One common question that arises when discussing the governance of charities in Scotland is whether charity trustees can be paid for their services. Understanding the rules and regulations regarding trustee remuneration is crucial for ensuring that your charity remains compliant with the law and maintains public trust. This article will explore the circumstances under which charity trustees can be paid in Scotland, the legal requirements, and the implications for charity governance.
General Rule: Trustees Cannot Be Paid
As a general rule, charity trustees in Scotland are not allowed to receive payment for their services as trustees. This principle helps ensure that trustees act in the best interests of the charity and its beneficiaries, rather than for personal financial gain.
According to the Office of the Scottish Charity Regulator (OSCR), the standard position is that trustees should not benefit financially from their role. This includes not receiving any direct payment, honorarium, or fee for their trustee duties .
Exceptions to the Rule
While the general rule prohibits payment, there are specific circumstances under which charity trustees can be remunerated. These exceptions must be carefully managed to ensure compliance with the law and to avoid conflicts of interest.
1. Provision in the Governing Document
Trustees can be paid if the charity’s governing document explicitly allows for such payment. The governing document (such as a constitution, trust deed, or articles of association) must detail the conditions and limits of trustee remuneration. If payment is not mentioned in the governing document, it must be amended, which typically requires approval from OSCR .
2. OSCR’s Prior Consent
Even if the governing document allows for trustee payment, charities must often seek prior consent from OSCR before implementing any remuneration arrangement. This step ensures that OSCR can review the terms and assess whether the payment is reasonable and in the charity’s best interests .
3. Payment for Services Beyond Trustee Duties
Trustees may be paid for providing services to the charity that go beyond their normal trustee duties, such as professional services (e.g., legal, accounting, or consultancy work). In such cases, the following conditions must be met:
- The payment must be reasonable and reflect the market rate for the services provided.
- There must be a written agreement detailing the services and payment terms.
- A majority of non-conflicted trustees must agree to the arrangement.
- The charity’s governing document must not prohibit such payments .
Implications and Best Practices
When considering paying trustees, charities must adhere to best practices to maintain transparency and public trust.
Conflict of Interest Management
Any decision to pay trustees should be handled with a clear conflict of interest policy. Trustees with a financial interest should not participate in discussions or decisions regarding their own remuneration. Maintaining clear records of such meetings and decisions is essential for transparency and accountability .
Reasonableness and Proportionality
Payments to trustees must be reasonable and proportional to the services provided. Excessive payments can attract public and regulatory scrutiny and damage the charity’s reputation. OSCR provides guidance on what constitutes reasonable remuneration based on market rates and the charity’s financial capacity .
Regular Reviews
Charities that decide to pay their trustees should regularly review the arrangement to ensure it continues to be in the best interests of the charity. This includes assessing the value of the services provided and the impact on the charity’s finances and governance .
Conclusion
While the general rule in Scotland is that charity trustees should not be paid for their services, there are exceptions that allow for remuneration under specific conditions. Ensuring that any payments comply with the charity’s governing document, obtaining prior consent from OSCR, and managing conflicts of interest are crucial steps for maintaining compliance and public trust.
By adhering to these guidelines and best practices, charities can navigate the complexities of trustee remuneration while ensuring that their governance remains robust and transparent.
References
- Office of the Scottish Charity Regulator (OSCR). (n.d.). Guidance on Trustee Remuneration. Retrieved from OSCR
- OSCR. (n.d.). Trustees and Payments. Retrieved from OSCR
- Scottish Council for Voluntary Organisations (SCVO). (n.d.). Paying Trustees. Retrieved from SCVO
- Government of the United Kingdom. (n.d.). Charity Trustee Payments. Retrieved from GOV.UK
- Charity Commission for England and Wales. (n.d.). Conflicts of Interest: A Guide for Charity Trustees. Retrieved from Charity Commission