Today sees the release of the most systematic survey of charity trustees to date. The findings are at once concerning and encouraging. They highlight some significant shortfalls in charity governance but they also point to solutions that are, for once, very obvious and actionable – at least at the level of individual boards.
The report is based on analysis of the data that the Charity Commission holds on trustees and the results of a survey asking trustees about their perceptions.
Boards are typically ‘pale, male and stale: 92 percent white, two thirds are male and the average age is 55 – 64. Three quarters earn above the national median income.
The lack of demographic diversity is reflected in terms of skills and professional experience. Boards have insufficient skills in key functional areas such as marketing and digital
Previous estimates by the charity commission suggested that there are 850,000 trustees. In fact there are only 700,000. Many of these trustees serve on more than one board, and the average is 1.35 board positions per trustee
Over 70% of trustees are recruited through informal channels. This is really problematic, given the narrow background from which trustees are drawn, the fact that so many trustees are recruiting fellow board members from their own networks just perpetuates the lack of diversity and expertise on boards.
Being a trustee is a voluntary position, so perhaps we should just be grateful that anyone is putting their hand up for the job? But good governance is too important to leave it at this.
Boards hold the executive team to account, and offer it much needed support; they ensure that the beneficiaries needs are prioritised, that the charity is run sustainably and that it remains true to its purpose. A good board is key to any thriving charity, and conversely, a poor board can bring a good charity down.
Boards will only make good well rounded decisions if the trustees have a range of skills, experience and perspectives. What happens when trustees share very similar backgrounds?
Lack of legitimacy. Charities work with marginalised communities who are often excluded from positions of power. If the boards of these very same charities do not include trustees from their communities, what legitimacy can they have?
Groupthink. It is well documented that diverse groups make better decisions. If everyone shares the same perspective they will also share the same blind spot.
Lack of leadership. The world is changing fast, and charities need leaders with the right skills and expertise to help them seize opportunities and navigate difficulties. Digital is a good example of this. It emerges from the research as one of the functional skills most lacking at board level. Another recent research report found that over 70 percent charities say that their boards have low digital skills, and that this constrains the charity’s ability to develop.
Ninety per cent of trustees say that they find their role rewarding and 94 per cent say that the role is important to them. Being a trustee brings personal and professional benefits so it should be possible to attract a wider group of people.
Our experience at Reach Volunteering is that if you recruit purposefully, and invest time and effort, even smaller charities can attract good trustees who will expand the range of skills, experience and diversity of their board.
And once recruited, these trustees will have a very positive impact. 87 per cent of charities who recruited through our service say that the new trustee strengthened their governance, and 95 per cent say that the new trustee increased the diversity of skills and expertise on the board.
The survey does not ask this question. We find that it is often down to culture (the board has always recruited informally), confidence, or lack of time. Whilst lack of time may be a real constraint, it is not a good reason. The board chooses how it prioritises its time, and ensuring that they have the right team to carry out their role effectively is surely one of the most important things that they can do. And doing it well is likely to save time in the end.
There is not a one-size-fits-all solution. As the research shows, issues vary with size. Eighty per cent of charities have no staff at all, and the trustees do the (operational) work as well as the governance. Being a trustee for Oxfam is very different from being a ‘hands-on’ trustee of a local scout group or village hall and recruitment methods (and target audiences) will be different for both. This is one of the reasons I am unconvinced by some of the report’s recommendations – for example a national register of trustee vacancies.
However, a more joined up approach by those who support charities to recruit trustees could certainly pay dividends. Reach is part of a working group exploring how we can develop a more a collaborative approach to encourage and support more charities to take an open approach to recruiting trustees. This is not just possible, it is essential: charities need boards with a breadth of skills and experience, to earn legitimacy and to provide good leadership.
Reach Volunteering was a member of the research advisory group for this syrvey. The Charity Commission will be giving free access to all the data sets soon.
Reach runs a trustee recruitment service that is free of charge to all charities with a turnover of under £1 million. Last year we recruited 450 trustees.
Our programme Building boards for a digital age is a useful starting point to help boards recruit trustees with digital expertise.
Good governance is all about understanding the options facing the organisation and their implications. In this guest blog, Peter Kelly, Business Development Director at Charity Bank, provides an introduction to loan finance for charity trustees.
Charity trustees and management need to understand what loan finance can offer to determine whether it is a suitable option for them.
Indeed loans are not right for all situations or organisations and careful consideration of the financial commitment should always be taken. In the right circumstances, however loans can be a valuable tool for a charity to further its charitable mission.
A loan can help organisations become more sustainable. For instance, it can allow you to buy a property rather than continuing to pay rent. This is one of the most common uses of Charity Bank loans.
Loans can help a charity to grow its income. Borrowing to invest in a new activity that increases income can be a fast track to growth, with the additional income helping to repay the loan. In this way, loans can reduce reliance on grants and donations, whilst allowing you to broaden your range of services.
Loans can help bring in grants. In Charity Bank’s latest social impact study 46 per cent of respondents from its existing borrowers reported that the loan helped them unlock funding they couldn’t have accessed otherwise.
Loans can be useful in the short-term. A loan can also be used to bridge the receipt of retrospective grants or payments under service delivery contracts. This can help smooth cashflow deficits and make it easier to plan and manage your finances.
In short, in the right circumstances a loan can empower charities to: seize opportunities, extend their reach, smooth cashflow, improve financial sustainability and leverage additional funds.
Before applying for a loan, it’s useful to know what a lender will look for when considering a loan application. Some of the key factors considered in the due diligence process are as follows.
First and foremost, a lender will be looking for evidence that a borrower can afford to repay the loan. The charity will need to be sustainable and ideally have several streams of income so that repayment isn’t reliant on any one source. The charity will also need to demonstrate that it can continue to repay the borrowing following external events such as rises in the general level of interest rates.
As part of the loan process, a lender would expect to see a business plan including financial projections. Once overheads, expenses and any plans to generate future revenue are considered, will the charity have sufficient surplus income available to afford the loan repayments?
The governance of a charity is important and will be taken into consideration: who are the management and trustees, how long have they been involved and do they collectively have the breadth of experience and skills to manage the organisation?
Reach Volunteering provides a template to allow you to perform a skills audit with your board. A skills audit will capture the current skills of the trustee board and highlight possible gaps in trustee skills or where professional guidance is required.
A lender will need to see evidence that a charity’s governing documents (this may be a Trust Deed or Articles of Association) give the legal powers to borrow and, if necessary, to pledge assets as security for the loan. This is not always clear, so you may need to take professional advice.
Unincorporated organisations have an implied power to borrow but may still require a specific power to charge assets. Changing your powers to allow borrowing or the giving of security is usually a relatively straightforward process and your legal advisers will be able to guide you through this.
Social lenders, such as Charity Bank, will also wish to understand the social impact of a charity and of the proposed use of the loan. They will want you to provide evidence of the good work your organisation is doing with tangible examples that it delivers social benefit.
Loans will usually require security. Examples of security offered against a loan could be property, cash deposits or a guarantee from a trading subsidiary.
Whatever your situation or proposal, the best guidance we can give is to open a dialogue with potential lenders at an early stage. This will give you the best possible chance of finding a loan that’s suitable for you needs and of ensuring you have sufficient time to get it approved.
Peter Kelly is Business Development Director at Charity Bank, the ethical bank that lends solely to charities, social enterprises and other organisations where the loan is for social purpose. Charity Bank is run for the sector and owned by the sector, as all its shareholders are charitable trusts, foundations and social purpose organisations.
The stories from this year’s Charity Governance Awards winners and entrants are a vivid illustration of the difference a good board can make. They tell of boards that have brought fresh thinking, integrity and a clear vision to their charity’s work, strengthened its impact and, sometimes, averted disaster. The charities themselves range from tiny to large, and their causes are diverse. The governance categories they entered include digital, diversity, impact and turnaround.
They are all stories of great leadership, exercised as a team, for a common cause.
This is quite at odds with the way that we, as a sector, usually talk about trusteeship. Often the focus is on the fiduciary and the language is all compliance, liability, duty. For a long time, I was deeply uninterested in anything to do with trusteeship: it had a fusty, almost Dickensian connotation, and the link between trustees and the work of the charity – the difference it made – seemed tenuous.
However, as the entrants for this year’s awards (and last year’s too) clearly demonstrate, good governance involves so much more than just getting the basics of compliance and scrutiny right.
A common theme of these stories is of trustees keeping hold of the bigger picture and not being afraid to think afresh about how their focus should shift in the context of a changing world. In some cases this meant deciding to narrow their remit to key strategic activity, and stopping anything that did not contribute to this. (This can be so hard to do in practice!) Dementia UK decided to focus on exclusively providing care through specialist Admiral Nurses. For others this meant broadening their mission to create a more holistic approach. For example, Off The Record expanded its work from providing counselling services for young people to a mental health service for the same audience. Body & Soul widened the focus of its services from young people with HIV to a broader range of beneficiaries. Always, the board were careful to keep true to the overall purpose of the charity, and to the needs of service users.
Another strand (and a refreshing change from the stereotype of risk averse boards) is the willingness of the trustees to be ready to try new things where this helps them achieve their goals. Voluntary Arts’ BAME Advisory Panel incorporated shared meals into their meetings to help build inclusivity, Raise the Roof has embedded the use of several off-the-shelf platforms to deliver services and increase participation at board level. There are stories of boards taking bold decisions, based on calculated risk to achieve more – for example, Preston Road Women’s Centre took advantage of the Empty Homes Partnership to develop a new programme providing safe accommodation for women escaping domestic abuse.
The entrants share an evident belief in the value of collective, and collaborative, action; a willingness to look outwards and work in partnership with other organisations. There is also a real seriousness: clarity about the change that the board wants to achieve and determination to draw on the right information and processes to achieve this. These are boards who are interested in the impact of their organisation’s work, who seek evidence of the difference their service makes and take corrective action where necessary. They are also boards who are willing to step up to the plate when the going gets tough. Witness the courage and commitment shown by the trustees of Kentish Town City Farm when faced with a seemingly hopeless situation.
These stories are important for three reasons. They show how there is more to being a trustee than scrutinising accounts. They also offer a counterpoint to the bad press that governance has had in the last couple of years – the plethora of stories about people doing it wrong and a focus on the ‘problems of governance’. This negative focus is problematic, and not only because it creates an unbalanced picture of trusteeship. It actually contributes to the problem: underlying much of the existing bad governance. From poor trustee recruitment to lack of board engagement, there is a lack of appreciation of, or even belief in, the difference that a good board can make to a charity. Sharing examples of good governance is one of the most powerful ways to help people to understand the value of good trusteeship. It makes it tangible. These stories demonstrate that good governance really does matter, that it really is possible, and that it is worth striving to achieve. So, please read and enjoy these stories, and share them widely.
The Charity Governance Awards is organised by the Clothworkers’ Company, in partnership with Reach Volunteering, NPC and Prospectus.
The winners were announced at a ceremony at the Clothworkers Hall in London on Wednesday 24 May 2017.
Entries are now open to charities both large and small, from all sectors, for the Charity Governance Awards 2017 – the UK awards that recognise and reward good charity governance.
Reach Volunteering is delighted to be a partner in these awards that by shining a spotlight on the best of the sector, demonstrate how effective governance can transform a charity and the lives of its beneficiaries.
Entry to the awards is free. Each of the seven categories offers a £5,000 cash prize.
Looking for inspiration for your entry? Want to know what makes an award winner special? Browse the profile pages and short films for the winners, and the shortlisted charities.
You can enter online for free until 13 January 2017. The winners will be announced at the invite-only free awards ceremony drinks reception on 24 May 2017. Follow the conversation at #charitygov17
The Charity Governance Awards are organised by The Clothworkers’ Company – a City Livery company that supports trusteeship initiatives – in partnership with NPC (New Philanthropy Capital), Prospectus and Reach.
Scarcely a week seems to go by without some bad news story about charity governance. Kids Company, fundraising scandals, harsh words from a House of Commons Committee; there has been a stream of news articles illustrating how bad governance can be and the terrible implications of this. And yes, bad governance is clearly a serious problem.
But is this a fair picture of governance in the sector? No! There are many truly amazing but unsung boards out there, steering their charities through perilous waters with good judgement, great courage and lots of hard work.
How do I know this? Because I have just been reading through examples of many such boards. I have had the privilege to be one of the judges in the inaugural Charity Governance Awards. Together with many much wiser heads than mine, we shortlisted from over 100 entries, and the calibre was truly impressive. We were looking for boards which had shown real leadership in improving impact, embracing opportunity and risk, demonstrating diversity and inclusion, or turning around their charity’s fortunes.
It was a humbling and inspiring experience: instances of trustees making tough decisions for the long term, going the extra mile to create vibrant, diverse boards, seizing new opportunities without betraying the charity’s values, to name but a few.
Whilst the challenges and the responses varied widely (as did the nature and size of the charities), all showed great commitment and leadership. They seemed to me to demonstrate the personal qualities of good trustees, as outlined by charity lawyer Philip Kirkpatrick recently: conscientiousness, inquisitiveness, courage and judgement – meshed with effective challenge.
Of course there are cases of poor governance, and we should study them closely. But there are also many cases of brilliant governance, and we can, perhaps, learn even more from them. Certainly we should be sharing these stories to bring balance to the flow of bad news and to remind ourselves that the charity sector has much to be proud of.
I am looking forward to 12 May when the winners will be announced and we can celebrate their success. But, even more so, I am eagerly anticipating sharing the stories of the shortlisted through an ebook that will be compiled soon afterwards. There are wonderful Boards out there, and we all deserve to know about them!
We have been working on these awards for a while: you may remember that last year we blogged about an upcoming governance award to promote, reward and celebrate good governance. Now, more than ever, we all need a focus on trustee boards that are really effective.
The recent headlines about Kids Company have provided plenty of coverage about what happens when governance fails. Every charity needs to take stock and ask: could this happen to our charity? Is our board sufficiently well informed and robust? However, there is also danger that the pendulum swings the other way, and boards become overcautious and risk averse. Indeed, there is a long running critique that many charity trustees are too cautious.
The new Charity Governance Awards will shine the spotlight on cases where boards have got it right. The awards are designed to generate examples of the impact that good governance – for example, a focus on impact, or in leading a charity to turnaround its fortunes. We hope that this will reward good practice and inspire other boards. The awards will demonstrate what a positive and pivotal role trusteeship can be – and this is essential if we are to attract more good people to the role.
Entries for the awards are now open to charities both large and small, from all sectors. We are keen to encourage entries from all charities that have great boards and the awards are designed to be equally accessible to smaller charities. Mindful that such trustees are often focused on things other than entering for awards, we have ensured that the process is easy, entry is free, and that each of the six categories offers a £5000 cash prize.
If you think that your charity has a great board visit the website to find out how to enter. Similarly, if you know of a such a charity, please reward them with a nomination.
The award categories are:
The deadline for all entries is 15 January 2016 and those who have been short-listed will be invited to the awards event in London on 12 May 2016, where the winners will be announced.
Thank you to everyone who took part in the original survey – your contributions and thoughts are much appreciated.
Visit the Charity Governance Awards website to find out more.
Governance – and good governance in particular – is vital for all charities. Reach was deeply engaged with Trustees’ Week which, as always, was a great opportunity to celebrate the fantastic work of trustees across the UK.
From issues of diversity and finance to strategy and recruitment, we are keenly aware of the many challenges faced by trustees in the difficult role of steering their organisations through a time of uncertainty and, in many cases, austerity.
Having met with countless charities who have demonstrated incredible resilience and innovation, we have been inspired to work with our partners, the Clothworkers’ Company, Prospectus and NPC to design a new and exciting award which recognises great governance in action.
We know that there are a number of governance awards already out there so, rather than create an award which replicates existing ones, we want to create an award which celebrates and showcases some of the inspiring stories that many trustees have to share. We really want to demonstrate, through stories and actions, how good governance in trying times can make all the difference. We also want to develop awards that will be really worthwhile to the award winners.
Of course, we realise that there may not be an appetite in the sector for another award, so we are appealing to you to let us know if this is something that we should proceed with. As such, we would be extremely grateful if you could let us know your thoughts by completing the survey below. It’s only a handful of questions so it’ll only take a minute, I promise!
Thank you for taking the time.
Having had great success in our work with students’ unions over the last few years, the TrusteeWorks team is excited to be moving forward with NUS in a more formal capacity as preferred supplier.
We are confident that this relationship will give us the opportunity to help many more students’ unions source fantastic external trustees.
Reach Volunteering has entered 2014 on a strong note! We have secured long-term funding from institutions like GlaxoSmithKline and City Bridge Trust and plan to introduce iReach, our new web-based platform. This will dramatically increase the volume, range and quality of skilled volunteering across the U.K.
iReach will come into service this summer, building an online community where charities and skilled volunteers meet, interact, and find their ideal match. It will create an increased number of matches and significantly reduce Reach’s transaction costs.
Reach had an excellent 2013 helping to place 20% more skilled volunteers than in the previous year, representing an estimated value of £8mn worth of skills transferred into the sector.
A Reach highlight was the decision to make our Trusteeworks Matching Service free from 1 November for charities with an annual turnover of less than £1mn. This led to a 150% increase in demand for the service.
There was a huge surge in volunteer registrations in the second half of the year, with an average of 167 new volunteers joining the Reach register every month, double the amount for the same period last year!
Charities continually need to fill vacancies in key roles, particularly as trustees. Reach, as the U.K’s leading skilled volunteering charity has been providing this invaluable service for more than 30 years. Our placement advisors are widely respected for their expertise and enthusiasm in finding the right match between skilled volunteer and charity.
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Reach’s Trusteeworks Matching Service will be free from 1 November 2013 for charities with an annual turnover of under £1 million. Reach believes that removing the entry level charge of £75 for smaller charities, who have limited funds for recruiting, will make a big difference by helping them to strengthen their boards.
Strong boards, with a sufficient breadth of experience and skills, are crucial for charities facing difficult decisions in an uncertain economic climate. The ability to recruit outside a charity’s immediate networks by using a service like Reach is an important factor in this process.
The Trusteeworks Matching Service provides a free, high-quality introduction to skilled volunteers. The trustee role appears on Reach’s register of available trustee opportunities, and Reach’s recruitment teams search their extensive register of available volunteers, sound out candidates and forward suitable names to the charity.
In addition to the Matching Service, Reach offers the Trusteeworks Matching Plus Service and the Trusteeworks Premium Service which provide additional features such as preparing advertising copy for the role and in-depth screening and briefing of candidates.
Reach is the biggest recruiter of trustees in the UK having placed nearly 750 with charities all over the country since the launch of Trusteeworks in October 2009, including 185 in 2012 and 142 so far this year. Overall, Reach placed 500 volunteers in 2012 representing an estimated value of £9 million worth of skills transferred into the charity sector, and registered over 1,000 new volunteers and more than 1,100 placement opportunities with charities.
Posted in News Tagged with: Charity boards, Charity Governance, Charity Trustee, Corporate volunteering, Good practice in governance, Good practice in volunteering, Governance, Measuring impact, Reach in the news, Reach volunteering, Recession, Skilled volunteering, Trustee, Trustee Recruitment, Trustees' Week, TrusteeWorks, Volunteer expertise