The principle of voluntary trusteeship has long been central to the charity sector. Although the vast majority of trustees are unpaid, there are circumstances in which it is appropriate for a trustee to be paid for their role.
The Charity Commission has revised its guidance on paying trustees. Although the underlying rules remain the same, the guidance stresses that if a charity decides to pay a trustee, then this must clearly be in its best interests.
This new guidance aims to increase clarity and reduce potential risks for charities, which include:
- Within the charity, a risk of disagreements between board members regarding payment of a trustee.
- Public criticism associated with paying a trustee - potentially affecting the charity's reputation and funding.
- Risk of conflicts of interest which are not managed appropriately, and the charity being seen as benefitting certain individuals. This may also have a reputational and funding impact.
- The Commission notes that its casework has shown that paid trustees can become disproportionately influential - impacting the other trustees' ability to comply with their legal duties. This is particularly relevant in cases where that trustee is the founder or chair or connected to other board members.
Firstly, charities must have legal authority to pay a trustee. This is demonstrated by meeting various conditions stipulated by the Commission. These include: there being no prohibition in the charity's governing document to paying, having an agreement in writing and ensuring that any remuneration is reasonable. Charities must also carefully consider alternative options and manage properly any ongoing conflicts of interest. The guidance addresses several trustee payment scenarios - supplying goods or services to the charity, reimbursement for loss of earnings and employment.
Charities are strongly encouraged to review the guidance, ensure ongoing adherence with written payment agreements, stopping payments at the relevant time, disclosing all payments in the charity's accounts and keeping a full record of why the decision to pay a trustee was justified.
The Commission provides separate guidance on trustee expenses. Trustees are entitled to have reasonable expenses (such as travel, accommodation, childcare or adjustments for disabilities) reimbursed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
