Trustee expenses

A well run and effective charity board should have a Trustees Expenses Policy that is clear and easy to use. This will:

• Ensure you have good controls over financial procedures to protect the assets of the organisation.
• Ensure you are acting with care and diligence when managing the affairs of the organisation.
• Enable your board to identify payments made to trustees correctly. You should be able to distinguish between expenses paid to trustees to carry out their duties and any other money paid to trustees.
• Enable the charity to show payments correctly in the Charities Accounts and Trustees Annual Report.

Charity trustee duties

There are specific duties in the 2005 Act that all charity trustees must meet. Trustees might delegate the practical details of these duties to their charity’s staff, volunteers or professional advisers (if they have them), but it is the charity trustees who are responsible  making sure the specific duties are met.

Every year, every charity must:

• Keep proper accounting records.
• Prepare a statement of account, including a report on its activities, at the end of each financial year.
• Have the statement of account independently examined or audited.
• Send a copy of the accounts, along with the annual return, to the Scottish Charity Regulator.

The notes to the accounts must contain the following information, unless it has been provided in the annual report.

1. Trustee remuneration

Renumeration means any payment or benefit in kind. You must note the amount of renumeration paid to a charity trustee or person connected to a charity trustee.

The note must also ‘state the authority under which that remuneration was paid’. For example: The provision under section 67 of the Act, and a decision of the charity trustees taken at (insert name and data of meeting).

You must also state if no renumeration was paid to a charity trustee or someone connected to a charity trustee.

2. Trustee expenses

The total amount of expenses, if any, paid to charity trustees and the number of charity trustees receiving expenses.  You must also state if no expenses were paid to charity trustees

3. Transactions with trustees and connected persons

The nature of any transactions between the charity and any charity trustee or person connected to a charity trustee.  The note must include:

• The nature of the relationship
• The nature and amount of the transaction
• Any outstanding balances at the financial year end

Record keeping

It is essential that there are accurate minutes of all meetings where Trustee expenses rates and payments are agenda items.  These must clearly reflect the discussions and decisions about the value of trustee expenses to be included in the budget, and who trustee expenses will be paid to.  The draft minutes should be distributed to members in a timely fashion and retained by the charity for a minimum of 10 years.

Trustee expenses policy template

For more on how to use this, see our page on using SCVO templates.