Why New Philanthropy Capital are missing the point regarding paying charity trustees.

Why New Philanthropy Capital are missing the point regarding paying charity trustees.

New Philanthropy Capital (NPC) recently released a report called IT STARTS FROM THE TOP, IMPROVING GOVERNANCE, IMPROVING IMPACT. I wait with baited breath, sad I know, for such reports in the hope that one day I will be further enlightened. The UK, across all sectors, has an opportunity to lead the world in its governance practice and I’m keen in my own small way, as an advisor to Boards and as a trustee, to pick up new thinking.

One of their recommendations is that The Charity Commission should its amend guidance on paying trustees to avoid disincentivising charities from exploring payments and empowering individual charities to make the decision about paying trustees if they wish to do so. This is not a new issue, but the guidance is helpful. I’m all for promoting more freedom for charities to test new ideas that promote better governance.

In my experience this is a question increasingly asked when recruiting Chairs of Boards of Trustees, as these roles are particularly onerous and almost part-time employment. In many cases a Chair will give 1-2 days per week of their time and sometimes more when an organisation is going through a period of major change or difficulty. When asking candidates for these roles (those who are often time poor) to make such a commitment, payment is certainly worthy of consideration, particularly when good Chairs are difficult to find and often in demand by commercial or public sector organisations who will remunerate them. The charity sector should not be held back from being in a position to compete, and potential Chairs do turn down opportunities when they find that they are unremunerated.

On the other hand, I’m not an advocate for a charity paying trustees who may give up 1-2 days a month of their time to volunteer. In my experience, Trustees get (or should get!) more out of the experience in new networks (social and professional), training and experience that can be helpful to their careers and the philanthropic feel-good factor that many of us want, than hard cash would give. Giving back is good, and I for one would not want to be paid for volunteering; it changes the dynamics of what volunteering is about. I would also say that it is very rare for prospective candidates who we approach and engage to turn down a trustee opportunity because it is unremunerated. Their considerations focus primarily on time availability, then location and motivation to be involved with the cause.

What I’m struggling with most is NPC’s rationale behind paying trustees. NPC argues that charities should be able to make this decision as long as “this is done not as a way to hire expensive people who are already very wealthy” and “to avoid perpetuating the assumption that boards are populated by a shallow demographic of people—those with the time and independent wealth to become a trustee—and risk being unrepresentative of the communities they serve.”

Let me pose some questions here:

* So it’s OK to pay trustees a certain amount of money as long as they are not too expensive? What is that amount?

* How should we categorise people who are “wealthy” and should it actually matter at all if they are? Surely it’s about their motivation, commitment and the value they can add, regardless of whether they need the money or not?

* If this is about diversity, will paying people who cannot ordinarily afford to volunteer improve governance? I doubt it, even though I am a firm advocate for very diverse boards and the benefits they bring.

NPC correctly point out the diversity, both in terms of skills and people, that can improve the governance of a charity is lacking, and is compounded by too many charities not recruiting openly, preferring to rely on a ‘tap on the shoulder’ approach of mining the contacts of existing trustees. But their answer to this is framed in the context of improving recruitment with better known networks and websites and a portal for these various (unknown) networks and websites to help round up candidates hunting for opportunities.

This could help but it’s not exactly targeted and proactive. There is a massive pool of potential trustees (entrepreneurs and people with executive and non-executive experience in other sectors) who don’t understand either what being a trustee is or how to find trustee roles. We should be targeting them proactively to expand the potential pool of charity trustees.

Through our recruitment experience and our ‘unconferences’, which have generated two reports; GetWired and GetRaising, we would say that a more targeted approach to trustee recruitment, to attract the modern skills and experience of people such as tech entrepreneurs, digital specialists and fundraisers, as well as reaching people from diverse communities and inviting them to apply, will have more of an impact than offering trustees cash and better websites.

For trustees in general, I’ve never found a problem with recruiting a broad and diverse range of high-calibre people for charities. There is no shortage of people willing to put themselves forward, just a shortage of charities willing to put the time and investment into searching proactively for them.

For a Chair role the recruitment is much more difficult. If we are to remunerate the Chair, then the search and recruitment process has to be more open, robust and professional as there certainly is a shortage of good Chairs in this sector.

Let’s look at it in terms of a very simple financial calculation. Let’s say a charity agrees to remunerate trustees by offering £3,000 per annum (less than £300 per day for their time) and the Chair £6,000 per annum. For a board of 10 people this would cost £33,000 + any additional costs of administration and recruitment costs (advertising and websites only). For the sake of argument let’s say that the costs of remunerating trustees and a Chair could be circa £50,000, with no real guarantee of better governance or diversity.

Alternatively, we could decide only to remunerate the Chair at say £8,000 per annum (an NED in an NHS Trust receives over £13,000 per annum) and invest in executive search for the best possible Chair (when required) and unremunerated trustees who are motivated to make a difference and give their time for the right reasons. This would still leave plenty of money to induct trustees professionally, offer ongoing development and also enhance an employee’s post internally to support the trustees and help maximise their contribution. This is likely to cost a lot less than £50k per annum and make a much bigger difference.

I hope that this article stretches your thinking and I’d love to take your views on this – please contact me at grant@peridotpartners.co.uk if you want to pick up the conversation.

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