Revised Charity Commission guidance on trustee payments and expenses
On Friday redesigned guidance on paying trustees was published by the Charity Commission.
This refresh is part of the Commission’s continuing project to rewrite much of its major guidance. The aim is to make it more accessible – apparently most trustees access guidance on their mobile phone screens. The Commission has already updated a wide range of its guidance, including:
- Accepting and refusing donations; and
- Charities and elections
We cover all the above in our blog here.
This is a substantial rewrite – it is shorter and clearer and broken into useful sections – paying a trustee for goods and services, employing a trustee, paying for trustee duties, compensating for loss of earnings. The core message is that trusteeship is voluntary and payment exceptional. Charity Commission Director of Communications & Policy, Paul Latham, said: “The charity sector is founded on public trust – and voluntary trusteeship is a key component of that.”
Payment for goods and services
There is a statutory power to allow trustees to be paid for goods and services provided to the charity that may be used in the absence of, or instead of any constitutional power. To use this power there are 6 conditions to fulfil – including the need for careful conflicts management and the payment to be in the charity’s best interests. There are also times when Charity Commission consent should be sought – where for example all the statutory conditions cannot be met and there is no constitutional power.
Payment for trustee duties
Again, the Commission emphasises that public trust in charities is promoted by the unpaid nature of the trustee role. There are a range of circumstances where paying a trustee is in the charity’s best interests. The Commission gives the example of a trustee being paid to support an interim chief executive.
To pay a trustee for trustee duties you must:
- Have either a constitutional power or authority from the Commission;
- Deal with conflicts of interest properly; and
- Consider that paying the trustee is in the best interests of the charity.
The Commission rightly warns of the multiple risks of paying trustees, including public criticism and excessive trustee dominance. These are all risks that must be weighed when deciding whether the payment is really in the charity’s best interests.
Missing from this new guidance is a section headed “Can charities offer trustee benefits to help improve the diversity of their boards?”
Our top tips
At Mills & Reeve we have advised a range of clients in varying circumstances on the payment of their trustees – here are our top tips:
- Line all your evidence up in advance (we have used evidence of failed recruitment rounds and pay benchmarking against comparable positions)
- Consultation (how are you going to consult with beneficiaries and/or stakeholders?)
- Governance is critical here – is there a remuneration committee and what is its role in these decisions?
If you would like any advice about paying trustees, get in touch with Neil Burton.
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.