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Charity Trustees Censured for Payment to Redundant CEO

When the trustees of a charity agreed a severance payment for a departing senior officer without taking professional advice, their decision was clearly open to criticism.

The trustees of the Glasgow East Regeneration Agency had agreed to pay the outgoing chief executive a £500,000 redundancy payment. This action prompted a complaint.

The Office of the Scottish Charity Regulator (OSCR) investigated and ruled that the decision of the charity trustees to augment the former CEO’s pension by more than six years’ worth of contributions was not in keeping with the aims of the charity. It has now issued a report censuring the trustees. Fortunately for them, the OSCR does not have the power to recover the funds from them.

The OSCR commented that charity trustees as a body are collectively or corporately responsible for the activities of the charity and are equally accountable for their organisation. This collective duty of care means that charity trustees are expected to act together as a board to realise the values and purposes of the charity and to comply with legislative and regulatory requirements. Collective responsibility applies even when:

  • a charity trustee has limited time to spare for voluntary activities. A charity trustee whose time is limited should consider carefully their position, seeking advice where appropriate on whether, in the circumstances, they are able to fulfil their duties as a charity trustee; and/or
  • a charity trustee is unable to attend a particular meeting of the board. In such circumstances, the trustee has a responsibility to consider the papers for the meeting before it takes place and make their comments or views known to the committee so that these may be taken into account.

The OSCR stopped short of banning the trustees from acting as charitable trustees, but it did recommend that they undertook specialist training on their duties as trustees.

Although this was a Scottish case, the general approach of the Charity Commission for England and Wales would be similar.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.