Over the last few years, I have become particularly interested in the way that charities ensure effective governance. Most of us are familiar with the disaster surrounding kids company and the blatant mis-spending of public funds. If you are based outside of Wales, you may be less familiar with AWEMA who had similar issues and Trustees were criticised for not having the right safeguards in place. These cases have helped to place a spotlight on the charitable sector and made it even more important that robust governance procedures are in place.
For those readers who are totally new to the concept of governance in this context, the term is defined by the Charity leader’s network ACEVO as ‘systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation’.
Achieving ‘good governance’ requires the appropriate systems to be in place and the right people to be around the table. The current governance code sets out 6 key principles which focus on individual performance, suggesting that a Board room of individuals that can contribute fully according to these principles is what is needed for success.
Here are the 6 principles explained:
1) Understanding your role – the first requirement is that Trustees know what role they play in the process, what is expected of them and how they can make a full contribution.
2) Ensuring delivery of your organisational purpose – a charity Trustee must ensure funds are used to deliver the mission and that the very greatest value is achieved for every pound.
3) Work effectively as an individual and as a team – diversity has been talked about a lot in the ‘good governance’ debate and it’s not just about diversity of backgrounds but also a mixture of different viewpoints. To be effective, Trustees must be able to contribute their view as an individual but also respect the views of others and be able to support the overall decision.
4) Exercising effective control – it takes particular skill to exercise control without being controlling. The word ‘control’ gives an instant feeling of hierarchy which is not the aim here. What it means in this context is to ensure risk is managed effectively, financial controls are in place and the right questions are asked which hold those with responsibility to account.
5) Behaving with integrity – being honest and acting in a way that is guided by strong moral principles. As a charity Trustee, its likely that a strong sense of values is present and as such, decisions should be guided by a belief in what is right and proper.
6) Being open & accountable – this means to be clear about the decisions that have been taken and the reason for the board’s position. Being accountable might also require you to stand by your decision when challenged because you believe it is in the best interests of the organisation.
Building on this good practice, a new code of governance is out for consultation. The revised code reflects concerns about governance and responds to aspirations across the charitable sector to improve it. As a result of such high profile cases of mis-management, the new code places more emphasis on leadership, values, accountability, transparency and diversity. Its aim is for charity boards to maintain a strategic focus, ensure Board development and pursue charitable objectives.
To read the new code and respond to the consultation, click here