Should a charity pay trustees’ expenses?
Monday, 17 September 2018
Making a payment of any sort to a trustee of a charity can be fraught with difficulties, especially when one of the defining aspects of the charitable sector is that trustees aren’t (usually) paid.
However, that doesn’t mean that payments can’t be made to trustees – they can, if they are dealt with properly. Payments for services rendered and for being a trustee or employee are possible, although, of course, there are strict guidelines. By far the most common payment to trustees is their expenses. But even this is covered by quite detailed guidance.
The Charity Commission has, however, made it clear that they don’t expect trustees to be “out of pocket” from being a trustee. Therefore, claiming expenses is perfectly reasonable.
To make sure that expenses are dealt with correctly, it’s essential that your charity has a properly thought-through expenses policy, which is set out in writing and fully understood by all trustees. It should also be reviewed on a regular basis. The policy should set out what can and can’t be claimed as an expense, and the process for making and approving the claim.
Approval of trustee expenses should be at a sufficiently senior level.
If properly repaid, expenses are neither a trustee payment nor a personal benefit in kind. Any claims would normally be supported by invoices or receipts, unless this is impractical or the amounts are very small. The need for supporting documentation should be included in the expenses policy.
So, what expenses can be reclaimed? As long as they are reasonable and were incurred in order to assist a trustee to fulfil their duties, it’s likely that a legitimate expense is refundable, unless, of course, the charity’s expense policy says otherwise.
Did you know?
One of the most frequent frauds against a charity is through excessive or inaccurate expense claims, be it by a trustee, staff member or volunteer. A precise and extensive expense policy is therefore essential.
With MHA, we have created 11 Key Steps for Trustees, 1 Giant Leap for Your Charity, a monthly guide for trustees to allow them to upskill and improve standards in a stepped and measured way. Each month’s article covers a different area. The article for month nine considers expenses in more detail and can be viewed here.
For more information on how we can help, please speak to your usual MHA Larking Gowen contact.
Call 0330 024 0888 or email email@example.com.