When trustees can lose it all

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This blog celebrates Trustees Week.

Trustees have many responsibilities and significant power to guide their charity for good or ill. Occasionally circumstances become so stressful, particularly during a stock market panic, that long held strategies can be quickly abandoned.

In one scenario trustees might have instructed their investment manager with a high earning but high risk mandate, only to find that it falls by 30% (so far). Not knowing how much further it will fall, they change their mandate to one focussed on preserving the remaining capital, usually by selling equities and holding cash. Too often the market then recovers, but the portfolio doesn’t. Only trustees can do this.

We should always remember that being a trustee is very rewarding but can involve a variety of stressful situations: think of safeguarding, expenditure decisions, data and of course investing. It is not as simple as rolling some dice and hoping for the best outcome, as it is rarely that simple. The key is to be prepared and rehearse these situations as far as possible – which is a good use of the Risk Register.

Where organisations have mission critical components it is important to make sure they are resilient and well supported. It is up to senior staff to make sure that their trustees are properly supported so they can exercise their duties and responsibilities as effectively as possible.