Third Sector’s recent article about whether more trustees should be paid created something of a stir on social media, with many arguing that payment undermines the very principle of trusteeship.
But there is part of the charitable sector where board members are usually paid: housing associations.
Trowers & Hamlins acts for many housing associations, the majority of which are charitable. It is estimated that the majority also pay their board members. As exempt charities, they are regulated by the Regulator of Social Housing rather than the Charity Commission, and as such are subject to different regulatory requirements. The RSH is more interventionist than the commission and is generally very demanding of governance in the sector.
In 2014, I co-wrote a book for the National Housing Federation on the legal and practical implications of paying board members. In preparation, we carried out a survey in which more than 800 housing associations were invited to participate and to which 210 participants contributed. A majority of those paid their board members.
Housing associations have to go through a process involving regulatory scrutiny and independent advice when deciding to alter their constitutions to pay trustees. When we carried out our survey, the reasons given for deciding to pay included: to achieve greater engagement; to attract applicants with relevant skills; to raise the standards of attendance and input; to attract applicants for the board; and to reinforce the accountability of the board.
Since then it has become the norm in medium-to-large associations to pay trustees and the anticipated benefits have arisen.
Housing associations that pay their board members tend to receive more applicants in terms of quality, diversity and number. From my own charity board experience, they don't experience the same difficulties in recruiting as non-paying organisations. I’ve found that associations now generally use skills-based recruitment and offering payment for board positions has had the effect of reducing the average age of the board, because younger applicants who work have been encouraged to apply. The gender balance of boards has also improved and people are happier to meet during the working day, possibly because they are paid to attend.
The benefit of paying is really shown by the fact that engagement, attendance and input have all improved. As one chair said to me recently: "It's much easier to appraise a board member who is paid, rather than someone you must thank for volunteering."
It is routine now for housing boards to appraise their members, and this has, in turn, led to their improved development and performance. For many housing associations whose organisation has become more complex, and which have increased their commercial activity, the payment of board members has resulted in boards that are better equipped to deal with the challenges of a growing business.
Another benefit to paying trustees is that board members become properly involved and committed. They are happy to get involved in committees, training and awaydays, and generally make more of a contribution.
The turnover of board members has also fallen, which means that it feels as if boards are more stable. The change in culture this brings means that some boards have reduced in size and meet more often.
The yearly mean board pay today is about £4,500. The question, perhaps, is why the culture and commitment of board members changes so much when the pay is nothing like as high as those payments made in the public and private sectors. There are drawbacks to paying trustees, but in view of the benefits I wouldn't write off the idea in the wider charitable sector.
Emma Burrows is a partner at the law firm Trowers & Hamlins