Can I Pay Myself a Salary If I Start a Charity

Introduction

Starting a charity is a generous act, often driven by passion for a cause rather than profit. However, as the organisation grows, running it can become a full-time commitment. It’s common to ask whether you can pay yourself a salary to cover your time and effort.

The answer depends on your role within the charity and how the organisation is structured. Charities can employ paid staff, including their founders, but strict rules apply to ensure that payments are fair, transparent, and in the charity’s best interest.

Can a charity pay its founder a salary

Yes, a charity can pay its founder a salary, but only if the payment is for legitimate work done for the charity and not simply for being the founder. The payment must be approved by the board of trustees and documented clearly.

If you are also a trustee (which is common for founders), you must be especially careful. Trustees cannot normally be paid for their trustee duties unless the governing document allows it or the Charity Commission grants permission. However, a trustee can be paid for providing separate services to the charity, such as management, training, or project work, if it benefits the charity.

For example, if you start a charity that supports young people and you later take on a paid role as a project manager, you can be paid for that work as long as it’s agreed properly and transparently.

Understanding the rules for payment

The Charity Commission’s guidance is clear: any payment to trustees or founders must be reasonable, necessary, and in the best interests of the charity. To stay compliant:

The payment must be for work or services genuinely provided to the charity.

The decision must be made by the board of trustees, excluding the person being paid.

The terms and pay rate must be documented in writing, such as in an employment contract.

The charity’s governing document must allow payment, or written permission must be obtained from the Charity Commission.

The payment must represent good value for money and not exceed what would be paid in a comparable organisation.

These steps ensure that the payment is legitimate and does not create a conflict of interest.

Paying trustees versus paying staff

It’s important to distinguish between being paid as a trustee and being paid as an employee.

Trustees hold ultimate responsibility for the charity but are usually unpaid. Their role is voluntary, and they are expected to act in the public interest. In most cases, trustees can only claim expenses such as travel or meals.

Employees, on the other hand, are paid for carrying out day-to-day operational duties. A charity can employ staff, including its founder, if the trustees agree and the charity can afford it. The founder’s employment must be separate from their governance role as a trustee.

In practice, this means that if you wish to be paid for your work, it’s often best to step down as a trustee and become an employee instead. The charity can then hire you on standard terms.

How to pay yourself properly

If you intend to work full-time in the charity and receive a salary, follow these steps to stay compliant:

Check your governing document
Review your constitution or governing document to see whether it allows trustee payments. If it doesn’t, you’ll need Charity Commission approval before any payments can be made.

Separate decision-making
You cannot be part of the discussion or decision about your own pay. The other trustees must decide independently, based on what is fair and reasonable for the role.

Agree a formal contract
If approved, ensure there’s a written employment contract outlining your duties, pay rate, and responsibilities. The terms should be in line with similar roles in other organisations.

Be transparent
All payments to trustees or founders must be declared in the charity’s annual accounts. Transparency helps maintain trust with donors, regulators, and the public.

Stay within budget
Any salary must be affordable and proportionate to the charity’s income. Paying yourself too much relative to donations could raise concerns about governance and public trust.

What if you volunteer instead

Many charity founders choose to volunteer their time, especially during the early stages when funds are limited. This approach helps the charity direct more money toward its cause and demonstrates commitment to potential donors and grant providers.

However, volunteering does not mean you should cover personal costs out of your own pocket. You can and should claim legitimate out-of-pocket expenses such as travel, phone bills, or materials used for charity work.

Alternative structures for paid founders

If you want to lead a social mission but earn an income from day one, you might consider setting up a Community Interest Company (CIC) or social enterprise instead of a charity.

CICs are designed for individuals who want to run a business that benefits the community but also receive a salary. They are regulated differently from charities and allow more flexibility around personal income, while still maintaining a public purpose.

This model works well if your project has both commercial and charitable elements.

Common mistakes to avoid

Paying yourself without trustee approval or a written agreement

Mixing personal and charity funds

Failing to declare payments in annual reports

Setting a salary that isn’t justified by the work done

Remaining a trustee while being paid without permission

Avoiding these mistakes protects you and your charity from scrutiny or penalties.

How much can you pay yourself

There is no fixed limit on how much a charity founder or employee can be paid. The amount should reflect the responsibilities of the role and be in line with what similar charities would pay.

The Charity Commission may question unusually high salaries, especially if the charity’s income is small or if most funds go toward staff costs rather than charitable activities. A reasonable, transparent approach is always best.

Conclusion

You can pay yourself a salary if you start a charity, but it must be done properly. Payments must be approved by independent trustees, supported by a written contract, and declared transparently. If you want full control and flexibility over your income, consider forming a CIC or social enterprise instead.

In short, the Charity Commission allows charity founders to be paid for genuine work, provided it benefits the organisation and follows the rules. By acting transparently and putting your charity’s mission first, you can balance personal income with making a positive difference.