News analysis: The pros and cons of paid trustees

An education trust is being allowed to pay some trustees. But is this is a good thing? Nathalie Thomas reports.

To pay or not to pay? That is the question more charities could be asking about their trustees, thanks to a recent Charity Commission ruling that many governance experts believe will lead to more paid boards in the sector.

Third Sector revealed last week that the commission has permitted the CfBT Education Trust, one of Britain's richest charities, to pay 40 per cent of its trustees. A previous ruling means the trust already pays its chair and an operations board that reports to the trustees on finances.

The trust says it has not yet decided how much trustees will receive, but given that its chair, John Harwood, is already rewarded to the tune of about £20,000 a year for the one day a week that he works on trust business, the figures involved are likely to be more than just pocket money.

Stephen Bubb, chief executive of Acevo, says he thinks the CfBT ruling signals a growing trend in the sector, particularly among service delivery charities with large incomes. He knows of at least two other charities that are hoping to move to a corporate-style governance structure with a paid board. "We'll certainly see more of this," he says.

But it isn't as easy as simply deciding to adopt a corporate governance style. Charity law firmly forbids trustees from receiving any benefit from their charity, be it money, goods or services, without explicit legal authority from their governing document, a court or the commission. So organisations interested in paying their trustees must seek permission first.

"The commission will consider any request for trustee remuneration received from a charity in accordance with our guidance on Payment of Charity Trustees (CC11)," says a spokeswoman for the Charity Commission. "The commission considers requests on a case-by-case basis."

This may sound like a potentially lengthy process, but Stephen Lloyd, a partner at law firm Bates Wells & Braithwate, which did the legal work for the CfBT Education Trust, warns there's no getting around it.

Lloyd agrees that the CfBT ruling sets a precedent, especially for service delivery charities that deal with big contracts. But he also says persuasion will continue to play its part. "One would need to do a convincing presentation to the commission," he says.

CfBT was able to win the commission over because its trustees often have the challenging task of overseeing large contracts abroad, according to Lloyd. "The role of the trustees in ensuring these contracts are properly negotiated and supervised is very demanding," he says.

Risks of payment

Nevertheless, CfBT trustees are not the only ones with onerous roles, and a number of charities will be watching the developments closely.

"For service-providing organisations that deliver specialist care services, I think it will provide a potentially positive option," says Phil Luxford, deputy chief executive of Sue Ryder Care. "Paying trustees could enable charities to greatly diversify the pool of talented people they can attract." Governance expert Judith Rich agrees. "It could make all the difference between organisations getting the right person and not getting the right person," she says.

However, both Luxford and Rich concede there should be a limit to how far the payment goes. "The general rule should be that trustees aren't paid," Rich says. Others go one step further. Robert Leader, chief executive of St Dunstan's, is opposed to trustee payment in any form. "I think if charities address the task of recruiting trustees appropriately, most of the larger charities are able to recruit good quality volunteer trustees," he says.

Leader suggests paid trustees could pose a risk to the reputation of the sector. "I think the public would find it seriously difficult," he said. "I'm not saying I agree with this, but non-executive directorships of companies can often be seen as a gravy train. I would not want anything in the voluntary sector to be seen as a gravy train."

The RNLI, the fifth-biggest fundraising charity in Britain, is equally reticent. "There is no pressure for the RNLI to pay trustees," says Ian Ventham, corporate services director at the RNLI. "We are very happy with the trustees we have, all of whom are dedicated to the work they do."

The Bournemouth Symphony Orchestra, like the CfBT Education Trust, did change. It placed a salaried managing director on its board, but with a consequence: HM Revenue & Customs decided it was no longer run on an "essentially voluntary" basis and so was ineligible to reclaim VAT on ticket sales (Third Sector, 18 October).

The CfBT Education Trust doesn't think it will be chased by the tax man but, for some bodies, paid trustees have already proved a mixed blessing.

- See Letters, page 15.

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