Charities should respond to recent negative media coverage of the role of trustees and chief executive pay with a robust approach to governance says Adrienne Airlie, chief executive of Martin Aitken & Co

The last three months have not been great for the public’s perception of trustees.

In November we had the case of the so-called crystal methodist minister Paul Flowers who was the former chair of the Co-operative Bank. It came to light that in 2005, he was investigated for allegations of false expenses claims of around £65,000 while a trustee at drug rehabilitation charity, Lifeline. You really couldn’t make it up!

In December, the BBC were investigating the 81-year-old Lord Bhatia. He is a cross-bench peer accused of misappropriating more than £600,000 to fund his own lifestyle through the Ethnic Minority Foundation – a charity he helped to set up. The peer had been suspended from the House of Lords in 2010 after wrongly claiming thousands of pounds in allowances.

Throughout this whole period there has been the ongoing debate about remuneration of senior staff and trustees, and questions about the need for charities to be able to attract the right people.

Public opinion on this topic became more polarised in January when The Halo Trust, the landmine clearance charity, defended its position of paying its chief executive and founder a salary package, including school fees, of about £220,000.

It stated this was necessary to remain competitive and that its “beneficiaries and staff both deserved and needed a highly competent and professional management team”. The charity stated that it had to compete alongside its counterparts, which included the UN, army and the Foreign Office. It also added that the remuneration package reflects “the complexity and responsibility of his role, pay in comparable jobs, entitlements of subordinate staff, the amount of time he is expected to spend abroad and the value he provides in driving the efficiency and productivity of the charity.”

the public perceives high levels of self-interest and remuneration and low levels of morality and decency from trustees

The result of all this, unfortunately is that the public perceive high levels of self-interest and remuneration and low levels of morality and decency from trustees as well as their ability to “dip the till”, or take part in outright fraud over a long period. Not a great advert!

We all know these are isolated cases. However the sector is contaminated as a result and public trust eroded.

So how can charities protect themselves? All the recent high-profile news stories have highlighted the need for good governance, especially with regards to trustee remuneration and expenses. Although charities cannot completely eliminate the risk of misappropriation and abuse, it is the role of trustees to ensure that they have established adequate controls and safeguards to mitigate the threat.

Some examples of these controls include: keeping minutes of all discussions on trustee and senior staff pay and expenses, including the level of pay, outlining the reasons why it is being awarded, checking whether the payment conforms with the founding document and OSCR regulations, and, most importantly, linking the benefit the charity gains from making the payment.

Martin Aitken & Co Ltd has a specialist charity team. If you would like to chat through this issue or any financial issues affecting your charity, please call 0141 272 0000 or email me on [email protected]