Posts tagged ‘Fat Cat’

Well it really depends on what you mean by paid.

Remuneration

your time is a valuable resourceIt is true that a Trustee can not be paid for the time and skills committed to assisting the charity.  This is to prevent conflicts of interest when a Trustees personal decisions are not necessarily in line with those of the charity, and ensures that the charity sector doesn’t ruin the trust it has built with the public with media stories of fat cat bonuses, like the banking sector are still trying to shrug off.

Expenses

California StreetA Trustee should not however, be out of pocket.  It is one thing to donate your time, thoughts and energy to the cause, but to be financially worse off as a result is recognised by the Sector, after all attracting highly skilled people to take on the time commitment and huge responsibility of Trusteeship is difficult enough.

It is therefore considered acceptable to reimburse such as travel to Trustees meetings and specifically identifiable telephone call charges.

It is imperative however that the governing document (usually a Memorandum and Articles of Association, a Trust Deed or a Constitution) allows this.  Many of these documents have not been revised since the origin of the charity and more often than not prohibit any payment of charity funds to Trustees.

If expenses are allowed then Trustees should be careful to ensure adequate controls have been designed and fully implemented so that their governance of charitable funds is not questioned.  Your auditor should be able to advise whether the systems in place constitute “adequate controls”.

Services

In the Charities Act 2011 which was implemented in phases between 2006 and 2011, it was acknowledged that in some circumstances it is perfectly logical and commercial for a Trustee to tender for work to be carried out for the charity.  For example, if a surveyor was a partner in a Chartered firm and a Trustee, it would be nonsense to engage the services of a different firm to offer advice regarding properties held, when the Trustee already knows the objectives of the charity, the opinions of the Trustees and the properties involved. He may even offer his professional services at a preferential rate.

Once again the Governing document may prohibit this, but assuming it doesn’t, the board must ensure that they are using charitable resources in the most effective manner and the Trustee in question must be removed from any decision making process in respect of his firm’s appointment.

Regulation

This is bound to be a focus point of Charity Commission scrutiny, so make sure you read the guidance on their website and liaise with your auditor before considering this.

It is also possible to obtain the Commission’s approval, which I would recommend if the amounts involved are substantial or relate to non-commercial circumstances such as compensation for loss of earning because the Trustee was required to attend a meeting.

The Commission also has the power to override the governing document, which may be useful if time does not allow for the document to be amended and approved.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

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