November E-news Survey Results: over 80% say Trustees should not be paid

Analysis of results and comment

In our November Quick Survey we asked:

The Charity Commission is currently reviewing its guidance on the remuneration of trustees, which it will be publishing in the New Year. DSC has long maintained that unpaid trusteeship is a fundamental characteristic of the voluntary sector and that trustees should not receive remuneration either for their contribution as trustees, or for other services delivered to the charities they govern. What we want to know is, do you agree with us?

Results were:

1) 82% agree
2) 18% disagree

Many thanks to the 932 people who participated in the survey, 250 of whom left additional comments.

Discussion of Question Responses and Additional Comments

DSC says…

A clear majority of participants agreed with our position, although there were important qualifications put forth by people who also submitted comments (some examples are discussed below in the Comments section).

There seem to be three main distinctions about what constitutes payment or remuneration, which perhaps the wording of our question failed to account for. To set these out more clearly, these are:

1. paying trustees to be trustees;
2. reimbursing trustees for legitimate expenses;
3. paying trustees for services rendered to the organisation.

On paying trustees to be trustees, our position is clear – we are against it for any reason. We absolutely recognise that there are numerous and ever-increasing challenges to how individual organisations govern themselves effectively.

Governance can be a complicated matter, and the level of understanding about legal requirements, roles and responsibilities, and best practice is not always present with trustees or indeed executive officers.

There are problems around recruitment, the need for specialised knowledge and skills to guide the organisation effectively in an increasingly complicated environment, and the need to increase diversity – but paying trustees is not the solution.

We think that a holistic approach to the problems faced by trustees is required, one which develops solutions that maintain the voluntary status of trustees. We believe that the essential characteristic of the voluntary sector is its voluntary nature, and voluntary trusteeship is an important cornerstone of this. The idea that paying trustees will solve any of these problems is flawed, as it seems mainly based on an unfounded belief that payment inherently makes people more competent and dedicated, which will therefore translate into improvements in governance.

Setting principle aside, there are many practical problems with paying trustees even a limited bursary. Obviously it diverts financial resources from other activities, without any guarantee of improved performance or greater commitment. In fact, it could have the opposite effect – turning off those who wish to contribute their energy and skills voluntarily, whilst attracting people whose main motivations are primarily financial. When trustees are paid it raises issues around employment law, which have the potential to exacerbate governance problems even further. One person who commented described the following scenario:

A charity for which I work has in recent years employed two of its Trustees, one at Director level, with Charity Commission approval, and the result is disastrous. We now have a new CEO who line manages a Trustee and one Trustee reporting to the other who is his line manager! There are many conflicts of interest as a result and the charity is struggling to cope with these. Charities should not be allowed to pay Trustees.

One of the biggest problems in governance is clearly setting out and maintaining the boundaries between trustees and executive positions. As the example above illustrates, paying trustees is likely to introduce an employer/employee relationship into the mix, which runs counter to proper governance roles and only blurs these boundaries further.

On the second type of payment – reimbursing expenses – we think this is entirely legitimate and right. This could range from travel expenses to compensation for lost pay as a result of having to undertake trustee duties. If trustees are hugely out of pocket – effectively donating not just time and knowledge but money – this can be a significant obstacle to them performing their role.

In order to increase diversity, organisations should explore how they could accommodate the needs of certain types of trustees without resorting to giving them a job – such as reimbursement for childcare expenses, for example. Obviously there is a balance to be struck between the need to facilitate trusteeship and the financial demands of other priorities.

The final aspect of payment, payment for services rendered, is allowable according to Charity Commission regulations but we feel it is best avoided. The most common argument in favour seems to be because a trustee can offer a service at a discount or that they already have detailed knowledge of what needs to be done. But have you really got value for money if you have just taken the option which is cheapest or closest to home, but may not necessarily deliver the best result or needed objectivity? This practice is also open to abuse by trustees who perhaps don’t have the best interests of the organisation at heart. And, even if everything is done above board, the way this will be perceived externally must be taken into consideration.

Returning to the issue of clarity around trustee roles, the main problem with this type of payment is that it introduces a client-contractor relationship into the sphere of governance, which is not helpful. Of course you can fire your trustee/contractor when the product or outcome is not up to standard, but it may be complicated by the fact that they are also a trustee and a productive relationship needs to be maintained on that basis. In short, there are many potential variables that might not be foreseen at the time the decision is made to pay a trustee for a service. We think the risks greatly outweigh the benefits, and at the very least the decision needs to be carefully thought through before proceeding, rather than seeing it as an easy solution.

Good governance is crucial to the effective operation of individual charities and voluntary organisations. While it might go largely unrecognised, proper governance underpins the public perception of charity and influences the way the sector is perceived by other types of institutions and the public at large. Bad or ineffective governance threatens the sustainability of individual organisations and by extension the people and social needs they exist to serve. Governance is therefore extremely important to the voluntary sector as a whole. Paying trustees will not lead to better governance – on the contrary, it is likely to exacerbate existing problems and create a whole host of new ones.

Discussion of Comments

1) Paying trustees to be trustees

Many arguments against paying trustees were based on the principle of voluntary trusteeship as a fundamentally important and distinguishing characteristic of the voluntary sector:

This is fundamental to good governance of charities and gives the public confidence in the integrity of individual charities and the sector.

Unpaid trustees help to demarcate the voluntary from other sectors. While it may sometimes suffer operational weakness, it is outweighed by moral strength.

The fact that Trustees give their time and expertise freely allows them to view the affairs of a charity in a way that is difficult for paid staff to achieve. If Trustees are to be paid, why not simply hand governance over to the Chief Exec and directors?

Other arguments against payment were more practical, or argued that paying trustees would not solve the problems with governance:

We HAVE to stop this trend towards believing that people are better motivated when they are paid. It is nonsense.

We are so strapped for funding as it is, how would we be able to pay for trustees?

Payment will bring confusion to Charities through employment law; whether the Trustee is a "casual worker" or "employee". Either status bringing legislative rights. This is aside from the ethical issues relating to the drivers of the Charity becoming beneficiaries.

Most arguments in favour of paying trustees centred upon the difficulty in recruiting and retaining dedicated trustees with the necessary skills:

I believe that the key to securing better governance is to promote the idea that being a trustee is a job not a hobby. Modest fees of a few hundred a year would help this.

Management committees are unable to attract people with the relevant expertise to enable them to develop; particularly small community based organisations. Remuneration will help.

We struggle to find professionals who can advise us, who are aware of charity law and finances and who even can be relied on to attend board meetings…I believe that payment of the board would help us to find professionals who can help us with running this refuge rather than providing more headaches.

Some people also argued that payment would increase the diversity of representation on boards:

You will never widen the spectrum of the community represented on Boards until a moderate remuneration is made available.

If it is always unpaid, you often only get the people who can afford to be a trustee. Is this really equality?

How will we ever get a truly representative, diverse board of trustees, when there is not even a small amount of remuneration? People who are working full-time, people who have children, people who are just starting out on their careers, unemployed people - how can they afford to take off the time that being a trustee requires?

2) Reimbursing trustees for expenses

There was general agreement among those who left comments that reimbursing trustees for their expenses should be allowed, and we agree. This could range from travel expenses to lost pay as a result of having to miss work to undertake trustee duties. Obviously individual organisations must decide whether they are capable of doing this and to what extent – there is a balance to be struck between the need to facilitate trusteeship and expenditure which might be required for other purposes.

3) Paying trustees for services rendered to the charity

This type of payment was more contentious. Some people felt that allowing it can present conflicts of interest, and the service rendered might not be objective enough (ie. a trustee who is an accountant preparing the accounts).

Too often we see trustees benefiting from their role especially those who provide services through their company.

It would be wrong for trustees to receive financial or any other kind of reward for services rendered. Dodgy characters would become trustees just to make financial gain.

If you want to pay for advice, get a consultant!

Others felt it could be legitimate and could help the charity by providing a needed service it could not afford otherwise.

There are occasions when it is more economic for smaller charities to pay for the expertise of one of their Trustees to complete a discrete piece of work than having to tender for it or pay an outside contractor.

I think it is perfectly in order for trustees to be able to render paid services (not trusteeship services!) to charities provided that normal conflict of interest declarations and procedures are followed.

Depending on how Trustees have been selected some may have skills and unique knowledge which makes them the right person to carry out a particular piece of work as a consultant.