If you are a UK charity trustee, the rule is simple: grant money must be used to further your own charitable purposes and public benefit, and you must be able to prove you managed risks with a proper process. The Charity Commission’s 3 June 2026 guidance on grant-making says trustees apply core duties before and during every grant decision, not just at approval stage. If your charity’s documents, risk controls, and board decisions do not stand up to scrutiny, you should pause and fix them before you spend.
Grant-making is a duty-executing role. The Commission also says trustees are jointly responsible for all major decisions and must base those decisions on the charity’s purposes and law, not on relationships. That means your grant policy should be as formal as your budget process: clear criteria, proper checks, and a clear audit trail.
What duties apply to grant-making under UK charity law?
For grant-making, the Charity Commission guidance says trustees must carry out four core duties in this context: charitable purposes, compliance with governing document and law, acting in best interests, and acting with reasonable care and skill Charity Commission guidance (opens in a new tab). The same page emphasises that grant decisions are part of your overall trusteeship, so no task is ‘only operational’. The Commission’s broader trustee guidance reinforces that trustees must make informed and balanced decisions, not delegate judgement to one person Charity Commission CC3a (opens in a new tab).
The practical version of this is:
- Use your governing document first to confirm powers and limits.
- Work within purpose clauses in the constitution or articles.
- Check legal and fiscal requirements for your charity and any connected activity.
- Record decisions at trustee level with supporting evidence and rationale.
If your trustees decide to use templates, keep one rule non-negotiable: the process has to match the size and risk of the grant. This is exactly what the Commission’s grant-making guidance says.
What is the first question before awarding any grant?
Your first question should be: does this grant help us deliver a purpose we are legally authorised to pursue? The Commission states the grant terms must only fund work that helps the charity carry out its purposes, and trustees should keep this review active in strategy, project, and budget decisions Charity Commission grant-making (opens in a new tab).
The guide also makes a strict distinction between recipient type:
- Same or narrower-purpose charities can often receive unrestricted funds if the grant aligns with your purposes.
- Wider-purpose charities and non-charities need restricted grants, with tighter written terms to keep use on target.
If you are not sure what the recipient does, do not skip the scope check. Public benefit is the test for your money too, especially where grant outcomes affect who benefits and how Charity purposes and rules (opens in a new tab).
Can you fund non-charities, and what must be different?
The Commission says grants to non-charities are usually allowed if they help your purpose, but risk is higher because those organisations are not bound by charity law and do not automatically have the same public benefit obligations Making grants guidance (opens in a new tab). In practice, that means more controls, not fewer.
For every non-charity recipient, add at least these checks:
- Purpose test against your aims and intended beneficiaries.
- Governance check, especially board strength, legal status and ownership structure.
- Use-of-funds control: line-by-line spending permissions and outcomes.
- Monitoring intensity matched to grant size and risk.
The published rules also require you to verify the recipient status. The same Charity Commission page directs trustees to check the register and note that some organisations can be charities without full registration, including very small ones and certain exempt bodies; if uncertain, ask for HMRC recognition evidence. Those conditions should influence your risk grading and reporting expectations.
How to run due diligence before the board approves a grant
You should not treat this as a one-off form check. The Commission is explicit that trustees must make appropriate checks, identify risks, and ensure grant-making is reviewed and documented before approval.
A practical due-diligence sequence for trustees:
- Confirm purpose fit against your governing document and any funding strategy.
- Verify the applicant’s legal status and ability to deliver (charity registration, accounts, references where appropriate).
- Check whether trustees have conflicts, including loyalty ties and connected-person risks.
- Confirm delivery capacity: staff/board capability, budget realism, and safeguarding or compliance needs if vulnerable groups are involved.
- Set clear deliverables and evidence requirements.
The Commission’s conflicts guidance spells out concrete risks: personal or commercial ties can create financial or loyalty conflicts and require declaration, management, and records Managing conflicts of interest (opens in a new tab). Build this as a pre-approval step, not an afterthought.
What should grant terms and monitoring include?
Use your own template and do not over-engineer every small grant. The Commission gives a simple risk-led principle: low-risk, small grants can use simple letters, while high-risk or multi-year grants need stronger conditions, especially where deliverables are stretched over time or overseas Making grants guidance (opens in a new tab).
Core clauses should cover:
- What the grant can be used for and what it cannot fund.
- Timescales and milestones.
- What evidence trustees will receive (reports, invoices, beneficiary data).
- What happens if terms are not followed (pause, repayment discussion, or recovery action).
- Ownership and branding rules if your charity name, logo, or IP is used.
Monitoring should match risk. The Commission suggests one-off final reporting for low-risk grants can be enough, while larger or riskier grants should use milestone reporting and periodic reviews Make grants: monitoring (opens in a new tab). Use reporting cadence as a control, not a box-ticking exercise.
What to do if a grant is misused or goals are missed
If monitoring shows misuse or non-performance, the guidance says act immediately. You can suspend ongoing funding while you review the case, and if needed, take formal steps and escalate where required Charity Commission grant-making (opens in a new tab).
A good board-level response plan:
- Ask for an urgent written update and full evidence pack.
- Record the issue in minutes and register of concerns.
- Decide whether to suspend, amend, or terminate terms based on risk and impact.
- If misuse is serious or systemic, seek legal advice and consider referral obligations.
Do not underplay conflict issues in this phase. The conflicts guidance requires early declaration and steps to remove influence, with stricter action for serious conflicts and potential legal advice where decisions are high-risk Managing conflicts of interest (opens in a new tab).
How should trustees prove compliant grant-making in records and reporting?
The Commission links grant-making to wider financial stewardship, including records, risk registers, and accurate books Managing charity finances (opens in a new tab). Even when staff or a committee handles checks, trustees remain legally responsible for outcomes and decisions Making decisions at a charity (opens in a new tab).
Keep these records as routine, not exceptional:
- Board papers showing purpose fit and risks.
- Conflict declarations and any recusal decisions.
- Monitoring notes and progress reports.
- Outcome review against intended community impact.
- Annual review in trustees’ reporting when grant-making is material.
You should retain financial records for the required period, keep a risk register up to date, and ensure the annual report explains reserve and grant policy decisions where relevant. That consistency is what protects trustees when they are questioned later.
Practical tools to speed your grant-making compliance checks
If you are building a repeatable workflow, use your own pre-flight process before staff draft the first grant note. You can use the Grant eligibility checker for a quick recipient and programme fit check. Use it after your internal eligibility review, then validate with your legal and finance checks before board submission.
For written quality control, align templates with the UK charity grant eligibility checklist and your own grant application readiness checklist UK. For first-time grant teams, the reporting section of Grant reporting for first-time fundraisers: practical templates can help you avoid missing basic evidence requirements.
Frequently asked questions
Do trustees still carry legal responsibility if staff run the grant process?
Yes. The Commission’s decision guidance says trustees may delegate administration, but not legal responsibility for delegated decisions. You still need final oversight, documented decisions, and the ability to challenge assumptions before the final approval.
Can we fund a non-charity with an unrestricted grant?
You should not usually do this. The Commission’s grant-making guidance requires higher care for non-charities and says grants must be restricted so funds are used only for your purposes. Unrestricted grants are generally suitable only where recipient purpose is the same or narrower and still charity-aligned.
What counts as a conflict in grant decisions?
A conflict is any situation where a trustee’s or related person’s interests may influence award decisions. The conflicts guidance identifies both financial conflicts (money or benefit) and loyalty conflicts (personal ties or affiliations). Declare early, record it, and manage recusal from discussion and votes where needed.
What should trustees do if a grant recipient fails to meet milestones?
Escalate quickly. Review evidence against the original agreement, pause future payments, and consider revised terms, termination, or legal recovery depending on risk and contract.
Can a trustee attend meetings where they have a personal interest?
They can attend but should follow your policy and generally should not debate or vote on conflicted matters. The Commission expects a documented process: declaration, management steps, and evidence that decisions were made in the charity’s best interests.