Trustee Remuneration

Information on charity trustee remuneration and the conditions for remuneration.

The 2005 Act states that remuneration of charity trustees may be any direct or indirect payment or benefit, including a benefit in kind. It can be for:

• being a charity trustee
• a contract of employment
• for other services to or on behalf of the charity.

Charity trustees must act in the interest of their charity and any personal benefit, whether direct or indirect, must be treated with caution. Section 67 of the 2005 Act states that a charity trustee must not be remunerated from charity assets unless certain conditions are met.

What are the rules on paying charity trustees?

The 2005 Act states that you must not pay a charity trustee, for services provided to the charity, either as a charity trustee or under contract, unless you meet all of these conditions:

• there is no restriction to the payment in the charity’s governing document
• less than half the total number of charity trustees are getting paid (directly or indirectly) by the charity or are connected with any person who is getting paid for services by the charity
• there is a written agreement between the charity and the charity trustee
• the written agreement sets out the maximum amount to be paid, and
• the charity trustees are satisfied it is in the interest of the charity
  for the services to be provided by the charity trustee for that
  maximum amount.

If your governing document says that the charity trustees cannot be paid, then even if the other rules from the 2005 Act are met, you will not be able to pay any of the charity trustees.

Examples of when it might be reasonable to pay a charity trustee, provided the conditions above are met:

• When a local tradesman is a charity trustee and provides services to the charity at a competitive rate.
• When employees of the charity are also charity trustees because of their position: for example, as chief executive or because they are elected as a staff representative.

Example of where a charity trustee must not be paid:
A charity has 3 charity trustees who are unrelated. Its constitution does not prohibit payment to its charity trustees. Trustee A’s child is paid by the charity for services provided to it. Trustee B or C can’t be paid by the charity for the provision of services or under a contract of employment because if they were paid this would be in breach of the remuneration conditions. If Trustee B or C were paid, more than half the total number of charity trustees would be getting paid or would be connected to a person who is also getting paid by the charity.

See the flowchart below to see if a payment meets the conditions.