Guidance

Paying a trustee or a connected person for providing goods or services to the charity

Published 25 April 2025

Applies to England and Wales

Being a trustee is generally a voluntary role. This is what makes the charity sector unique and promotes trust and confidence in charities. As a result, external reaction to paying trustees is often negative.

There is a statutory power (a power in law) that you can use to pay a trustee for providing goods or services to the charity. Read this guidance so that you use this power correctly. If you do not use the power correctly, payments you make may be ‘unauthorised’. As a result, your charity will face risks, and those who received the payment, or all the trustees, may have to repay the charity.

Understand what it means to ‘pay’ a trustee. It means:

• giving financial rewards such as money or fees and/or

• giving other benefits, such as free use of equipment or property or free access to services that people normally have to pay for

The rules also apply:

• if it is a company belonging to the charity that pays the trustee

• if it is a person or organisation connected to the trustee who is being paid (a ‘connected person’)

You may have to name the trustee or connected person you paid and what you paid them in your charity’s accounts. Your charity’s accounts become public information.

This guidance applies to all charities.

Overview

This overview sets out the key steps. Don’t just rely on this overview. Make sure you read the guidance. 

Step 1 – Understand what paying for goods or services means.

Step 2 – Check if you can use the statutory power and who you can use it to pay (such as a connected person).

If you are using the statutory power, you must comply with the conditions.

Step 3 – Read this step if:

• you cannot comply with the statutory power conditions, or

• you are using a governing document power

You may need Charity Commission authority.

Step 4 – For charitable companies only, check if some extra company law rules apply.

Step 5 – For all charities, make sure you record your decision.

Step 6 – Follow the rules on disclosing trustee payments in your charity’s accounts.

What ‘goods’ and ‘services’ mean

When we refer to ‘goods or services’ we mean a charity receiving and paying for:

• goods only or
• a service only or
• goods and a service together

These are examples of ‘goods’:

• hiring premises or facilities, for example a meeting room
• buying food for a charity event
• buying stationery

These are examples of a ‘service’:

• administration or secretarial work
• computer consultancy
• land management

These are examples of both together:

• building, plumbing or similar repair work and related materials
• a training course and related printed materials
• veterinary care and related medicines

It can be a one-off payment such as for a one-off piece of research. Or it can be a regular payment, such as for playing the church organ every Sunday.

Know what ‘services’ does not mean. It does not mean:

• auditing services: you cannot pay a trustee or connected person for providing auditing services to the charity. This is because a charity’s accounts must be audited by someone who is independent from the charity

• employment. Employment is different. Read guidance if you are looking to do this

• paying a trustee for carrying out trustee duties

Get legal advice if you are not sure.

The statutory power

There is a statutory power (a power in law) that you can use if you can meet certain conditions.

You can use the statutory power to pay the following for providing goods or services to the charity:

• a trustee

• certain people or organisations connected to trustees, and who are defined in law. We call them ‘connected persons’

• a holding trustee or anyone connected to them. A holding trustee is someone who is appointed to hold the title to the charity’s land

You can also use the power to pay any trustee or connected person for providing a service on behalf of the charity.

You can use the power instead of any equivalent power in your governing document. Read guidance if you plan to use a power in your governing document.

The legal conditions

There are conditions you must meet to be able to use the statutory power. You must meet all 6 conditions.

1. Your charity’s governing document must not contain a prohibition

A prohibition is any wording or clause that indicates trustees or connected persons cannot:

• be paid to provide goods or services to the charity or

• receive any type of payment or benefit (or ‘remuneration’) from the charity

If there is a prohibition, read the rest of this section. If this is the only condition you cannot meet, there is guidance at the end of this section on what to do.

2. Getting the goods or service from the trustee or connected person must be in your charity’s best interests

To help you make your decision, you should think about factors like:

• the quality and speed of getting the goods or service from the trustee or connected person compared to other providers

• the price they are charging compared to other providers

• what other options are available

• risks to your charity

Understand why getting the goods or service from the trustee or connected person is better than the other options.

The charity must need the goods or service.

Think about the risks. They include:

• the charity being seen as a way of benefitting particular individuals

• criticism from within or outside your charity. This could become public criticism and could affect your charity and its funding

• paid trustees becoming overly influential amongst the trustees

• trustees disagreeing about whether to pay a trustee

• not following the legal requirements

You must manage the risks. For example, by:

• reading this guidance and making sure you follow the rules on paying trustees

• complying with the rules on trustee decision-making

• keeping a full record of why you made your decision

• explaining your decision especially if it is criticised in public

• following the rules on disclosing payments in your charity’s accounts

When using the statutory power, you must take this guidance into account when you make your decision to go ahead. And you must use reasonable care and skill.

3. The amount you agree to pay must be reasonable

You should consider factors like:

• what the charity has paid in the past for the same goods or service

• the price the trustee or connected person is charging

• the market price for the same goods or service

• what the charity can afford

• other factors like speed of delivery or quality

You should get quotations from other suppliers unless the amount involved is very small. You do not have to start a formal tendering exercise but if your charity has a policy on buying goods and services, you should follow it.

4. There must be a written agreement

Before you receive the goods or service, you must enter into a written agreement with the trustee or connected person.

Recording the decision in your minutes of the meeting is not enough. There must be a separate agreement.

Your agreement must:

• accurately describe the goods or service the charity is buying

• include the name of the person or company providing the goods or service

• state the amount or maximum amount that the charity will pay

The ‘maximum amount’ is the upper limit you will not exceed for the goods or service.

Your agreement should also:

• confirm you have complied with all the conditions, particularly condition 6

• state how the charity will check that the goods or service received meets what is agreed

• state if the charity may end the arrangement early

• include anything else the charity needs

Take legal advice if you need it.

The agreement:

• should be signed by the trustee or connected person providing the goods or service

• must be signed by one of the other trustees or a person authorised by the other trustees

The agreement forms part of your charity’s financial records. You must keep it for 6 years.

5. Only a minority of trustees may be paid at any one time

You must make sure that when you enter into the agreement, only a minority of trustees at your charity will be paid or will receive benefit.

Make sure you count:   

• all the trustees who are paid by the charity irrespective of the reason for it, for example trustees who are employed by the charity, and

• all the trustees who are connected to people or organisations that are paid by the charity

Don’t include trustees receiving expenses as this is not a ‘trustee payment’.

6. A conflicted trustee must not take part in any discussion or decisions about the arrangement

This condition is about managing the conflict of interest.

A ‘conflicted trustee’ is a trustee:

• who is going to provide the goods or service to the charity and/or

• who is connected to a person or organisation that is going to provide the goods or service to the charity. This person can be another trustee

There can be more than one conflicted trustee. Make sure you identify them all.

A conflicted trustee must not take part in discussions or decisions about the payment. This includes:

• whether to go ahead

• what to include in the agreement

• whether to change or end the agreement

This means that:

• a conflicted trustee must leave the meeting when you discuss and make your decision, and

• you must not count a conflicted trustee in the quorum

The quorum is the minimum number of trustees your governing document says you need to attend a trustee meeting to make a decision.

A conflicted trustee may provide information to help the other trustees make their decision before they leave the meeting.

If you do not meet this particular condition, the Commission can:

• require the person to repay money they have received for supplying goods or services to the charity, or

• order the charity not to pay for goods or services it has received

If you cannot meet the conditions

Read guidance if:

• you cannot meet condition 1, about the prohibition

• you cannot meet the other conditions

Paying a connected person

You can use the statutory power to pay a connected person to supply goods or services to the charity. You must meet the conditions explained above.

Section 188 of the Charities Act 2011 defines who is a ‘connected person’. It includes certain people or organisations closely connected to a trustee such as:

• a child, parent, grandchild, grandparent, brother or sister of a trustee

• a spouse or civil partner of a trustee or of a relative listed above

• a business partner of a trustee or of a relative listed above

• organisations in which the trustee or any of the above have a controlling or substantial interest

Check the section 188 list or get legal advice if you are unsure if someone you are looking to pay using the statutory power is a connected person under the law.

If you are not using, or cannot use, the statutory power

This section is about not using the statutory power. For example, because you cannot comply with all the legal conditions.

You may need authority from the Charity Commission depending on who you are looking to pay and what your governing document says. So check if your governing document: 

• contains a prohibition - read 1. A prohibition is any wording or clause that indicates trustees or connected persons cannot:

  • be paid for providing goods or services to the charity or

  • receive any type of payment or benefit (or ‘remuneration’) from the charity

• contains a suitable power you can use - read 2
• does not contain a power - read 3

If, after reading this section and checking your governing document, you are not sure, get legal advice.

1. Your governing document contains a prohibition

You will not be able to use the statutory power if your governing document contains a prohibition.

1.1 To pay a trustee

You can remove the prohibition. This must be in your charity’s best interests.

Most charities can remove a prohibition without Commission involvement, using the statutory power to change a governing document in the:

• Companies Act 2006, if you are a charitable company

• Charities Act 2011, if you are another type of charity

You will need Commission involvement if:

• your charity is a trust or

• your charity’s only members are its trustees, or there are not enough members who are not also trustees to vote on the change

This is because all the trustees of a charity stand to benefit from a decision to remove this prohibition. So, they all face a conflict of interest. Charities that have a separate voting membership can manage this conflict of interest by asking the members to make the decision (by passing a resolution) to remove the prohibition. Other types of charities cannot do this.

So:

• remove the prohibition as explained above

• if you do not have a separate voting membership, or enough members who are not also trustees, apply for Commission authority to remove the prohibition

• after removing the prohibition, use the statutory power by meeting the other legal conditions

• if you cannot meet the other conditions, you will need Charity Commission authority to pay a trustee for providing goods or services to the charity

(If you want to make other changes to your governing document about paying trustees, read guidance about the rules you must follow.)

1.2 To pay a connected person

Follow these steps.

• Check what the prohibition wording says.

For example, if you are looking to get goods or services from a trustee’s company, the prohibition must not refer to companies belonging to trustees.

• If the prohibition covers the relationship, remove it as explained in 1.1 above. If the prohibition does not cover the relationship, you do not need to remove it.

• Then, check if the person or organisation you want to pay falls within the definition of a ‘connected person’ in the section 188 list. If they do, use the statutory power by meeting the conditions.

• If they do not fall within the section 188 definition, or you cannot meet the conditions, you must have authority from the Charity Commission if you are paying:

  • a company or organisation in which a trustee has a financial interest, or from which a trustee may receive a financial benefit as a result of the transaction
  • an individual who is financially interdependent with a trustee. For example, they share living costs

If they are not financially interdependent, or they will not receive a financial benefit, you do not need authority as long as you can manage the conflict of interest.

2. Your governing document contains a power you can use

If your governing document contains a clear power to pay a trustee or connected person for providing goods or services to the charity, you can use it.

You must comply with what the power says. For example:

• if it only allows payment for professional services, you cannot use it for anything else. If the power is not suitable, read 3 below

• if you are looking to pay a connected person, the wording of the power must cover the relationship between the trustee and the person or organisation you are looking to pay. If it does not, read 3 below

• if your governing document power refers to sections 185-186 of the Charities Act 2011, this is the statutory power. You must comply with the conditions explained above

If the power in your governing document says you must get Commission consent, you do not need our consent if you can comply with the statutory power conditions. Keep a record of how you have met the conditions. If you cannot meet the conditions, you will need authority from the Charity Commission.

If you can use a power in your governing document, remember that:

• your decision to pay a trustee or connected person must be in the charity’s best interests

• what you decide to pay must be reasonable for the goods or services being received

• you must manage the conflict of interest

• you should enter into a written agreement that sets out what the charity expects to receive, what it will pay and other safeguards the charity needs

You can show that the decision is in the charity’s best interests, and that the amount is reasonable, if you can show you followed the guidance set out above.

Read guidance about trustee decision-making and managing conflicts of interest.

3. Your governing document does not contain a power you can use

Read this section if your governing document:

• does not say anything about paying trustees or connected persons for providing goods or services to the charity, or

• includes a power but you cannot use it. For example, it covers payment for professional services only and you want to pay for goods

You will need authority from the Charity Commission to pay the following:

• a trustee

• a company or organisation in which a trustee has a financial interest or from which a trustee may receive a financial benefit as a result of the transaction

• an individual who is financially interdependent with a trustee. For example, they share living costs

If they are not financially interdependent or they will not receive a financial benefit you do not need authority as long as you can manage the conflict of interest.

Apply for Charity Commission authority

You do not need Commission authority if you can use the statutory power by meeting the conditions.

You do not need our consent to use a conditional power if you meet the conditions explained above.

If you are using a different power that needs the Commission’s involvement, we will first expect you to use the statutory power.   

If you need authority, you will need to tell us:

• who you want to pay, and whether they are a trustee or connected person. If they are a connected person, explain the relationship to the trustee

• what are the goods or services, and why your charity needs them

• why this is in your charity’s best interests

• what you have agreed to pay and how you decided on the amount

• why the amount is reasonable and in your charity’s best interests

• why you did not choose other options

• what risks you have identified and how you will manage them

• why you cannot use the statutory power

• whether your governing document contains a prohibition or conditional power as explained in this guidance

• that you made the decision in line with your governing document rules. For example, that the meeting was quorate

• whether other trustees at your charity are paid; what they are paid; and what proportion of your charity’s trustees are currently paid

• that you managed the conflict of interest

Apply for authority

Record your decisions

Keep a full record of your decisions and the reasons for them. For example, in the minutes of the relevant meeting. This can help show you followed the rules.

Keep a record of any Charity Commission authority you received.

Your written agreement forms part of your charity’s financial records. You must keep it for 6 years.

Disclose trustee payments in your charity’s accounts

Charities that prepare accrual accounts

Your charity’s accounts must give certain details about payments and other benefits to trustees and connected persons. Check the Charities’ SORP or get professional advice.

SORP explains the accounting rules for charities that prepare accrual accounts.

Charities that prepare receipt and payments accounts

You should include details of payments you made to trustees and connected persons. For example, who you paid, why you paid them, what you paid them, and the power or authority for the payment.

Check what type of accounts your charity must prepare.  

Extra guidance for charitable companies

Only read this section if your charity is a charitable company.  

There are company law rules that apply to companies that transact with directors and people or organisations connected to them. Where a company is a charity, the directors are the trustees. So, check if these rules apply to what your charity is looking to do. Get legal advice if you need it.

Here are examples of what to check:

• the definition of who is a ‘connected person’ under company law is different. Check if this means you need to follow extra rules

• if your members must give their approval to the charity (or its subsidiary) agreeing to pay a trustee or connected person for goods or services. This includes where the goods being received meets the definition of a ‘substantial non cash asset’

Where your members must give their approval, you will need Charity Commission authority under section 201 of Charities Act 2011. If you need this, get Commission authority first; then your members’ approval.

If you decide to consult your members first, their resolution must state that their approval is subject to getting section 201 authority from the Commission.

If you need section 201 authority, you will need to explain:

• why you need that authority; which company law requirements apply to what you are doing

• why the arrangement is in the charity’s best interests refer to the list above

Apply for section 201 authority.

Charities that have a subsidiary 

A subsidiary is a company that a charity owns and controls.

The subsidiary employing a trustee

A charity can appoint a trustee as a director of its subsidiary so that it has oversight over it. This is not a ‘service’ and this guidance does not apply.

If you decide to do this, and the trustee is employed by the subsidiary, you must comply with the rules on employment.

A trustee supplying goods or services to the subsidiary

You cannot use the statutory power to pay a trustee or connected person to provide goods or services to a charity’s subsidiary.

If you are looking to do this, check if your charity’s governing document contains a clear power that permits this. Get legal advice if you are not sure.

If your governing document does not contain a power you can use, you will need authority from the Charity Commission. You will need to explain:

• what goods or services the subsidiary will receive

• how getting these from the trustee or connected person (at the price they are charging) is the best option

• why other options were discounted

• whether the trustee or connected person is connected to the subsidiary. For example, are they employed by the subsidiary

• who made the decision to go ahead. If the subsidiary made the decision, did it consult the trustees

• any other relevant information

Apply for authority