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Payments to Charity Trustees – a reminder

Did you know that there is a general prohibition on remunerating trustees for acting as a trustee?

Where a person is acting in their capacity as a charity trustee or as a trustee for a charity under a contract or employment, the starting point is that the trustee is not entitled to remuneration.

To establish whether your charity is permitted to pay trustees for acting as a trustee, you would need to consider the contents of the trusts/governing documents of the charity. If payments to trustees are expressly allowed, your charity would not have to worry about the general prohibition.

If your charity’s trusts/governing documents do not allow payments to trustees, or they are silent on the matter, the charity could apply to the Charity Commission for approval.

Where a trustee is providing services to a charity, the Charities Act 2011 sets out the conditions that would need to be met for the charity to be able to pay the trustee for such services. These conditions can be summarised as follows:

  1. The amount of remuneration is set out in an agreement between the charity and the trustee providing services and the amount does not exceed what is reasonable for the charity to pay for the services in question;
  2. Before entering into the agreement, the charity trustees decide that they are satisfied that it would be in the best interests of the charity for the services to be provided by the trustee for the amount set out in the agreement;
  3. The number of charity trustees that already have an agreement to provide services, or are already entitled to receive remuneration or are a person connected with such persons are a minority of the charity trustees in office at that time; and
  4. The trusts/governing documents of the charity do not contain an express prohibition that make it clear that the charity trustee is not entitled to payment.

 

For further information or advice on whether your charity could make payments to trustees then please contact Jennifer Clarke on 01274 377366.

About the Author

Jennifer Clarke

Director

Jennifer has a strong commercial and procurement background, having spent a number of years…

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