Making payments to trustees
Charity trustees do a lot. They are generally people with particular skills, a great deal of commitment to the church or organisation, and they give their time generously. So, when is it appropriate to make payments to them for what they do? There are very strict guidelines on trustees’ expenses and payments produced by the charity regulators in each part of the UK.
England and Wales: Trustee expenses and payments - CC11
Scotland: Remuneration (Paying charity trustees and connected persons)
Northern Ireland: Making payments to trustees
Although the requirements are similar across the UK this briefing note is based on the requirements in England and Wales and needs checking before application in Scotland and Northern Ireland.
In all cases the first check is the charity’s own governing document which may prohibit certain types of payments.
All trustees can be reimbursed for out of pocket expenses when carrying out a trustee’s duties and can include, for example, travel and costs of attending meetings or when on trustee business (including mileage at HMRC rates) and specific telephone charges. It can also cover childcare provision etc. while on trustee business. All expenses must be justifiable and supported by receipts wherever practical.
Paying for services
Trustees often have key skills that are useful to the church such as construction or accountancy. Where a trustee carries out work that is beyond normal trustee duties such as, for the above examples, building maintenance or a professional review of the accounts, they can be paid for the work so long as:
• There is a written agreement between the charity and trustee (not just a note in the minutes) which set out details of the work and payment.
• The trustee declares an interest and does not take part in decisions made by the other trustees regarding the payment.
• The payment is reasonable for the work required – this can be demonstrated by getting quotes (except for small sums) or where the trustee’s rates have previously be market tested, or by comparison with payments made by similar charities.
• The payment is in the best interest of the charity.
• The number of trustees with an ‘interest’ are in the minority.
• The trustees ‘have regard’ to the Charity Commission’s guidance regarding payments.
Payment for trusteeship
Charities must not pay a trustee for carrying out trustee duties whether on a one off, occasional or ongoing basis, unless they have a suitable authority, either in the charity’s governing document, or provided by the commission or the court. A lack of trustees is unlikely to be sufficient justification and the Charity Commission would normally only give permission if the operation of the charity was highly complex and so putting a heavy burden on one individual. Without such authority, any such trustee payment is a breach of trust - even if the charity benefits from the transaction.
Employing a trustee (or connected person)
Sometimes charities who need to employ someone may feel that one of their existing trustees would, for a variety of reasons, be suitable for the job. However, it is essential that any decision must be open, transparent, completely justifiable and made without influence by an interested party. A key point is that if the decision to appoint someone while that person was (or is) a trustee the commission’s approval MUST be obtained unless there is another express authority for it.
Developing a policy
As part of an ongoing process churches should develop an expenses policy. It is important that trustees should not be out of pocket by being a trustee (unless by choice) and a policy should set out what is a recoverable expense (and what is not), what evidence is required, and how to claim. In most cases this should cover a maximum of one sheet of A4 paper.
This guidance only seeks to provide generalised advice on the subject covered to assist churches in their operation. It is not a substitute for seeking specific advice on particular issue.