Introduction:

As a member of a charity, you understand the dedication and effort required to support its mission. However, the inability to compensate trustees for their services can pose challenges. Fortunately, recent changes to the Charity Act 2022 have provided charities with the statutory power to pay trustees for providing goods or services under certain circumstances. In this blog post, we'll explore these changes and provide guidance on navigating the process of paying trustees for their contributions.

Understanding the Changes:

On 31 October 2022, amendments to the Charity Act 2022 granted charities the authority to remunerate trustees for specific goods or services rendered to the charity. This signifies a significant shift, allowing charities to reimburse trustees for their valuable contributions beyond their standard duties.

Types of Payments Permitted:

Charities can now compensate trustees for:

• Services only, such as consultancy or estate agency.
• Services and associated goods, including plumbing or painting services and related materials.
• Goods only, such as supplying stationery.

It's essential to note that payments must be made for services or goods that go above and beyond normal trustee responsibilities. Additionally, the decision to pay trustees must be made by trustees who will not personally benefit from the payment.

Charity Commission Guidance:

The Charity Commission offers comprehensive guidance on paying trustees for goods or services. Key considerations include:

• Ensuring a written agreement between the charity and the trustee (or connected person) receiving payment.
• Specifying the exact or maximum amount to be paid.
• Guaranteeing that the trustee does not participate in decisions related to the payment agreement.
• Assessing the payment's alignment with the charity's best interests and reasonableness for the goods or services provided.
  

Duty of Care:

Charities must adhere to a duty of care when paying trustees, which includes:

• Confirming that payments are in the charity's best interest.
• Identifying and mitigating conflicts of interest.
• Exercising reasonable care and skill in decision-making.
• Addressing unsatisfactory goods or services promptly.
• Maintaining detailed records of discussions and disclosing payments in the charity's accounts.
  

Conclusion:

The ability to compensate trustees for their goods or services marks a positive development for charities, enabling them to recognize and reward valuable contributions effectively. By following Charity Commission guidance and exercising due diligence in decision-making, charities can navigate the process of paying trustees with transparency and accountability. As trustees, it's crucial to prioritize the charity's best interests and ensure that payments provide clear benefits to further the organization's mission.