Paying Trustees for Providing Goods to the Charity
The Charities Act 2022 is coming into force in phases, with the first phase implemented on 31 October 2022. This first phase includes provisions around charities paying trustees for providing goods to the charity.
Whilst it is a fundamental principle that charity trustees should not benefit personally from being a trustee, charities already have a statutory power that they can use, in certain circumstances, to pay trustees for providing a service to the charity beyond usual trustee duties. This could include, for example, building work, specialist services such as IT consultancy, professional or administrative work. A trustee can also be paid for goods supplied in connection to that service. This could also include paying someone who is connected to a trustee, such as a family member or business partner.
This power has been extended by the Charities Act 2022 so that charities will also have a statutory power to be able to pay trustees in certain circumstances for simply providing goods to the charity, even if there is no express power in the governing document. The charity will now no longer be required to seek Charity Commission authorisation for such payments.
Before obtaining goods and/or services from a trustee, the trustees should ensure that the charity’s governing document does not prohibit this, that it is in the best interests of the charity and that they can comply with the Charity Commission’s detailed and updated CC11 guidance on payments to charity trustees.
Crucially, the trustees should ensure that conflicts of interest are managed so that the trustee who may be paid by the charity (directly or indirectly) does not take part in the relevant discussions or decision-making. In addition, the terms must be reasonable and set out in a written agreement. The trustees should also ensure that no more than half of the trustees are currently providing services to the charity or connected with someone who is doing so.
Please get in touch with the Charities team if you wish to discuss further.