NEWS IN FOCUS: Is it wise to relax rules on using trustees' services?


Changes to the rules on paying trustees for services could save charities money. But there would be a price to pay, says Patrick McCurry

You may have a trustee who is a builder and is happy to install central heating in the charity's premises at cost?

Or perhaps another board member is a solicitor and is prepared to handle some of the charity's legal work for a low rate?

In theory it sounds like a "win-win" scenario - the charity benefits and the trustee is allowed to contribute his or her particular talents to the organisation.

But many in the sector view a proposal to relax the rules on payment for services, contained in the Government's recent Strategy Unit report, with unease.

"As trustees of a charity, we should not be seen to be profiting from our position," says Terry Oliver, chair of Arthritis Care, adding that her main concern would be the potential conflict of interest if a trustee were paid for providing a service.

At present some charities do pay trustees for services but only those which have governing documents that specifically state they can do this.

The Strategy Unit wants this power to be made universal so that trustees can be paid.

The crux of the Strategy Unit's argument is that often a trustee can provide a service on much more favourable terms than an outside provider.

But some, not least the Charity Commission, are uneasy. Giving charities powers to make payments, argues the Commission, could create a damaging perception "if it became widespread practice for charities to prefer a trustee to an unconnected contractor".

It adds that some charities will have problems managing the conflict of interest and the confusion of roles that arise when a board has a commercial relationship with one of its members.

Anne Taylor, manager of recruitment resource the Trustee Register, says: "When trustees are not paid for the work that they do, they retain a level of independence that would be lost if these new proposals go a head."

Luke FitzHerbert, of research group Directory of Social Change, advises caution. He argues that those charities that have such powers often make regular payments to trustees, rather than the one-off payments suggested by the Strategy Unit's report, and that such payments can be substantial.

A survey by the Directory of Social Change showed that 21 of 300 large trusts made such payments, in some cases running to more than £200,000.

But there are those who support an easing of the rules. Linda Laurance, chair of the Charity Trustee Networks, argues that charities could benefit as long as the relationship with the relevant trustee is handled openly and the potential conflict of interest managed appropriately.

"For example, any decision on whether to pay a particular trustee for services should be made without that trustee involved in the discussion," she says.

Tesse Akpeki, head of the trustee and governance team at NCVO, argues strongly that before paying any trustee for services, the charity should ensure it is getting value for money. "The board should tender the work and do its homework," she says.

But for Philip Burke, chair of homelessness charity the Simon Community, paying trustees for services is a slippery slope. "We have all kinds of professionals on our board and if we started paying one for particular services we could end up paying them all," he says. "My main problem with this kind of payment is it can call into question the trustee's impartiality."

Akpeki says her research found there are more pressing issues facing voluntary organisations' relationships with trustees."Many board chairs spend an awful lot of time on charity-related work but don't get much reimbursement of expenses," she says.

"Another important issue is that many trustees feel underappreciated and I'm sure that if more charities said 'thank you' a bit more often that would help and perhaps defuse some of the debate about paying trustees."

Oliver raises the issue of loss of earnings compensation for those trustees in jobs that make it difficult to attend meetings and events connected to the charity.

"We've had discussions about whether we should make loss of earnings payments to trustees in busy jobs like banking or fundraising but we haven't reached a formal decision yet," she says.

While there may be moves toward loss of earnings compensation or payments for provision of services, there is widespread opposition to the idea of paying trustees to be trustees.

Alec Reed, chair of Women at Risk, says: "The danger of creating a culture of payment is that in the future many charities will not be able to afford the high calibre of trustee they have at the moment."

Akpeki argues strongly that one of the key things that differentiates trustees from full-time staff is that they are unpaid and can therefore take a more objective view of the charity's activities.

"Paying trustees blurs that distinction," says Akpeki, highlighting the fact that in the private sector non-executive directors, who are paid, have been criticised for not exercising their watchdog role.

If the Strategy Unit's relaxation of the rules is implemented, many in the sector would like to see safeguards as part of the changes.

These could include limiting the number of trustees who can be paid for providing services and ensuring that a register of trustees' interests is established.

Any change will have to be managed carefully, says Akpeki, so that public trust is not eroded. "A lot of the public don't even think that charity staff should be paid, never mind about trustees, so it's a tricky area," she says.

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