On the tenth day we look at Payments to Charity Trustees

An area where charities can often come unstuck is payments to Trustees.

There are 4 potential types of payment:

  • Payments of out of pocket expenses
  • Payment for role as Trustee
  • Payment for professional services / work
  • Payment to a connected person

The Charity should have a formal policy / process for claiming reasonable out of pocket expenses which sets out what can be reimbursed to Trustees.

The role of Trustee is voluntary so ordinarily there should be no expectation of payment for acting in this capacity. However, there may be occasions when a paid Trustee is required, in such instances the governing document must allow such payment to be made and the Charity Commission (or courts) must give its approval.

Where the charity makes payments to a Trustee for services and or work it must:

  • Ensure it is allowed to do so in its governing document
  • Agree that such payments are in the charities best interest and the amounts are reasonable (i.e. it is achieving value for money)
  • Have a written agreement in place and the amount of the work / services specified
  • Manage and minute any conflicts of interest in connection with the work of this Trustee
  • Ensure by the Board that such contracts exist with less than ½ of the board members

Payments to persons connected with the Charity require Charity Commission permission, whether this is for services or in an employed capacity.

All such payments are required to be disclosed in the charity’s notes to the accounts to ensure there is transparency over payments that are being made to Trustee’s.

Charity Commission detailed guidance can be found here