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David Ainsworth: Is it time to move on from the debate about paid trustees?

09 Aug 2017 Voices

There are few subjects as guaranteed to make charity workers’ hackles stand up, as getting rid of voluntary trusteeship.

So kudos to Asheem Singh, former head of policy at Acevo, for getting stuck into this argument in the Guardian, in a piece rather dramatically entitled Two years on from Kids Company, it’s time to decide if charities are worth saving?

The thrust of the article is really that big charities can’t operate effectively with volunteer trustees. These bodies are now highly professionalised, and need professionalised governance – either paid trustees, or executive directors on the trustee board. The article implies that this is particularly true for charities involved in delivering government services:

The principle that committees of volunteer trustees should run charities has been at their heart for centuries. But now that charities are spending tens of billions of pounds a year holding up key public services, this model is killing them.

This is an area that provokes very strong feelings, so it’s worth taking a look at the arguments on both sides.

Those in favour...

First, there are plenty who think Singh has a point. It’s weird that the rules are the same for the smallest to the largest. At present, it doesn’t matter how many employees a charity has. Whether none or nine thousand, it’s likely to have a fairly similar number of part-time, volunteer trustees. And their legal responsibilities are likely to be much the same.

The theory goes that these charities need more robust governance, from high-quality scrutineers, incentivised properly to do their jobs well. They need trustees with a high degree of skill, who can commit a long time to it. Professionals, in short, not well-meaning amateurs.

There is also a diversity argument. Sure, you can get trustees who will do it for free, but they will all be patricians and plutocrats. If you’re a sight loss charity, and you have blind trustees, they need paying. If you’re a youth charity, can you really ask your young trustees to take time off, unpaid, to sit on your board?

Principle and practice

The arguments against can be broadly divided into principle and practice.

The principled argument says that voluntary trusteeship is the bedrock of the sector, and that the sector is founded on this fundamental idea – that voluntary organisations should have at their highest level those giving time freely for the good of society.

This is a particularly difficult view to shift because it’s a moral and social one. It goes beyond questions of effectiveness to what we’re all about.

There is a reputational element, as well. The country’s largest charities are already seen by many as too corporate. Too many believe that the charities’ leaders have their snouts in the trough. Appointing a few more guys in suits on £400 a day would not do us too many favours.

I have mixed feelings about this argument. At root, I think that you should do what’s best for the people you serve, and if you think it will cause PR problems, then create PR solutions. Don’t make yourself less effective to mollify the Daily Mail.

But that, of course, assumes that paid trustees are more effective. And the evidence here is limited, to say the least. After all, the intangible value placed on trusteeship is very considerable. There are many people who will do many things for charities for nothing that they wouldn’t do for anyone else, for any amount of money.

If you offer a cash sum, that intangible value disappears.

The evidence from industries where non-executive directors are highly remunerated suggests that money is not a panacea. In fact, the same problems appear everywhere. Non-execs do not seem to offer more effective scrutiny and challenge when they are paid more to do so. Perhaps unsurprisingly, since the person they are scrutinising is now effectively their paymaster.

Governance is difficult

Governance, it appears, is simply hard to do well, whether you are paid for it or not.

This is perhaps the key point. The proposals to pay trustees could be put to bed for good if the sector broadly had strong governance. But it often doesn’t.

Governance is a complex, nebulous, difficult thing, as much based on personality as knowledge and experience. If charities do want to spend more on it – no bad thing, usually – the best place to focus that expenditure is not on paying trustees to do what they were doing for free, but in ensuring that they have the right support and the right resources. A company secretary’s office is likely to be a better investment.

More broadly, the problem stems from culture, both on individual boards and in the sector. To improve this, governance needs a higher profile, more training, more regulatory emphasis. These things are happening, but it takes a long time to change the norms. As a journalist, I’m usually in favour of big, flashy simple solutions, because they make good copy, but I don’t think we can improve governance that way.

Pay if you need to

So broadly, I am not convinced about the value of paid trustees. But I do not have to be, because I basically believe people should be allowed to solve problems as they themselves see fit. If an organisation is really convinced of the value of paying trustees, it should be allowed to do so. The sky will not fall. The existing order will not crumble. Everyone should just get on with their day.

It’s particularly easy to have sympathy with those who feel their beneficiary trustees have a hard enough time of it already, and want to ensure they do not lose out. Although there is a distinction between compensation for loss of earnings and payment for your time, and most of the time the former is all people really want.

What we certainly cannot do is offer carte blanche. Paid directors in private companies answer to the shareholders. In the absence of that check on trustee remuneration, there must be scrutiny from elsewhere, to ensure remuneration is proportionate and appropriate. In point of fact, there is: from the Charity Commission.

If I was to make a change to the trustee payment regime it would to improve the clarity from the Commission itself about when it will give permission for paying trustees, and to place a bit more onus on the regulator to justify refusal, to ensure that requests are dealt with consistently. Otherwise, the status quo is broadly where we ought to be.

In the end, it feels as if paying trustees is an attempt to find a simple answer to a deep-seated and complex problem. It is vital to strengthen charity governance, particularly in the largest charities, but this needs a change of culture and structure, and those are not issues you can address by reaching for the chequebook.


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