The answer in general is “no” but also “it depends”!
The general rule for charity trustees is that they should not benefit from their involvement with a charity, which would preclude payments of salary except in limited circumstances. There are also potential conflicts of interest where a trustee is paid which would need to be managed. There are however a limited number of exceptions and, while it is relatively unusual, it is by no means unheard of for trustees to be paid by their charity.
The key issues are as follows:
- There has to be a justifiable reason to pay a trustee. It may be for instance that one of the trustees acts as Chief Executive and has specific valuable knowledge that cannot easily be replaced. The trustee would normally be paid for their work but excluding any work for their role as a trustee. Exceptionally, trustees may be paid for work as a trustee, but this would be very unusual and there would need to be a compelling reason for this to be authorised.
- Any conflicts of interest must be appropriately managed. The trustee concerned should, for instance, not participate in any decisions agreeing his or her rate of pay, or indeed the awarding of a salary in the first place.
- There must be legal authority to pay a trustee, either within the governing document or in specific authority granted by The Charity Commission (or exceptionally the Courts). The Charity Commission or other regulators will want to understand the exact reasons why the trustee concerned should be paid, that any proposed salary is reasonable, and that potential conflicts of interest will be appropriately managed before giving their consent. There will need to be a minority of trustees paid in this way.
- Any such arrangements must be fully disclosed in the Financial Statements, including the name of the trustees concerned and the amounts paid.
To apply to the Charity Commission to pay a trustee, there is a simple online form to complete giving details of the reason why it is felt employing a trustee would be beneficial, how the salary is set, and how conflicts are managed.
There are similar rules for paying trustees for goods or services or paying salaries to members of a trustee’s close family.
In every case that involves a potential conflict of interest it is extremely important that these are declared appropriately and that all decisions are recorded, including full details of how decisions are made and who was involved.
The Charity Commission guidance on making payments to trustees can be found in their trustee expenses and payments (CC11) publication here.
Similar guidance can be found for the Office of the Scottish Regulator (OSCR) and the Charity Commission for Northern Ireland (CCNI).
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