EU grant to a charity: payments to trustees and volunteers?

EU grant to a charity: payments to trustees and...

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A registered educational charity is a member of an EU "Horizon2020" consortium. The charity relies on unpaid services of its trustees and other volunteers, and the EU grant is calculated on the notional value of their work. The European Commission requires detailed record-keeping, which would normally include evidence that workers have actually been paid for their time as recorded on time sheets.

However, actual payments would require volunteers to complete self-assessment forms and pay tax on such payments - and also would fundamentally alter the relationship between volunteers and the charity. Even if they donate the payments back to the charity, this would require operation of Gift-Aid. Altogether there would be an administrative burden on both volunteers and charity, whose accountant also provides his services free of charge.

Would it be valid to avoid all this hassle by including a tickbox at the bottom of each time sheet with some such wording as "Please credit the full amount to the charity's volunteer donation fund", next to a space for the volunteer's signature? This is even more important for the trustees, who might well fall foul of Charity Commission regulations if they receive such payments.

Replies (5)

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By johngroganjga
19th Aug 2015 10:17

I wonder if the tax tail is wagging the dog here.

Is the purpose of the grant so that workers can be paid for their services who would otherwise be unpaid?  The fact that the grantor requires evidence of actual payment strongly suggests this. What limitations on the uses to which the funds can be put do the grant conditions contain? 

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By silicondale
19th Aug 2015 10:33

Not a tax tail. Trying to avoid complexity, not tax!

No, the purpose of the grant is not that workers can be paid for their services who would otherwise be unpaid.

The charity is one member of a large consortium. The concept is that volunteers would continue to provide their services free of charge (and indeed the Charity Commission restrictions mean that those who are trustees would not be allowed to accept payment for their services).

The trustees and other volunteers each bring their own expertise and experience to the project. The grant is calculated on the basis of an equivalence of the value of these services with those of commercial and university members of the consortium. The purpose of the proposed tickbox is in effect to implement something like a "salary sacrifice" option so that unpaid volunteers may continue to be unpaid volunteers - and crucially that those who are trustees do not contravene strict Charity Commission rules.

 

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By johngroganjga
19th Aug 2015 11:26

So there are no restrictions on the use of the funds - which is good.

But why then does the grantor want evidence of actual payment?  And are you sure there no adverse consequences if you do not provide that evidence?

PS (EDIT)

Or to put it another way, you are not going to be able to provide evidence of actual payment unless there are actual payments. But you say that it is the wish of all concerned that no actual payments shall be made.

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By silicondale
19th Aug 2015 11:23

Yes, that's the key point

You identify the key point! I have to admit that the requirement for evidence of actual payment is something that I have not seen written down for this project, but it is a requirement that I have seen in other similar projects, though for SMEs and other participants rather than registered charities. It would need clarification by the project's financial officer at the EC in Brussels. This project hasn't yet started (it is at the stage of grant agreement preparation).

There must be other charities which have been in a similar position and may be able to advise on the solutions they have adopted. It seems to me that a "salary sacrifice" option such as I have outlined ought to satisfy the EC's record keeping requirements whilst also keeping the trustees on the right side of the law in the UK.

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By silicondale
19th Aug 2015 14:41

Possibly problem solved

I think I may be well on the way to answering my own question. The online Horizon 2020 manual has a link to the detailed standard grant agreement terms, and I have now ploughed through the relevant parts of this. For an organisation working on 'unit cost' basis it seems sufficient to provide time sheets, to satisfy the record-keeping requirement. Hence the 'salary sacrifice' option is not a problem. For organisations working on 'actual cost' basis the requirements are more onerous.

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