DCH 167 Manches
To: The Joint Committee on the Draft Charities
Bill
From: Manches LLP (Solicitors)
21 June 2004
1. We wish to comment on only one aspect of the
draft Bill, namely the introduction of a statutory power to pay
Trustees in limited circumstances (section 27, inserting a new
section 73A into the Charities Act 1993).
2. Condition D of the four conditions to be satisfied
under that section is that "the trusts of the charity do
not contain any express provision that prohibits the relevant
person from receiving the remuneration".
3. Our comment is that this seems to put charities
formed after the coming into force of the new Act in an advantageous
position, with regard to recruiting trustees, when compared to
existing charities with a very limited power to pay trustees contained
in their governing document.
4. Many existing charities already have a power
to pay trustees in limited circumstances. However, the common
formulation is to incorporate the general prohibition on payments
to trustees (as exists under the current law), and then state
a number of exceptions to this rule, as have been accepted by
the Charity Commission.
5. Those charities whose governing instruments
were prepared in recent years will tend to include a provision
permitting payment for services provided to the charity. For example,
the model documents provided by the Charity Commission, and those
prepared by the Charity Law Association, include this as one of
the exceptions to the general rule.
6. However, the governing instruments of many
older charities will include a provision permitting payment of
expenses, or rent on property let to the charity, but will not
include a general provision allowing payment for services.
7. It would appear that while the statutory
power may be used as an alternative to an express power to pay
for services rendered (s 73A (7) and (8)), it does not override
any express prohibition on payment (s 73A (6), stating Condition
D).
8. The effect of this is that older charities
with a general prohibition, but without an express power, will
have to alter their governing instrument in order to take advantage
of the statutory power. In contrast, any charity whose governing
instrument is silent on the question of payments to trustees,
will be able to take advantage of the statutory power.
9. If our analysis set out above is correct
then the statutory power, if left unaltered, will discriminate
between different charities.
- Given that section 73B directs the charity to
guidance given by the Charity Commission on the making of agreements
for the payment of trustees, condition D does not appear to serve
any useful purpose.
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