Trustees’ Week 2025 Day 3 - Remuneration of Trustees

Welcome to Day 3! Today we are looking at Remuneration of Trustees.

Being a trustee is generally a voluntary role – a principle that the Charity Commission strongly reiterated earlier this year. This is what makes the charity sector unique and promotes trust and confidence in charities. However, in some circumstances it is both appropriate and necessary to remunerate trustees. Understanding how and when is vital to ensure that the charity and its trustees do not breach charity law.

There are legal rules that apply to paying trustees. This includes the need for legal permission, which can come from a power in the governing document or authority from the Charity Commission. Trustees must also consider the risks of paying trustees, for example public criticism, and the extra risks that come from employing trustees or people connected to them. These rules must be followed irrespective of the perceived benefits to the charity.

Expenses and loss of earnings

Check your governing document – most allow a trustee to be reimbursed for reasonable expenses properly incurred. These can include childcare, travel costs and meals when acting on behalf of the charity. Trustees should make sure that these are properly authorised and comply with any expenses policy in place.

What about loss of earnings? Occasionally, a trustee may lose out financially if they cannot be at work because of their trustee role, and may ask for compensation from the charity. Some employers provide paid volunteering leave, so you should ask trustees to enquire with their employer. The Commission’s guidance sets out the circumstances in which a trustee can be paid for loss of earnings and what factors the trustees should consider when reaching that decision. In most cases, the Commission’s consent will also be required (unless there is an express power in the governing document).

When deciding whether to compensate for loss of earnings, trustees should consider the advantages and risks of doing so, namely the risk that the charity will be perceived as a way of benefiting particular individuals. These risks only increase if you regularly pay trustees.

Paying a trustee for carrying out their duties

This should only be considered in exceptional circumstances and as a temporary arrangement when paying a trustee clearly brings a significant advantage to the charity over other options. For example, being asked to complete tasks that are more complex, time-consuming or require specific skills.

Trustees should be able to demonstrate in their decision making that all options have been assessed, and that paying a trustee for this reason brings a clear and significant advantage to the charity over all the other options. Such other options could be, sharing the responsibilities, recreating a new trustee to fill the skills gap, or engaging a consultant to carry out the work instead. You should follow the guidance on this and seek Commission consent where required.

Paying a trustee or connected person for goods or services

Charities have a statutory power to pay a trustee or connected person for goods and services, as long as certain conditions are met.

Paying for services does not mean ‘employment’, as we will discuss below. Services can be a one-off or regular payment for consultancy, training or administrative work, for example. ‘Goods’ would include the hiring of premises or facilities, or buying food for an event or stationery.

There is a statutory power you can use to pay a trustee, connected persons, or holding trustees for providing goods or services to the charity. You can also use the power to pay any trustee or connected person for providing a service on behalf of the charity.

The Commission’s guidance clearly sets out the criteria and conditions that must be met before proceeding to pay a trustee or connected person for providing goods and services to a charity. These are summarised below, but the guidance should be consulted:

1. Your charity’s governing document must not contain a prohibition.
2. Getting the goods or service from the trustee or connected person must be in your charity’s best interests.
3. The amount you agree to pay must be reasonable.
4. There must be a written agreement.
5. Only a minority of trustees may be paid at any one time.
6. A conflicted trustee must not take part in any discussion or decisions about the arrangement.

If you are not using, or cannot use, the statutory power, you may have to request authority from the Charity Commission to pay a trustee in this way, depending on what your governing document says.

Employing a trustee or connected person

If the trustees decide it is in the best interests of the charity to offer a position of employment, a fair and open recruitment process should be carried out to help appoint the best person for the job. This helps ensure that a trustee has not – directly or indirectly – influenced you to create or keep the job, and that whoever fills the role has the skills and experience you are looking for.

Trustees need to also ensure they can manage any conflicts of interest that arise. Employment should not be used as a way to pay a trustee for carrying out their duties. A trustee interested in the position should not be involved in making decisions about the job, including advertising, recruitment and terms of employment.

Trustees should consider how they will advertise the job, so that a wide pool of candidates can apply, and how they will assess candidates, so that the best person is picked for the job.

As usual, check your governing document to see what it says about employing trustees. You may need Charity Commission consent, and remember that a majority of the trustees cannot be paid for their role.