We've had two good financial years, following some bad times. A trustee suggested a staff bonus. Can I do this?
On the face of it, this sounds a good idea! I'm sure there has been plenty of hard graft to turn around your finances. It is important to recognise and reward such work.
But the payment of a bonus raises some issues. One charity I know was about to do this until the auditors questioned whether it had the legal powers necessary. They argued that if a bonus was not properly part of an employment contract, it was not possible to pay out. This was money from a surplus that was otherwise available for the charity's beneficiaries. The auditors also questioned whether funders would feel this was a proper use of donations or grants.
These are fair points. And then of course there is the question of how much to pay. Would it be an equal amount or graded? If it was an equal but small amount, would those who had a particularly large role in the turnaround feel hard done by? But paying them more could cause resentment in others, who might think, "But I worked as hard as her!"
In legal terms, you can certainly pay a bonus if your trustees feel it proper to do so. The Charity Commission's advice is that trustees are not acting in breach of trust if they incur employee expenditure that they were not legally required to meet, but which they nonetheless reasonably consider to best serve the interests of the charity.
There is a fascinating legal precedent often cited - Hutton vs West Cork Railway. "You cannot say the company has only the power to spend the money which it is bound to pay according to law, otherwise the wheels of business will stop ... The law does not say that there are to be no cakes and ale, but that there are to be no cakes and ale except such as are required for the benefit of the company."
And on the subject of cakes and ale, there are other ways you can reward staff for good performance. How about putting money aside for a celebratory meal for starters?
Perhaps you could consider how to reward staff in the next discussions on pay and conditions. You could consider something practical like a contribution towards a health club or gym membership. You might make an annual contribution to external courses or development materials that are over and above your professional training budget. Or you could establish and fund an employee-assistance scheme.
You could even ask staff for their views.
Stephen Bubb is chief executive of the Association of Chief Executives of Voluntary Organisations (Acevo).
Send your questions to: email@example.com.