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Posted 10 August 2017
by Leanne Yendell

Trustee remuneration – the good, the bad and the ugly

statue of justice

On Tuesday, the Guardian dramatically claimed that the voluntary trustee model was “killing” charities. While Asheem Singh raised some valid points, his emphatic piece did seem reminiscent of a script from Mission Impossible, with Tom Cruise emerging from a pile of flaming annual returns.

So, what are the arguments for and against?

Paying trustees goes against the spirit of the sector

Subject to a charity’s constitution, trustees already can be paid for being a trustee – with consent from the Charity Commission which is not readily given. But a statutory rule allowing pay without consent is widely considered a step too far.

One advocate of trustee pay is Kevin Carey, Chair of the RNIB, who is already paid, having made his case to the Charity Commission successfully. He contributes 3 working days a week and was paid just over £25,000 in 2015/2016. He says that, without this payment, he could not perform the role. Without doubt three days a week is a significant contribution and Kevin clearly is valued by the charity, but is it right to open the floodgates?

Imagine the opposite. Would we eventually face a ‘banker bonus’ scenario where trustees are paid despite failures? It would be a PR disaster in an already tumultuous time for the sector. 57% of the British population already say that they are put off donating if they feel that too much is being spent on staff salaries, let alone on volunteers!

The benefit is also heavily questioned. Research in the US contradicts Mr Carey’s position by saying that wider analysis indicates little correlation between remuneration and increased board engagement, diversity or specialist expertise.

Diversity will rise if trustees are paid

The average British trustee is said to be a 57-year-old white male and pay has been suggested to increase diversity. Is it really that simple?

Not all, particularly young people, are able to give their time for free – and in a world of rising costs, they might have existing livelihoods and commitments that take precedence. The Charity Commission does not want trustees to be ‘out-of-pocket’ in performing their role and rightly so. But again, consent is available if the case is strong enough. Young people and ethnic minorities surveys have indicated that they would be more attracted to becoming a trustee if it were paid.

Nonetheless, it is important to remember that busy people will not become available overnight if this change is made. In terms of the unemployed, being paid might affect their benefits and so act as a further deterrent. Research also shows that pay is not the primary issue; a lack of understanding about the role and its potential liabilities is the true culprit. Charities could mitigate this by investing in marketing and training and protecting its trustees against personal liability through incorporation.

It will professionalise the sector

Labour MP John Spellar once said that charities look at the private sector with envy. The corporate sector is seen as efficient and money-making, unlike charities who often struggle.

Charities have become increasingly ‘professionalised’ over the last 20 years. Some now partake in investment strategies which, in turn, bring an element of risk. Along with this, charities are becoming heavily intertwined with government in that many undertake work subcontracted to them by the state. This is all extremely complex and as such requires time and understanding. They need skilled people to steer the ship. But is this really a trustee’s role?

A professionalised board is often criticised for lacking the checks and balances required to exist ‘for the people’. If a trustee is paid, they might be motivated to assume the position, but this financial motivation might dilute their empathy with the cause and ability to make decisions for the good of the charity and its beneficiaries. Trustees do not themselves need to bring expert skills to the table; they have the power to access the skills needed, whether through advisors on the payroll at executive level or through consultancy.

In truth, I largely agree with Civil Society’s David Ainsworth – the value of paying trustees is questionable, but the sky will not fall if trustees are paid. Whilst a blanket approach might not be appropriate, the Charity Commission should remain open-minded and truly explore the case made by the charity when granting consent.

If you need any assistance regarding this matter, please speak with our team of Charity case experts.

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About the author

Leanne Yendell

Paralegal

Paralegal in our Company and Commericial team at our Exeter office