Charitable Organisations and Foundations
A foundation is governed by assets dedicated to a purpose and a body that is accountable for having respected it. The law adds an obligation to insure that does not depend on the size of the entity, that of volunteering, and an activity protocol with minors that is documented in writing to whoever requests it.
Trustee liability, volunteers and work with minors
The board of trustees is jointly liable even if the position is unpaid.
Article 17 of Law 50/2002 requires trustees to perform their duties with the diligence of a loyal representative and makes them jointly liable to the foundation for damages caused by acts contrary to the law or the statutes and for those carried out without such diligence; those who voted against the agreement and those who prove that, not having been involved in its adoption or execution, were unaware of its existence or, knowing it, did everything possible to prevent the damage or expressly opposed it, are exempt. Alongside this, Law 45/2015 recognises the right of volunteers to be covered at the entity's expense, and Organic Law 8/2021 sets out how work with minors is organised. Each translates into a different contract and a document that the entity must be able to show.
The joint liability of the board of trustees
Trustees are jointly liable to the foundation for damages caused by acts contrary to the law or the statutes and those carried out without the diligence of a loyal representative, and those who voted against the agreement and those who prove that, not having been involved in its adoption or execution, were unaware of its existence or, knowing it, did everything possible to prevent the damage or expressly opposed it, are exempt. Towards third parties, liability is governed by general rules, and the unpaid nature of the position, which is the rule of the law itself, does not modulate either. Directors and Officers (D&O) insurance is what separates this liability from the personal assets of the person accepting the position.
The trustee who ceases and the subsequent claim
Directors and Officers insurance operates on a claims-made basis and the insured status accompanies the person who held the position, so that a claim for a decision made in previous years is covered by the policy in force on the day it arrives, as long as the foundation maintains the programme. What creates the gap is failing to renew, changing insurer without maintaining retroactivity, or dissolving the entity, and for these cases, there are the discovery period and run-off.
The insurance that the law recognises for volunteers
Article 10 of Law 45/2015 recognises the volunteer's right to be covered, at the entity's expense, against accidents and illnesses directly resulting from their actions, and against civil liability when the sectoral regulation requires it. The policy is issued based on a census, so the agreement on how it is updated is as important as the contracted capital.
The census that changes with each programme
Organic Law 8/2021 requires the appointment of a protection delegate in entities that regularly carry out leisure and free time activities with minors, and to provide a negative certificate from the Central Registry of Sexual Offenders and Human Trafficking, which is the name given to the registry by the law itself. In a volunteer organisation, this census is renewed with each campaign, and the insurer subscribes to the procedure of enrolment and withdrawal rather than the number of people: this is where it is agreed how the policy is updated throughout the year.
Lo que nos preguntan en charitable organisations and foundations
Our board of trustees does not receive remuneration. Does it respond equally with its assets?
Yes. Article 17 of Law 50/2002 requires trustees to perform their duties with the diligence of a loyal representative and makes them jointly liable to the foundation for damages caused by acts contrary to the law or the statutes and for those carried out without such diligence. The non-remuneration of the position is the rule established by the law itself and does not modulate this responsibility. General rules apply to third parties. The directors and officers insurance assumes the defence from the first requirement, which is when the expense begins.
What cover do we need to provide to our volunteers?
Article 10 of Law 45/2015 recognises their right to be covered, at the entity's expense, against the risks of accidents and illnesses directly resulting from voluntary action, and against civil liability in cases where sectoral legislation requires it. The policy is issued based on a census, so alongside the capital, it is agreed how it is updated when people join and leave with each programme.
A trustee leaves the position. How long do they remain protected?
As long as the foundation maintains the programme, any claim that arrives after the cessation is covered by the policy in force on that day, because in directors and officers insurance, the insured status accompanies the person who held the position. The dissolution of the entity is the scenario that requires contracting the extension before agreeing to it, and the discovery period and run-off are closed in that same agreement.