Memorandum from Alan Meyer (DCH 56)
CHARITIES BILL—CHAPTER
9
I am writing as a Lawyer and Charity Trustee,
with more than 30 years' experience in being involved in particular
with the running and administration of a number of long-standing
charities. However, for the most part the charities concerned
would comprise charities with an annual income of less than £500,000.
Probably such charities would fall within the description of small
charities, or less substantial charities.
For the reasons which will be explained below,
the proposed provision in the Bill to add the additional Sections
73A and 73B are to be wholeheartedly welcomed recognising as they
appear to do that the world generally has changed, and that applies
to charities as well, particularly with regard to Trustees of
small charities.
1. At the present time it has to be accepted
that it has become more and more difficult to find people prepared
to take on the onerous and perhaps dubious honour of becoming
a Charity Trustee.
2.1 Many well-run small charities are necessarily
very dependent on the service and activities of their salaried
(non-trustee) Director or Chief Executive for day-to-day running
and management.
2.2 Often the real problem arises when the
paid official departs for an unexpected reason. How to replace
that vital departed official when often there is no obvious managerial
successor.
2.3 Finding the required replacement takes
both time, and money which is often not immediately readily available.
It may be necessary to employ headhunters or to advertise the
post several times.
To cover the gap it is often necessary for the
existing Trustees to share these executive duties and responsibilities
in addition to their usual Trustee responsibilities. It can mean
devoting one or more days each week to ensure that the charities
work or services continue and that the charity actually survives.
Trustees may not be able to afford that, especially financially.
3.1 Recognising that position by relaxing
the rule is enormously to be welcomed, provided that it allows
the trustees to make a reasonable payment to a Trustee providing
services or work not normally part of being a Trustee for a limited
period.
3.2 However, the proposed Section 73A(5)
coupled with proposed Section 73B(2) poses for small charities,
as opposed to substantial large charities' with many "Trustees
or Directors", a considerable practical problem.
4.1 Under the proposed Section 73A subsection
(2) there is a requirement to fall within and meet the conditions
A to D contained in subsections (3) to (6).
4.2 In the case of small charities for the
reasons set out above the qualification in subsection (5) will
undoubtedly make this welcome relaxation of the previous rules
difficult to work due to the requirement "the total number
of them constitute a minority of the persons for the time being
holding office as charity trustees of the Charity".
Almost certainly for "substantial"
or "large charities" this is a sensible and reasonable
requirement. However, in the case of small charities it will make
sharing of duties and service responsibilities unnecessarily difficult
and probably unfair.
4.3 Accordingly it is suggested that such
a general condition or requirement needs to be more sophisticated
since the needs of large and substantial charities are usually
quite different and distinguishable from the needs and requirements
of the small charities which are insufficiently funded to purchase
from the employment market quickly an adequate replacement for
a departed Chief Executive or Director.
4.4 It also has to be borne firmly in mind
that charities are expected to be as frugal as possible with administration
expenses, which means for small charities there is little available
funding for headhunters and their expensive fees. Accordingly
the interregnum has to be managed often by the Trustees themselves
using a proportion of the salary of the departed Executive for
such services.
SOLUTION
It is suggested that these difficulties would
be largely overcome if the qualification in subsection 73A(5)
was amended in the case of the smaller charities to make it transparently
clear that this proposed "minority of the persons" qualification
should generally apply only to substantial charities with an annual
income in excess of, say, £500,000 per annum. Such an amendment
would be of enormous practical benefit to smaller charities and
would be unlikely to promote misuse of this proposed provision.
June 2004
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