Payment, expenses and benefits

Trustees are generally unpaid for their role. The voluntary principle of trusteeship is a defining feature of the charity sector, because trustees have a duty to act in the best interests of the charity and its beneficiaries and should avoid conflicts with their personal interests.

Trustees cannot receive a payment or benefit from the charity unless it has been allowed by law or in the charity’s governing document or approved by the Commission. A payment or benefit to a trustee covers a number of different situations:

• Payment or honorarium for their role as a trustee – for example, being paid a fee for attending board meetings
• Being an employee of the charity at the same time as being a trustee – for example, acting as a trustee and as paid chief executive
• Payment for services or goods they provide to the charity
• Indirect payments such as where the charity pays the employer of the Trust to release the trustee in paid time

Payments and benefits also include in-kind benefits or payments that are not genuine reimbursement of expenses and payments or benefits to people connected to a trustee – for example, close relatives. An example of an in-kind benefit is where a trustee uses part of the charity’s premises rent-free for their personal business. The Charities Act 2006 has made it easier for charities to pay trustees for services beyond acting as a trustee, for example, as a consultant, they might provide to the charity (but not as an employee). This power is available provided that the governing document does not expressly prohibit payment and that certain conditions are met. 

Restrictions still apply to other forms of payment: in these cases the charity must either have an explicit power in its governing document approving payment or seek approval from the Charity Commission. 

It is unusual for a charity to pay a trustee to carry out their role, or to employ them in another role in the charity (for example, as chief executive) at the same time as serving as a trustee. For approval to be given, the charity would need to demonstrate that such an arrangement is clearly in the best interests of the charity and outweighs any other option available. For more information click here.

If a trustee resigns to take a paid position in a charity, approval from the Charity Commission (or authorisation in the governing document) might also be needed. This is because the trustee might have been in a position to influence the terms and conditions of the paid position.

The restrictions over payment do not apply to out of pocket expenses, which are genuine and reasonable expenses a trustee incurs as part of their trustee role. Trustees can claim back these expenses from the charity (unless the governing document prohibits it, which is unusual). Expenses might include travel expenses, meals, hotels, childcare or postal expenses.