Opinion

Chairman's corner: To pay or not to pay?

Governance | 1 Jul 2009

The chair of a grant making foundation who also manages a large investment portfolio is faced with the problem of how much to pay his trustees. The Chairman simplifies the problem.

Dear Chairman

I chair the board of a large, grant-making foundation that manages an investment portfolio of almost a billion pounds and makes grants totalling tens of millions of pounds each year. The volume and significance of our work is substantial and the responsibilities carried by, and commitment required of, our 12 trustees is proportionate. They are engaged in a number of decision-making committees, represent the foundation at various private and public events and attend six board meetings a year as well as two strategy days.

Last year one of our trustees was appointed a trustee of another large charity which pays its trustees an annual fee for acting as trustees. He has therefore suggested that our foundation pays trustees a ‘modest honorarium' for their time and commitment. Although previously content, this has stirred a degree of interest in two or three trustees and I have been asked to put the item on the agenda of the next board meeting.

As a lifelong supporter of the volunteering ethos of trusteeship, I am rather against this proposition. What do you advise?

Yours sincerely,

LSD

Dear LSD

Perhaps the first thing to consider in the context of your own board's debate of this issue is whether your foundation is empowered to pay trustees even if it is desirous of doing so. Unless there is authority in your organisation's governing document, or you have a specific authority from the Charity Commission or a court of law, you will have no power to pay trustees to act as trustees and would have to obtain such authority from the Commission before making any payments. Secondly even when the Commission is persuaded to authorise remuneration of trustees, it usually insists that only a minority of trustees are remunerated.

As for the debate itself, that need not immediately be a matter for board consideration and decision; indeed at this stage that may be a little premature. Perhaps you could suggest that the matter be given preliminary consideration at one of the strategy days you mention; or at an appropriate board committee meeting. It is certainly too important an issue for the board to feel it is being bounced into a decision. That said, regardless of your personal disinclination to go down this particular road, it is clearly your responsibility as chair to ensure that there is a fair and proper opportunity to debate a topic pertinent to the foundation's governance and of concern to at least three of your 12 trustees.

There are two sides to the argument. Whilst the preference for unpaid trusteeship remains the rule and predominantly the public expectation, underpinning trust and confidence in the sector and the assurance that a charity's money is being used for the core purpose of the charity; there is some recognition that the demands placed on trustees in the context of the larger and more complex organisations might justify paying trustees. There are some good sources of advice on this topic, not least the Charity Commission's own publications and you might talk to one or more of those charities that have implemented payment for trustees.

Among the issues you may want to consider are: what is the justification for payment in the particular circumstances of your foundation? Why would it be in the best interests of your charity? What conflicts-of-interest issues might arise and how you will deal with them? Would there be a reputational risk attached?

Ultimately it comes down to what is right and justifiable for your foundation. What would your trustees feel comfortable about disclosing on ‘News at Ten'? Rather like MPs' expenses, there can be a difference between what is permissible within the rules, and what is right and justifiable.

Yours etc,

The Chairman

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