In the world of business, the need to reimburse staff for expenses they incur is well understood and a regular part of life. Similar issues arise for Charities but I frequently come across circumstances where trustees get this wrong.
There seem to be 2 key problems:
- Charity money does not belong to the trustees so there is a need to ensure proper controls
- Many charities are run by amateurs (in the best possible use of this word) who may not have the time to fully understand or operate the rules
The rules themselves are set out in some useful guidance from the Charity Commission, “Trustee Expenses and Payments (CC11)” and if you have the time I would recommend reading this.
Basically, the charity can reimburse legitimate costs that the trustee has had to meet personally to carry out their duties.
Simplified examples of such costs could include:
• Travel to and from trustee meetings
• Overnight accommodation and subsistence
• Postage, telephone calls and broadband time for charity work
• Childcare or care of other dependents while attending meetings
• Special provision for facilitating a disabled trustee
Wherever possible these claims should be supported by receipts.
And, it is good practice to actually have an expenses policy. This has a number of advantages:
- Everyone knows and understands what is acceptable
- It can be tailored to the needs of the charity
- And, perhaps most importantly, it helps with recruitment of younger or less well-off trustees – after all, nobody should have to be “out of pocket” to be a trustee except through personal choice. Having a policy removes the stigma that claiming sometimes attracts.
The Charity Commission guidance covers much more than just the basics given here and also includes circumstances when trustees can be paid for their services. This can sometimes be very helpful in recruiting specialist trustees. Oddly enough, for some charities (such as museums) there can even be excellent VAT advantages from having a paid trustee.
For further advice on this subject, please do not hesitate to contact me or your local Thomas Westcott contact.