Banks crisis 'shows the pitfalls of commercialism'

The current banking crisis should be a wake-up call for charities that are "drifting into commercialism", according to charity lawyer and Liberal Democrat peer Andrew Phillips.

Lord Phillips will tell a charity conference in Edinburgh tomorrow that the provision in the Charities and Trustee Investment (Scotland) Act 2005 allowing charities to pay a minority of their trustees a "reasonable" salary is "a step firmly in the wrong direction" and could undermine public faith and donations.

"I hope the banking crisis will make people think more," he told Third Sector. "This is still a sector whose name has a positive resonance. That is why the sector is still in relatively good health. But the moment it ceases, the sector will have done itself unbelievable damage."

Rules requiring English and Welsh charities to seek the Charity Commission's permission to pay trustees were sensible, he said. But he added: "The notion that you can't get good trustees without paying them is nonsense and a self-fulfilling prophecy of despair."

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