Sell off land? Pay trustees?

A requirement for the Charity Commission to approve such decisions will be reviewed

Charity Commission
Charity Commission

Few issues in charity law have polarised the sector more than whether trustees should, in some situations, have to seek permission for their actions from the Charity Commission rather than making decisions for themselves.

Selling land and paying trustees are the key issues where the legal requirement to gain the commission's permission comes into force. A question in the regulator's consultation about its strategic review, which asked whether this requirement should be removed, revealed an almost exact 50 per cent split between those who agreed and those who didn't.

Dame Suzi Leather, chair of the Charity Commission, has indicated that the regulator is likely to ask parliament to rule on the issue as part of the review of the Charities Act 2006 that is due to begin this year.

The RNIB, which last year received permission to pay its chair, Kevin Carey, is clear on where it stands. "Charities should have autonomy to devise their own schemes reflecting what best meets the needs of their organisation," a spokesman says. "They should not be bound by regulation, but by publishing requirements in respect of the schemes adopted."

But Jay Kennedy, head of policy at the Directory of Social Change, argues that the commission should keep a close eye on circumstances where there could be a conflict of interest, including paying trustees and selling land. "I'm not convinced that trustees can hold each other to account on these issues," he says. "The decisions need to be scrutinised by the commission as an external body."

Kennedy also warns that it is dangerous to consider scaling back the commission's role in the context of saving money. "The issue has come to a head because the commission's budget has been slashed," he says. "Changing the law permanently to save the commission money in the short term isn't necessarily wise."

When the commission asked in its strategic review consultation about the circumstances in which its specific permission should be required, responses were mixed. A respondent from the independent living charity the Abbeyfield Society said: "The Charity Commission should put a clear advisory framework in place and update this as practice requires. Within this I would suggest intervention by exception rather than as the norm."

One anonymous respondent to the consultation suggested setting financial thresholds above which a charity would need permission from the commission to sell land or pay trustees, an idea in tune with the commission's intention to save money by focusing on cases where there is a high level of risk.

Other forms of compromise are also possible. Nicola Evans, a senior associate at the law firm Bircham Dyson Bell, says charities should be free to pay trustees for goods they supply, but should be made to ask the commission before paying them for their work as trustees. "The fundamental principle of trusteeship is that you can't benefit from the trust, so the commission should retain its power to check on trustees who are being paid," she says.

The Charity Commission seems unwilling to take a public stance on what its role should be in sanctioning trustees' decisions, particularly given the even split between supporters and opponents. But removing the powers would be in line with two of the government's agendas: shrinking the role of quangos and devolving more powers to charities. So it's more likely that MPs, who will make the decision, will settle on this option.

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