Paying trustees would damage charity sector, warn umbrella bodies

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Paying trustees would damage charity sector, warn umbrella bodies5

Governance | Vibeka Mair | 18 Jul 2012

Opposition to proposals that would allow large charities to pay their trustees has gathered pace, with seven umbrella bodies writing to minister for civil society Nick Hurd, warning that it would be damaging for the charity sector.

Currently, a charity can pay their trustees only with permission from the Charity Commission or if it is allowed in their governing documents. However, as part of his review of the Charities Act 2006, Lord Hodgson has recommended that charities with an income of over £1m should be given the automatic right to pay their trustees.

The proposal has been met with strong opposition from some in the charity sector and collectively NCVO, Volunteering England, Navca, the Institute of Fundraising, the Directory of Social Change, Small Charities Coalition and Community Matters, have written a letter to Hurd urging the government to reject the proposal.

The letter points out that Lord Hodgson’s own research evidence identifies that 61 per cent of the public are against payment of trustees.

“Given that charities of all shapes and sizes rely on public support – not just in terms of funding , but more fundamentally, for their legitimacy – it is vital not to put public trust and confidence at risk over this issue,” it says.

The letter also asserts that at a time of great financial pressure it would be “unjustifiable” to introduce an automatic right to pay trustees:

“The pressure that would follow for charities to begin paying their trustees or to increase their expenses and remuneration could be very damaging for the sector and their beneficiaries.”

The umbrella bodies urge Hurd and government to uphold the voluntary principle of trusteeship.

Hurd has said the government wants to hear from the charity sector on what it thinks of Lord Hodgson's 113 Charities Act review recommendations and it will devise its own traffic light system to rate them.

Directory: Directory of Social Change (DSC) | Institute of Fundraising | National Association for Voluntary and Community Action | National Council for Voluntary Organisations (NCVO)
Who's Who: Nick Hurd

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Michael Hall
25 Jul 2012

It would be wrong to have a law allowing charity trustees generally to pay themselves out of the charitable funds. To an extent the Charity Commission alread allows this but it is strictly controlled and rightly so.
Charity trustees are fundamentally different from the directors of companies, because directors can be voted out by the members, but charities do not have members and so there is no-one to vote them out. Charitable donors have no way of expressing their dissatisfaction other than by cancelling their standing orders. Which of course is what they will do if the charity trustees help themselves to the charitable funds which
they donated in good faith to be used for charitable purposes, not to liine the pockets of the trustees.

[Reply]

RC
19 Jul 2012

Another foundation stone shifting and being pried-out of the sector. Soon we will have as much faith in the very people that champion the cause of charities as politicians and bankers! It goes against the very fabric and ethos of charitable structure. So are big charities with over 1 million pounds of income under performing because their trustees are not being paid? How did the great work of charities and their achievements occur previously???
The present legislation governing trustees and their engagement should be upheld.

[Reply]

M D
19 Jul 2012

Far more important is the question of how we attract a decent calibre of trustee full stop. Volunteer trustees are a variable bunch with all due respect to them, while I don't like the idea of paying trustees, anyone who has worked with volunteer boards is perfectly aware of the many pitfalls and difficulties of working with this type of board. In the current climate we are even more in need of high functioning boards made up of committed individuals, where do we find them? Particularly smaller charities that are not in the public eye. With the greatest respect to public opinion I am curious to know how many of those 61% actually has any experience of how charities are currently governed, it is possible if they did have more experience or understanding they might arrive at a different opinion.

[Reply]

Barbara
19 Jul 2012
Response to [M D]

All these are fair points.
One has to rememebr that a good, devoted trustee can spend hours a month working for his/hers charity and payment could be see as a sort of allowance for all this time.
On the other hand, nobody really should expect to be paid in a voluntary sector - we are not in it for the money (every employee will energically nod their head now). And there is the risk of pushing out trustees who either are less effective/gifted/connected or are perceived to be such, think single mothers on welfare support, people with learning disability, very young people or the elderly - in other words all barriers that some people face in employment they potentially will face in accessing this important liberty.
But then again sector's stakeholders have rights to expect effects of their support so something should be done to improve efficiency of the board - maybe trustees should work in their charities as employees to see what actually is happening.

[Reply]

Chris Zealley
charity trustee various
18 Jul 2012

Anyone familiar with tax avoidance will spot the paying of charity trustees as an interesting new possibility.

I hope that Revenue and Customs will see that this one is scotched before it starts.

Of course the practical issue is the more important, that if charities can only pay a modest fee what kind or calibre of person will take it ?.

[Reply]

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