Charities should be able to pay trustees to improve standards of governance says a new report from New Philanthropy Capital
Charities should be able to decide to pay trustees without having to defer to the charity regulator, a third sector think tank has said.
In a report on ways to improve governance in charities, New Philanthropy Capital (NPC) has said the decision on whether or not to pay trustees “should be up to the individual charities”.
Although people who sit on the boards of businesses and public bodies are regularly paid quite hefty sums – for example, Sir Michael Grade is paid £500 a day to chair the UK’s new Fundraising Regulator – it is the accepted rule that charity trusteeships are voluntary and unpaid.
It is crucial that this [payment of trustees] is done not as a way to hire expensive people who are already wealthy
In Scotland the Office of the Scottish Charity Regulator (OSCR) guidance cautions against paying trustees, while in England, charities can apply to the Charity Commission for permission to pay trustees in exceptional circumstances.
The NPC report examines ways to improve charity governance in light of the collapse of Kids Company and various fundraising scandals.
It states: “It is often the case that when things go wrong, trustees have committed no obvious sins of commission, yet multiple sins of omission.”
It examines ways to improve standards in trustees and ways to help charities recruit trustees with the necessary business experience and skills to run their organisations.
The report suggests that charities can improve incentives for people to sit on boards by introducing payments but states "it is crucial that this is done not as a way to hire expensive people who are already wealthy”.
Instead, it suggests payments are “used as a way to help charities attract and compensate a wider range of people with more diverse skills who may not be able to afford the hidden costs – including precious time – of being a trustee”.
Guidance on the OSCR website states: “Charity trustees must act in the interest of their charity and any personal benefit, whether direct or indirect, must be treated with caution. Section 67 of the 2005 Act states that a charity trustee must not be remunerated from charity assets unless certain conditions are met.”
These tight conditions include that the payment is in the interest of the charity, that less than half the board is being paid and that the charity’s governing documents do not prohibit payment.
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