Click the headings below to read any of our Frequently Asked Questions. 

Please get in touch with Elliot Harris or any member of the Charity Group if you would like any further help or advice on any of the topics covered.

• If you need to recruit a new Chief Executive, how should you go about it?
• We are about to undertake a major strategy review. Do you have any tips as to how we might approach this?
• How can we resolve a dispute between trustees?
• Can a trustee of a charity be a paid employee?
• Our charity wishes to employ an individual to carry out some counselling for clients of our inner city charity. Do I have to deduct tax and NIC or can I rely on them to give me a monthly invoice for the number of hours they work for us?

Q: If you need to recruit a new Chief Executive, how should you go about it?

A: As a trustee of an organisation that has just recruited a new CEO, I’ve had fresh experience of the challenges involved. While there are some tried and tested recruitment methods, all require a great deal of time and energy from the trustees. Before starting the project, there is one fundamental question you should ask yourselves: what kind of chief executive do we want? When recruiting for such a senior post, you have the opportunity to re-evaluate the position. To clarify your requirements, try considering further questions such as these:

• Is the current job specification the right one?
• Do we want the same sort of personal characteristics as the current chief executive or is it time for a change?
• What gaps in experience do we have in the current senior leadership team and is the chief executive’s role one to fill all the gaps?
• Should we consider an internal candidate?
• If we do not consider external candidates, have we correctly fulfilled our duties as trustees?
• Should we advertise in the national press, charity press or both?
• Should we consider using a recruitment agency or even a ‘head hunter’?

Best practice
The right solution will be different for each individual charity, but all charities face some common issues and should follow some common best practices. Firstly, appointing a new chief executive provides an
opportunity to review the role. However, any change in job specifications will have to be reviewed in the context of the overall strategy set by the trustees. Some charities do use an incoming chief executive as a catalyst for a new five-year plan, but the chief executive’s role is one of implementation not setting the strategy. That is the role of the trustees, however much the chief executive is involved.

Secondly, it is important to look at a range of candidates. However good a potential internal candidate, it is your duty as trustees to try and find the best individual.

When interviewing prospective candidates, try for a panel approach so that the recommendation is coming from a group of people. You should have a minimum number of set questions that are identical for each
candidate, so that you can compare and contrast. This does not stop you from asking individual questions.

Even if there is one stand-out candidate on paper or at the first interview, aim to have a second look involving a second group of interviewers. Some repetition of panellists is allowed, but try for at least one fresh face to get a second opinion.

At Chantrey Vellacott DFK, we are often involved in these processes – not as decision makers, but to test out potential candidates’ financial acumen and knowledge of the rules and regulations.

Q: We are about to undertake a major strategy review. Do you have any tips as to how we might approach this?

A: Different organisations approach strategy reviews in different ways, often relating to the size of the organisation but there are some fundamentals common to all:

• Re-examine your governing document. There are two reasons for this; firstly to refresh your mind as to the reason for the charity. Have a look at all the objectives and ask yourself have you fulfilled each of these in recent times? Secondly decide whether in view of these objectives your priorities are still the   same? Are there other parts of your objectives that have not been given priority recently  that need a fresh look or alternatively, are these objectives still relevant in this day and age?
• Involve your senior leadership team. Of course it is the trustees who set the strategy and the senior leadership team who implement it, but they are the ones fulfilling the objectives on a day to day basis and they may have some thoughts in particular about the objectives as set out above. Nevertheless the trustees will still have the final say.
• Do not rush the review. This is not something you can squeeze into a normal trustees meeting. Think about having an away day to brainstorm the issues either alone or with members of the senior leadership team. Approach it either with a blank canvas and no preconceived ideas, or with no more than three or four key questions that you want answers to. Use a small team to co-ordinate the efforts. That team are not there to do the work for you, but to pull the ideas together and put them into a workable document for the rest of the trustees to comment on.
• Consider using an external facilitator. It is certainly not compulsory but neither is it a given that you have someone within the organisation with the necessary skills to keep an away day on track. An experienced facilitator is not going to come up with the answers but will assist you in keeping the process on track and focussed.
• Make the agreed outcome achievable. Too many strategy documents try to cram in too much detail and focus on the ‘nitty gritty’. Ask yourself the question, what do you want to achieve in three or five years and where do you want to get to? It should not be easy to achieve but at the same time do not set yourselves an impossible target.
• Keep the strategy under review. What you believe is achievable in 2012 may become impossible a year later by virtue of changes in the   economy, legislation and the public’s priorities that you could not foresee. This is not to say the strategy is wrong, but you may have to change the way you get there. However, if it is wrong, recognise it and be prepared to change course.
• Listen to your senior leadership team. You may think it is a great strategy but it is the senior leadership team who are going to have to implement it. What pitfalls do they foresee and do you or they have ideas as to how to overcome these pitfalls? If not, then it is back to square one!

There is no right or wrong way to carry out a strategy review, but trustees need to have a long-term focus in mind, not just short term targets. Chantrey Vellacott DFK has a team of charity specialists that can provide you with further information or advice.

Q: How can we resolve a dispute between trustees?

A: The last port of call is to involve the Charity Commission, when all else fails. The Commission make it clear that the trustees are expected to have exhausted all other means of resolving the dispute before approaching the Commission. Disagreements happen in any organisation and, most of the time, are usually resolved by consensus. When they are not it is usually for two main reasons;

1. the trustees are split straight down the middle with very divergent viewpoints or
2. there is a very strong-minded individual or minority view where the minority either refuse to see reason or alternatively have in their own eyes, legitimate concerns that the rest of the trustees are not taking seriously enough.

In the latter case, these trustees need to be very sure of their grounds to take such a standpoint and it would be expected that they would have taken advice to arrive at their position. Assuming advice has been received, the remaining trustees should then at the very least re-examine their position and if in doubt take their own advice and compare the results. In most circumstances following such a review, a consensus should become apparent. However, if the issue relates to strategy or policy matters then that could still require the minority to be “prepared to abide by decisions that are taken fairly and within the rules of the organisation, even if this does not match their own personal preferences" (RS7 Membership Charities - a Charity Commission publication).

In the case of a split board, again both sides would be expected to seek guidance in an attempt to resolve the dispute. Often the charity’s auditors or lawyers as trusted advisors may be able to help in such situations and again, on matters of fact, the consensus may be achievable but often such disputes are as much to do with personalities as anything else.

Some charities have internal procedures stipulated within their constitution for resolving disputes of this nature, but equally many do not. This is certainly an area to consider when you are revising your constitution. Others may have the ability to approach their national body or a membership organisation that they belong to who may be able to assist or arbitrate. An external fresh pair of eyes is often of use.

There are also forms of Alternative Dispute Resolution that may be attempted. The most cost effective of these is mediation where a professional mediator has the skills to assist both parties to resolve their dispute. If this fails, then the remaining course of action may be the incurring of costs to apply to the Charity Tribunal or to Court for a resolution. This is a last resort which will often need the permission of the Charity Commission and who in turn will have expected these other avenues to have been attempted. Remember also that the Courts do not look kindly on charities who have “frittered away money subject to charitable trusts in pursuing litigation relating to internal disputes” (Conflicts in your Charity - a statement of approach by the Charity Commission).

The Charity Commission will not get involved where the dispute is either about policies pursued or actions taken within the law or the charity’s constitution where others are more qualified to interpret. Where they will get involved is where the dispute not only gets out of hand but threatens the well-being of the charity or a severe disruption of the charity’s work.

The lesson with all such disputes is not to let them get out of hand. Having some sort of dispute resolution procedure within your constitution is useful. In the sort of disputes involving policy and strategy, some form of trustees “away day” will often get matters sorted away from the day to day trustee business. Consider using the assistance of an experienced external facilitator who will help to keep the meeting on track.

Q: Can a trustee of a charity be a paid employee?

A: The short answer is yes they can but…! There are lots of caveats particularly those centered around conflicts of interest and ensuring there is openness and transparency. For example the trustees would not wish to be accused of favouritism. Any recruitment for a post should be open and the remaining trustees would need to demonstrate that the trustee who is being employed is the best person for the job. This should not be confused with smaller charities such as a grant making charity where the trustees do all the work and there is express permission in the trust deed for them to be paid a fee for doing the work. Remember these issues also come into focus when a spouse or a partner of a trustee seeks employment with a charity.

If there is a wish to employ a trustee but there is no express authority in the trust deed to do so then the Charity Commission need to be approached for permission in various circumstances. A fuller explanation of these circumstances and other related issues can be found in CC11 (Trustees expenses and payments) which can be downloaded from the Charity Commission website on www.charitycommission.gov.uk/publications

Q: Our charity wishes to employ an individual to carry out some counselling for clients of our inner city charity. Do I have to deduct tax and NIC or can I rely on them to give me a monthly invoice for the number of hours they work for us?

A: The key word here is “employ”. If the consultant is working on a contractual basis in your premises, with your clients, under your direction and using your equipment then clearly they are employed under the tax and national insurance legislation and therefore PAYE should be deducted. If they are being used on an ad-hoc basis, providing this service to a variety of other organisations, using their own equipment, planning their own work and utilising their own premises then they are probably self-employed. Note the word probably because it is not always cut and dried. The experts refer to a comparison of a “contract of service” and a “contract for service”. Anyone thinking of using someone on a self employed basis should always run the contract past their tax advisors to ensure they do not fall into the “employment” trap. Better to be safe than to find you have a hidden liability for additional tax and national insurance together with the interest and penalties thereon.

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