Allowing charities to pay trustees without permission from the Charity Commission would fundamentally change the sector, says Gareth Jones.
There is no doubt that this has been “the year of governance” in charity sector discourse. Scandals in fundraising and the collapse of Kids Company have prompted serious soul-searching about whether charity governance is fit-for-purpose, particularly in large charities where unpaid trustees have a real job on their hands to oversee such complex operations.
This is all well and good, but an unfortunate side-effect of the clamour for action has been renewed calls for charities to be able to pay trustees without the Charity Commission’s permission. The most overt example was in a paper published by the think tank NPC, but perhaps more significant in the long term is the commencement of Sir Stephen Bubb’s Charity Futures programme.
His first paper in this role, Charity governance in crisis?, shows a degree of restraint in merely posing the question of whether this would be a good thing. But there is no doubt which side of the debate he sits on, judging from recent remarks on Twitter (for example here, here and here). Furthermore, in an interview with Governance & Leadership magazine in July, he stated that while it should not be “the norm” for trustees to be paid, it should be “a decision for the charity, not for anyone else”.
On the face of it, it’s an appealing idea. Paid trustees would be able to devote more time to scrutinising their charities, and it could also help tackle the embarrassing lack of diversity on charity boards.
Unfortunately, the first point is debateable. There has been very little study on whether paying trustees will increase their engagement, although one report suggests it makes little difference (as highlighted in the comments section here).
And as for the second point about diversity, while the status quo is highly regrettable and something I feel strongly about, it is unfortunately outweighed by the potential negative effect trustee payment would have on decision-making.
A gradual shift
The issue is that without some sort of impediment, trustee payment could well slowly, over a number of years, become the norm, as it is in other sectors. Sir Stephen suggests in his above-mentioned interview that he doesn’t want all trustees to be paid, but my view is that this would eventually become the case for a majority of charities. The desire for diversity and the fact that often highly-skilled trustees are giving up their time make for credible medium-term justifications for charities providing some remuneration, and once the precedent is set, more and more will follow suit.
The important question that flows from this is: how will trustees’ decision-making change as a result? The likelihood is that – consciously or unconsciously – paid trustees will seek to enhance their pay prospects by prioritising expansion and income growth. It may be subtle, but we should all at least be aware that we are talking about a fundamental change to charities’ decision-making incentives.
Of course, a focus on growth and expansion is not always a bad thing. But with public trust currently flaky, strategic decisions need to be focused on impact and free from personal incentives.
If we are going to tinker with the fundamental tenets of the charity sector, we need to be pretty sure that we know what we are doing. And in this case, there is sufficient doubt to suggest that caution is advisable.
