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OPERATIONAL GUIDANCE
PAYMENT OF CHARITY TRUSTEES
GIFTS TO RETIRING TRUSTEES
OG 92 C10 – 1 November 2004
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This guidance clarifies the position regarding the giving of gifts to retiring trustees. It explains our policy and the legal background to it, together with the points we should take into consideration when charity trustees make a request for authorisation of such a gift. |
Functional responsibility
| For action |
Regulation and Enablement Division (RED) |
For information |
All operational divisions |
Contents
1. Policy on small gifts to retiring trustees
2. Why is no authority required for small leaving gifts?
3. What value of gift would fall within the "de minimis" principle?
4. What would count as being in the interests of the charity?
5. When would explicit authority be needed?
Glossary of Terms used in this Guidance
Index to further related information
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| The Law |
Refer to a lawyer |
Refer to an accountant |
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1. Policy on small gifts to retiring trustees |
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Our wider policy on payments to trustees is set out in this series and in our publication CC 11 - Payment of charity trustees. The general principle is that, except to cover "out-of-pocket expenses", a trustee may not receive payment or other material reward from his or her charity unless the governing document contains a suitable power, or unless we or the Court have authorised the payment. |
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However, this does not prevent trustees from providing a modest token of appreciation to a trustee who is retiring, and they may think it in the interests of good morale to do so. |
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We are clear that charities need no explicit authority for small gifts to retiring trustees where: |
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the value of the gift is nominal; and |
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the trustees have agreed that the payment is in the interests of the charity. |
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This policy can also extend to a trustee leaving to take up another post. It is a matter for the trustees to exercise their judgement as to whether a person's length of service and quality of contribution to the charity should be acknowledged with a leaving gift. |
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2. Why is no authority required for small leaving gifts? |
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A leaving gift of nominal value may be justifiable as being expedient in the interests of the charity (see section 4 below). Technically, explicit authority is needed where there is no suitable power for this in the charity's governing document, and an Order under s.26 of the 1993 Act would normally be required. |
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However, our policy is that this requirement can be disregarded on the basis of the de minimis principle. The expression de minimis derives from the legal term "de minimis non curat lex", which (loosely translated) means "the law does not concern itself with very small matters". |
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Effectively, this means that in the case of a low-value gift to a retiring trustee, we can say that the transaction is too insignificant for the law to notice the lack of proper authorisation. |
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If the gift is not justifiable as being expedient in the interests of the charity then the payment cannot be made and we would not, in any event, give our authority. |
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Such a gift would not be regarded as an ex gratia payment (see OG 11 - Ex gratia payments). |
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A full explanation of the general principles underpinning our de minimis policy and procedural approach to small charities is set out in OG 200 A1 Small charities: Principles of Commission policy. |
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3. What value of gift would fall within the "de minimis" principle? |
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It is difficult to place hard and fast rules on what is an acceptable value of gift in these situations. As a "rule of thumb", we would not expect a de minimis gift to cost more than £25. In most cases all that will be appropriate is a token of esteem, such as a bunch of flowers or bottle of wine. But this is only a general guideline - smaller or larger values may be appropriate. |
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The key factor to take into account is whether the likely cost or time and effort involved in applying for our authority is out of all proportion to the value of the gift. If so, it is likely that the de minimis principle could be invoked. Trustees should be able to justify this expenditure if asked. |
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If there is any doubt in Regulation and Enablement Division (RED) as to whether the de minimis principle should be applied, legal advice should be sought. |
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4. What would count as being in the interests of the charity? |
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The test for this is not demanding, but the trustees must nevertheless be able to show (if asked) what grounds they had for deciding that the award of the gift was in the interests of the charity. |
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It is a matter for the trustees as a whole to decide whether a gift paid for out of charity funds would be in its interests. Typically acceptable grounds would be that this was so because the charity was publicly recognising the contribution of those who gave their time freely, thereby encouraging greater commitment - both from those already associated with the charity - and those who might be associated with it in the future. |
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If there is any doubt in RED as to whether the gift is in the interests of the charity, legal advice should be sought. |
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If the trustees are unable to justify the gift as being in the interests of the charity they should not proceed, and we could not authorise it. |
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5. When would explicit authority be needed? |
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Where anything other than a nominal gift is to be purchased, then explicit authority (deriving either from the governing document or an Order under s.26) would be needed. Whether we could sanction it would again depend upon whether the gift could be justified as being in the interests of the charity. |
Index to further related information
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