care. Section 189(6) blocks a purchase the trusts expressly forbid, and it still works where a clause only bans trustee benefits. CC49 says Commission authority is needed only for an explicit ban, which it calls rare.
Where you have acted honestly and reasonably, CC49 says you are "entitled to an indemnity from the charity's assets". Insurance covers the gap if the assets run out. Paying for the policy yourself needs no charity authority, on CC49's wording.
Neither CC3 nor section 191 sets a time limit after you leave. Time limits come from other law, including section 21 of the Limitation Act 1980, and how they apply to a charity depends on the claim. Take advice if a claim is about something from your time in office years ago.
What you should do before you sign
CC3's list is a set of "should" steps. Do them before the contract.
- Before a contract or substantial borrowing, check that the charity can meet the whole bill, and get the answer in writing. CC3 says you should make sure the charity can meet its financial obligations before that point. The written answer is our steer. On the hall figures, £4,000 is not an answer to £12,000.
- Ask the same of any staff pension. CC3 names that obligation.
- Minute the decision and the reason. CC3 says you should keep those records. The shape is in what charity minutes should include.
- Stay out of a decision where you have a conflict of interest, a personal interest that could get in the way of the charity's. Use the charity conflict of interest policy.
- Take advice before you sign, if the question is outside what the board knows, and file it with the minute. If you delegate, give written instructions and check they are followed.
- If you are unincorporated and you employ staff or sign contracts, put incorporation on an agenda. CC3 says pension liabilities can be triggered by that change, so get advice first.
Do this once, then let it run itself. Trustee Meetings is a simple board-meetings tool built for small UK charities. It keeps the minute of the decision, and the reason for it, with the contract or the policy you were looking at. 30-day trial, then £15 a month or £180 a year. Card required at signup. Cancel any time in the trial. £120 a year if your charity's income is under £25,000. Every trustee included. Try it with your board
Leaving does not end liability for past acts
The Commission's resignation and removal page tells you to resign in writing, and to follow any extra rules in the governing document. It does not say the letter ends liability for what you did in office.
Section 191 applies to a person who is, or has been, a trustee, for a breach committed in that capacity. Ending the appointment does not, under that section, wipe the breach. CC3's rule about a loss you cause is about the loss, not about whether you are still on the board when someone asks.
CC3 says you can ask for a strong disagreement to be minuted, and that you may feel you have to resign to distance yourself from the decision. That step distances you from later decisions. It is not a release from an earlier one. Copy the trustee resignation letter template. A successor needs the new trustee induction checklist.
Mistakes that feel safer than they are
Treating a company or a CIO as a full shield. CC3 limits the third-party row. It does not limit a loss you cause the charity by acting improperly. We see boards relax once the incorporation papers return, then sign a contract the new CIO still cannot pay.
Signing because the last treasurer signed. On an unincorporated charity, your name on the contract is your name. We see the builder's invoice arrive after the grant has already been spent. Section 191(4) means the Commission cannot relieve you of that contract, so the builder can still look to you.
Frequently asked questions
You were outvoted, and the minutes record your dissent. Are you still liable? The minute shows you objected. It is not a release. CC3 says a decision does not usually need every trustee to agree, and that once it is made you must comply with it, including where you disagreed. If you think the others are in breach of their duty, CC3 says discuss it with the chair or your fellow trustees, contact the Commission if you are still concerned, and you may feel you have to resign to distance yourself from the decision. Resigning distances you from what the board does next. It does not release you from the earlier decision.
Can the Commission release you from a contract you signed for an unincorporated charity? No. Section 191(4) of the Charities Act 2011 says the Commission's relief power does not apply to any personal contractual liability. CC3 says unincorporated trustees sign contracts personally and have to meet any claim, and that a sum above the charity's assets can fall on you. The charity can normally meet a liability you incur if you acted honestly and reasonably. A Commission order is not the payment to the supplier.
Will trustee indemnity insurance pay a fine or a Commission penalty? No. Section 189(2) of the Charities Act 2011 says the policy must exclude a criminal fine, a regulatory penalty for non-compliance, the cost of defending a criminal case that ends in a conviction for fraud, dishonesty, or wilful or reckless misconduct, and a liability to the charity for conduct you “knew (or must reasonably be assumed to have known) was not in the interests of the charity”, or where you did not care. CC49 sets out the same exclusions for trustee indemnity insurance bought with charity funds.
You are a paid trustee, or you act in a professional capacity. Is the test different? Section 191 of the Charities Act 2011 and section 61 of the Trustee Act 1925 still ask whether you "acted honestly and reasonably and ought fairly to be excused". CC3 says the Commission and the courts "expect higher standards from trustees who act in a professional capacity or are paid for being trustees". What counts as reasonable includes the skill you bring. CC3 does not create a second Act for paid trustees.
The charity has insurance. Can you skip the minute? No. CC3 says you should keep records of decisions and the reasons for them. CC49 says that if you acted honestly and reasonably you are "entitled to an indemnity from the charity’s assets", and that insurance covers you if those assets are not enough. Neither sentence says the policy replaces the minute. Our steer, not a Commission rule: a claim starts with what you decided, and why.
This guide is for trustees of charities in England and Wales. CC3 and CC49 are Charity Commission guidance for England and Wales. Scottish charities are regulated by OSCR, and charities in Northern Ireland by the Charity Commission for Northern Ireland. Use their rules rather than assuming this page applies in full.
If you are leaving, copy the trustee resignation letter template. Keep the decision in what charity minutes should include, and benefits in the charity conflict of interest policy. Browse the full guides library.