A question of scale
6 November 1996
15 November 2013
27 February 2014
18 November 2013
1 April 2014
21 March 2014
Charity administration has undergone massive changes during the past few decades and this has raised questions about the role of the charity trustee. For example, should the trustee be paid for work which is, by definition, of benefit to the community?
Whereas trustees would have been heavily involved in the management and implementation of policy 20 years ago, today even modest charities will have a paid employee who acts as chief executive, though they may be part-time. That employee will carry out many of the functions previously undertaken by the trustees and may be a charity trustee under the Charities Act 1993.
The trend towards the paid chief executive has two implications. First, the executive's role is different from that of unpaid trustees. Second, his/her involvement reduces the amount of time charity trustees need to spend on the charity's business. The views of the Charity Commission on payment and the role of charity trustees are held in its Decisions (Volume 2 1993). Charities exist for the public and those running them must do so altruistically, not for their own benefit. But charities must also be administered properly, with sufficient time and skills devoted to the job. And every case will be different - the issues for trustees of multi-million pound charities will not be the same as those for a local parish church.
Some of the issues involved in running a charity are:
Carrying out the charitable work of the charity. This may sound obvious, but the distinction between the charitable and commercial aspects (where fees are collected in return for services) can be subtle, such as in the work of some medical or educational organisations. The chief executive may be more concerned with making a surplus than with increasing the standard of education or research, which should be the trustees' objective. However, the two may not be inconsistent.
Raising money. Quite apart from the way the National Lottery has transformed the availability of funds for charities, the task of raising money is more competitive than ever. This means professional fund raisers must be considered, requiring documentation to comply with recent legislation (see page 16). v Public accountability. Filing annual returns and reports to the Charity Commission must be done promptly and the commission now chases up late filers. Most trustees are not caught up in commission investigations. But as the commission becomes more efficient and more investigations are undertaken, trustees may find sanctions imposed against them.
Which of these functions should be carried out by trustees and which should be delegated to either employees or agents? This depends on whether the trustee's role is to only have responsibility for the organisation and make policy decisions with the big picture in mind, or to do these things and also implement policy - in other words to do everything. For a small charity there is every justification for trustees doing everything. And on a local scale this has always been done voluntarily, with people taking on areas in which they have skills - accounts, fundraising etc.
But it does not make sense for trustees of a large charity to be directly involved in such minutiae of administration. The trustee in this case should be prepared to take management decisions while delegating the implementation of those decisions to employees and/or agents. The role is akin to the management of a large company and although the time spent by trustees on charity business need not be great, the decisions made are crucial.
The fact that trustees of a charity are not paid, other than reasonable expenses and professional fees for compliance work such as accounting or legal advice, does not deter people of the right calibre accepting trusteeship and carrying out their duties conscientiously.
But those who want to spend time on charity work but cannot afford to unless paid will find the move towards salaried positions in the voluntary sector enables them to use their skills for the public benefit while being paid a salary in line with their experience and knowledge.