Charities

Can a charity makes payments to a Trustee of the charity?

Questions sometimes arise as to whether a person who is a Trustee of a charity can be paid by that charity for goods or services which he or she provides.

Governing Documents

It is possible for a Trustee to be paid (including payments in kind) but the Charity must first establish whether it has authority to do so. This can usually be found in the Charity’s Governing Documents. If the Charity has authority, and the Trustees believe such a payment is in the best interest of the Charity, then it may proceed to make a payment to the Trustee.

The New Power

If there is no express power in the Governing Documents, but also no express prohibition, Trustees now have a statutory power to pay a Trustee to provide specific goods or services to that Charity. The goods or services paid for must be over and above the Trustee’s normal duties. In order to use this power the Charity must meet the following conditions:-

1. There must be a written agreement between a Charity and the Trustee.

2. The payment must be no more than is reasonable for the service and must be in the best interests of the Charity.

3. The Trustee who will receive payment must not take part in decisions regarding the agreement.

4. Trustees are subject to the usual duty of care within the Trustees Act 2000 when deciding whether to pay.

5. The power cannot be used if the number of Trustees who are being paid makes up half or more than half of the Trustee board.

Applications for Authority

If there is no authority to pay Trustees in the Charity's Governing Documents and payments cannot be made using the above new provisions, the Charity must apply to the commission for authority to make the payment.
 

If you have any questions about this or about any other aspects of setting up or running a charity, please contact Felix Appelbe on 020 7242 7000 or use the Contact Request Form.
 

© Ambrose Appelbe 2008
This web site contains general information only and does not constitute legal advice. You should take suitable advice as to your specific circumstances. Ambrose Appelbe accepts no responsibility and disclaims all liability in relation to such information.