Date of issue: 7th July 2003

NEW GUIDANCE ON THE REMUNERATION OF CHARITY TRUSTEES

Help is at hand for charities over the extent to which they can authorise payments to their trustees, reports Chartered Accountants Clement Keys, Birmingham.

Currently, instances of charity trustees being remunerated are relatively few and far between because such payments must be expressly authorised by the charity's governing document, the Charity Commission or the courts.

While trustees cannot receive payment from a charity simply for carrying out their duties as trustees, the recent Cabinet Office Strategy Unit report Private Action, Public Benefit recommended that a body of trustees should have the power to pay individual if to do so was in the best interests of the charity.

The Charity Commission, in its capacity as a regulator of charities, has concluded many inquiries into the matter of unauthorised and unlawful trustee benefit. Based on these inquiries it has now published a report in which it sets out some basic guidelines.

"It is essential that trustees appreciate their responsibilities towards their charity and that they have a good understanding of its governing document, since good intentions are not acceptable to the Charity Commission as justification for unauthorised trustee benefit," says Alan Robertson, a partner in the specialist Pension Schemes and Charities Unit at Clement Keys.
"Where a charity's constitution or the Charity Commission gives authorisation for payment to a trustee in respect of professional services to the charity, it is in the interests of the individual trustee concerned, as well as the body as a whole, to ensure appropriate controls and procedures are in place to show that such action will benefit the charity," he added.

The Charity Commission advises that trustees should take the following steps to ensure transparency, and includes them in the advice contained in its publication CC11 Payment of Charity Trustees:

· Maintain a 'register of trustees' interests' and update it regularly

· Undertake a tendering process to ensure that best value is obtained

· Individual trustees should take no part in any discussions or decision making where there is a potential conflict of interest - and ensure their absence is minuted

"A charity's reputation can easily become tarnished so it is worthwhile putting in place a few key procedures and taking early professional advice to help avert unnecessary and often unintentional damage to the probity of the charity," concludes Alan Robertson.