The 2014 Law Article 13(9) provides that the Chief Minister may by Order require a registered charity to include in its annual return details of any payment made by or on behalf of the registered charity to a governor, or to a person having a prescribed connection with a governor. The Order sets out when charity governors (and people who are connected to them) can receive payment from the charity for services provided to it. A charity must not pay charity governors, and people who are connected to them, unless the charity can satisfy the conditions set out in the Order.
This section explains what those conditions are and gives examples of when it is and is not appropriate to pay charity governors and people connected with them.
For Charity Governors to be paid for services provided to the Charity, there should be a written agreement setting out the maximum amount to be paid and the Governors must be satisfied it is in the interest of the charity for the services to be provided by the governor for that amount.
If a Charity’s Constitution says that the governors cannot be paid, then even if the other conditions of the 2014 Law are met, you will not be able to pay any of the Charity Governors.
Examples of when it might be reasonable to pay a charity governor provided the conditions above are met are:
- When a local tradesman is a charity governor and provides services to the charity at a competitive rate.
- When employees of the charity are also charity governors because of their position e.g. chief executive or because they are elected as a staff representative.
The process for deciding the level of payment must be open and transparent and must not involve the charity governor who is to receive payment or is connected to the person who will. You could compare payment amounts with similar roles at other charities or the wider market place. The important thing is that whatever the decision is, the interests of the charity come first and you can demonstrate that. If the payment appears to be excessive, there may have been a breach of charity governor duties, which would be misconduct.
It is good practice to have a payment policy that makes sure any payments to charity governors and/or connected people complies with the conditions set out in the 2014 Law. It is also good practice to establish a register of charity governors’ interests, obtain at least two separate quotes for services and clearly minute the decision that paying a particular charity governor or a person connected to them for services is in the charity’s interest.
If you are also registered with the Charity Commission for England and Wales or any other jurisdiction, you will also need to follow their rules on payments to charity governors or “trustees”.
If you are a cross-border charity and you are paying charity governors in line with the law of England and Wales you will need to take into account the rules under the 2014 Law and whether those rules allow the payment in question.
If you are not sure if a charity governor, or connected person, can be paid for services you should get professional advice.