Paying trustees to provide stuff to your charity – Just because you can, you probably shouldn’t!

My partner has a very strict rule about using family and friends to do work for us. The rule is ‘Never’. We’ve done it before and been in the horrible situation of the job not being done well and not feeling able to say so because we valued the relationship more.

I tell you this because I think this is highly pertinent to the changes being introduced by the Charities Act 2022. According to the Commission’s latest update on its website:

Charities now have a statutory power to pay trustees for providing goods alone to the charity in certain circumstances. Using the new statutory power, trustees can be paid for:

• Services only, for example estate agency or computer consultancy.
• Services and associated goods, for example plumbing or painting service and any associated materials such as plumbing parts or paint.
• Goods only, for example supplying stationery to the charity.

The temptation to use this power can be overwhelming. Trustees offering their company’s services to the charity are often doing it in good faith, usually at ‘mates rates’.

In its guidance the Commission, rightly, sets out some considerations for trustees to think about before deciding to do this. However, notwithstanding their advice, I strongly advise boards not to take advantage of this change in the law. And there are two reasons for it. Power and people.

Power

Firstly, power. A board of trustees is incredibly powerful. If they direct a CEO or Exec Team to use the services or goods of a company that a trustee is connected with and/or benefits from, it is incredibly difficult for the CEO to say that a company’s services are not up to standard. You are essentially asking them to criticise their boss (who determines their pay, their reputation and standing and their future at the charity) – and with the best will in the world that’s very hard to do. And very hard to hear if you’re the trustee concerned.

And how do you expect the CEO to handle it if, for example, a sub-contractor of that trustee’s company behaves or speaks inappropriately to staff members or volunteers with careless use of language, mildly misogynistic attitudes, apparently ‘harmless’ jokes about race, gender or sexuality – or they’re just really difficult to work with – all of which is not uncommon in life!

People

Then there’s the issue of how people think and feel. Trustees already find it hard to challenge each other at meetings if it appears that they might be undermining a colleague. The perfectly natural human desire to get on with your peers can get in the way of saying ‘that’s a bad idea, let’s not do it’ if that’s in relation to a colleague’s well-meant, generous offer of help.

So you run the danger of ending up with offers being accepted because you don’t want to offend, or you’re grateful for the offer, rather than because that’s the best course of action.

Standards

Then if the service or work isn’t up to standard – how do you handle it then? You may well have written down in advance the process for that – but implementing it still requires one human being saying to another human being (who they probably really like), ‘It’s not good enough, give us our money back’.

Imagine the embarrassment and humiliation that individual will feel? Imagine how hard it is to walk back into a board meeting knowing that your fellow trustees have rejected or complained about your company, even if you were recused from the decision-making.

And finally, like it or not, even with the best of intent, how do you explain to your beneficiaries, service users, unpaid volunteers or funders that one of your trustees appears to be either directly or indirectly financially benefitting from their role as a trustee (even at knock-down rates!)?

The best way to handle this is to simply not allow the situation to arise in the first place. Pass a resolution saying that even though the law allows it your charity won’t do it.

I can tell you a myriad of horror stories of how this has gone wrong, and whilst, yes of course, it doesn’t always go wrong and it might save your charity money, why risk it?

As my grandmother used to say, ‘Even if you can jump off a cliff, it’s probably a bad idea!’