No personal benefit
Members of the management committee/board must not benefit from their position beyond what is allowed by their governing document and the law and only when it is in the best interests of the organisation.
(Supporting principle to Principle 6 of the Code of Good Governance)
Individuals should give time to take part in the Management Committee/Board of a charity to serve the best interests of the charity, not for personal gain, whether financially or in terms of influence of other kinds. This helps to maintain the independence of the organisation and also safeguards and promotes the organisation's reputation with the public and relevant interest groups.
Payment of expenses
Payment of reasonable expenses incurred by Management Committee/Board members whilst carrying out their duties is, however, acceptable and considered good practice. Management committee/Board members should not be out of pocket for work they carry out for the organisation. In order to ensure transparency and avoid any accusations of personal gain, reimbursement of expenses should be done in line with agreed policies and procedures.
Payment of Management Committee/Board members
Payment of Management Committee/Board members is not recommended, for a number of reasons. The voluntary nature of governance in the charitable sector has traditionally been an important distinction between the charitable and the private sectors. It is a means of ensuring and demonstrating that management and decision-making is carried out in the best interests of the charity and its beneficiaries. Having a voluntary board ensures a clear perception of an organisation run by individuals who are committed to the charity's mission, with no other incentive for doing what they do.
However, in some specific situations, members of committees and boards can be remunerated for work they do on behalf of the charity but only where permitted by law and by the governing documents of the charity.
A common example is where goods or services are provided by a management committee member to the charity (e.g. where a committee member provides consultancy services to the charity). Unless this is provided for in the charity's governing documents, the individual must not be seen to profit from this exchange. Services should be provided free of charge or at cost.
Most importantly, the management committee must seriously consider the options and judge whether remuneration is actually in the best interests of the charity, or whether it is better to maintain the committee's integrity.
On those rare occasions where payment to members of the Management Committee is considered to be legal, appropriate and necessary, the relevant committee member should not be party to any discussions regarding this remuneration or determining the levels of remuneration.
Management committee members cannot usually be reimbursed for carrying out their governance duties. There are a limited number of examples where this does happen in England, particularly with larger charities, however this has required the specific authority of the courts or of the Charity Commission and the presumption is against payment.
For more information please see the NICVA Advice Note on Charity Trustee Duties.
The Charity Commission for England and Wales has available on their website additional resources regarding remuneration of trustees (i.e. management committee/board members) and reimbursement of expenses. These include:
- Trustee Expenses and Payments (Charity Commission Guidance)
- Research on payment of trustees in England and Wales
- Conference discussion on payment of trustees in England and Wales
(Please note that, whilst these are informative, they are based on the legal framework for charities registered in England and Wales and not all points will be relevant for Northern Ireland charities.)