How to pay trustees’ expenses, if trustees can be paid for work they do for the charity and how to give a trustee a gift.
Applies to England and Wales
Expenses are for out-of-pocket payments trustees have to make in order to carry out their duties, for example:
- travel to and from trustee meetings
- overnight accommodation
- postage, telephone calls and broadband time for charity work
- childcare or care of other dependants while attending meetings
Your charity should have a written agreement setting out what is classed as an expense, plus how to claim and approve expenses.
Pay a trustee to be a trustee
When you become a trustee, you volunteer your services and usually won’t receive payment for your work.
Generally, charities can’t pay their trustees for simply being a trustee. Some charities do pay their trustees – they can only do so because it’s allowed by their governing document, by the Charity Commission or by the courts.
Pay a trustee to do work for the charity
Trustees could be paid for:
- building work such as plumbing or painting
- providing specialist services, such as estate agency or computer consultancy
- providing premises or facilities for occasional use, for example as a meeting room
- administration or secretarial work
Legal requirement: before paying a trustee, you must have regard to the commission’s guidance on paying trustees for services. It explains how you must:
- produce a written agreement between the charity and the trustee (or connected person) being paid
- specify the exact or maximum amount to be paid
- make sure the trustee does not take part in decisions made by the trustee board regarding any aspect of the agreement
- agree the payment is in your charity’s best interests and reasonable for the service provided
- not allow payments or other benefits to half or more than half of your board – the number of trustees receiving any payment or benefit must be in the minority
- make sure your charity’s governing document doesn’t prevent you from paying trustees for services
When deciding to pay a trustee for services or goods, you must follow your duty of care as trustees. In practice, this means you should:
- be clear that the payment can be justified in the charity’s best interests
- identify and record conflicts of interest and prevent them from affecting the decision
- use reasonable care and skill when making your decision (take legal advice if you need it)
- decide what you will do if the services or goods aren’t satisfactory
- keep records of discussions at meetings and disclose the payment in your accounts
Pay someone who is connected to the charity
If someone is connected to a trustee, they are known as a ‘connected person’. For example:
- a spouse or partner
- a brother- or sister-in-law
- business partner
If a connected person is to be paid or employed by the charity, the trustee or trustees they are connected to must not be involved in any part of the process.
You need the commission’s permission to pay or employ someone who is connected to a trustee.
Buy a leaving gift for a trustee
If the trustee has been with the charity for quite a while, you can use the charity’s money to buy a small gift as a leaving or retiring present.
Small gifts usually do not need the commission’s authority, provided that:
- the value of the gift is minimal
- the trustees agree it’s in the charity’s best interest
When to get commission consent
You need to get the commission’s consent to pay or employ someone who is related or otherwise connected to a trustee. If your governing document doesn’t allow you to pay trustees, you may need to get the commission’s consent to:
- employ a trustee
- pay a trustee for serving as a trustee
- pay a trustee’s expenses or replace lost income
- pay a trustee for providing a service
What to say on the form
Don’t complete this form if you are the trustee who will be paid - ask another trustee to complete it. Use a different form if your charity is an NHS charity.
You’ll need to provide the commission with:
- the reason for the payment
- details of any recruitment process, demonstrating that it was open and fair
- a copy of any contract or agreement to pay the trustee as a PDF file
- a job description for any paid work
- your charity’s most recent accounts as a PDF file (if you haven’t already sent them to the commission)
It is an offence under section 60(1)(b) of the Charities Act 2011 to knowingly or recklessly provide false or misleading information to the commission.