This blog first appeared on the Charity Bank website in June 2017.
Finding ways to strengthen your board is never easy and there is no single solution that will work for every board.
To be more effective, however, boards do need to ask themselves searching questions regarding:
A good board makes all the difference to your charity’s future. Poor governance can lead to loss of strategic focus and ineffective oversight of a charity’s management. On the other hand, a strong board will create a shared vision, renewed purpose and ensure that the charity makes the right strategic decisions. Only the board itself can improve its governance, so it is important that it takes this responsibility seriously.
1. Reflecting on the Code of Good Governance
Creating a time and space in which your board can collectively reflect on their work is absolutely essential for ensuring that you are carrying out your duties properly.
The Code of Good Governance is a wonderful tool to help you do this. The Code centres on seven key themes:
By adopting the Code, board members are committing to a shared understanding of their duties and responsibilities as well as gaining a framework with which to structure a thorough, self-reflective and on-going analysis of their work.
It’s worth noting that inviting an external expert to facilitate the process (either an experienced volunteer or paid consultant) can enhance this process, providing additional impartiality and objectivity especially useful to a board reviewing itself for the first time.
2. Regular skills audits
Making sure that the board is aware of the skill sets it has and those it needs should also be an on-going process. You should set aside a time at least once a year to appraise your composition in relation to anticipated projects and plans.
This will allow you to clearly see where the organisation is going and what expertise you will need, as well as helping you to intelligently anticipate challenges and opportunities.
3. Strong recruitment and induction processes
Recruitment isn’t just about bringing on board valuable new expertise, it’s a process that implicitly sets the tone, culture and expectations of the board.
A strong recruitment process should include open recruitment, induction, training, mentorship and support. These factors combine to directly demonstrate to new trustees how it is they are expected to contribute their expertise and will ultimately result in more engaged, conscientious and capable trustee placements.
4. Create a succession plan
As most trustees well know, recruitment is an on-going process. All too often it can feel like, just as one trustee joins the board, another is preparing to leave. Anticipating this by coaching and mentoring existing trustees to take on important roles such as those of Chair and Treasurer can be a great way of limiting the impact of trustees leaving.
It’s a good idea to make plans for finding suitable replacements for retiring trustees well in advance so they can hand-over their responsibilities and duties properly.
A succession plan is also a great way to avoid the opposite challenge: too little turnover. Trustees should not stay on forever – bringing new trustees on board with fresh perspectives is healthy part of the organisation’s development and should be an integral part of your board’s strategic planning.
5. Training, development and networking
Whilst many boards may not have a budget for training their trustees, you should at least consider some of the courses and networking opportunities out there.
You don’t have to spend your entire governance budget to receive guidance from an expert: Small Charities Coalition, Civil Society and NCVO all offer great opportunities to learn from experts and other trustees.
Similarly, joining appropriate professional and support networks like the Association of Chairs and The Honorary Treasurers Forum can be great ways of meeting and learning from your peers. By joining the UK Charity Trustees group on LinkedIn you can connect directly with an active and friendly online community that is always willing to respond to questions with support and guidance. In addition, annual events like The Trustees Conference and the Trustee Exchange can also be helpful.
6. Constructive criticism & critical friends
Fostering a culture in which trustees are empowered to constructively challenge each other is the cornerstone of a well functioning board. Whilst it’s always incredibly important to respect each other’s opinions, avoiding awkwardness by not addressing potential issues with a given strategy can potentially lead the organisation down a far more precarious path.
Cultivating a culture in which all board members are empowered to challenge each other’s assumptions is a great way of making sure that strategies are tested and re-tested before being implemented and executed. This process is equally important for the Chair’s relationship with the CEO which should include support and challenge in equal measure.
Allowing board members the opportunity to voice their opinions and to challenge each other’s ideas not only reinforces inclusiveness, but can stimulate new ideas, uncover hidden pitfalls and generally refine an organisation’s strategy like no other discursive process.
The new National Trustee Survey by ACEVO and nfpSynergy has an interesting and surprising finding that has not surfaced in the commentary. Third Sector News ran with the headline Trustees under pressure. But there was some more positive news buried within the survey.
The question about board skills elicited an interesting and unexpected response: trustees ranked web/digital/online skills as the ones that they most needed on their board – far ahead of the kinds of skills that people tend to assume that boards most want, like financial or fundraising and income generation.
The nearest competitor for this pole position was ‘campaigning’. The detail is informative too: trustees were asked to rank skills from the ‘most needed’ to ‘already had sufficient expertise’.
Digital skills came out clearly as winner across the board – both the most needed, and the least held.
And now to a point I’ve heard made quite a few times: it’s not that boards don’t see the point of digital skills, and therefore haven’t prioritised them – only one per cent felt that digital skills were not relevant to their board. Compare this with the 12% who thought campaigning skills were not relevant.
Reach is an ardent advocate of the need for trustee boards to embrace digital. We recently launched a campaign to promote digital expertise at board level and to help boards recruit in these skills – building boards for a digital age.
However, whilst we are convinced of the underlying need, and can happily agree all day with other like-minded organisations about how important this is, we weren’t sure if many charity boards felt the digital skills gap so keenly. Now we know that they do.
Trustees are often accused of being risk averse and old fashioned. I read this survey as an endorsement of trustees’ attitudes – their willingness to look forwards, to embrace the new and unfamiliar, and to consider how their organisation should operate in a new digital world.
Happily, there are some great people with digital experience that are ready and keen to join trustee boards – have a look at some of their profiles.
It’s time to plug that skills gap on the board and recruit a ‘digital trustee’!
This article was authored by Zoe Amar for the building boards for a digital age campaign.
Trustees should be aware of the wider digital trends and how they could affect their charities. They should refresh their knowledge regularly in this area, and agree how they can best incorporate digital into their organisational strategy.
Boards need to agree the big picture overview of how their charity will use digital. All areas need to be on the table for this discussion. Our starters for ten are: digital fundraising, more targeted communications, scaling up service delivery, building relationships with key stakeholders, or simply as a catalyst for change to their business model.
Boards should be aware of areas where things can go wrong , from data protection to reputation management to understanding how the charity will take digital products and services to market. Trustees then need to know how those risks can be managed.
Boards will often be asked to sign off on significant investment in digital (for a small charity, this could simply mean a new website, and for a global NGO it could be a digital transformation programme). Trustees must ask the right questions to evaluate these proposals and they must know how they will judge if they have been a success.
Boards need to satisfy themselves that their charity has the right people in place to drive digital change, whether at trustee or executive level, and that their skills are being kept sharp.
Trustees must be confident about challenging their executive on the results they are getting from digital. This means understanding the story behind the data they are being presented with and interrogating it for insights. They must also be clear on the vision of where digital should ultimately take their charity.
Often the executive drive digital change but where this is not happening, boards need to ensure that they have buy-in from all trustees, the executive, staff and volunteers for greater adoption of digital. This includes keeping people motivated and interested for the long term, which is particularly important if the charity is embarking on digital transformation change.
Whether that is collaborating with a digitally savvy organisation who has the skills that the charity lacks, or looking at the potential to use systems already in existence (why reinvent the wheel?), boards can tap into their networks to leverage contacts and resources that will help their charity on its digital journey.
Zoe Amar is one of the sector’s leading experts on digital. She heads up digital agency Zoe Amar Communications. Zoe also has eight years’ experience as a trustee and sits on the board of The Foundation for Training and Education in Care, as well as on the board audit and risk sub committee at The Samaritans as their digital expert.
This success story is part of the building boards for a digital age campaign.
Embarking on a digital project can be daunting, and there are likely to be plenty of challenges along the way. Having someone on the board who fully understands the benefits of the project and the risks too, can make all the difference, as Reach Volunteering learned last year thanks to our digital trustee Dominic Tinley.
‘We were embarking on a very ambitious project to transform our service from a manually brokered service to a self-service online facility. We wanted someone at board level with a depth of relevant experience,’ explains CEO of Reach Janet Thorne. ‘Dominic’s experience meant he could ask probing questions, help when we struck problems and give us the confidence to follow through.’
Dominic joined Reach in search of an opportunity to use his skills at a more senior level, having done some volunteering in the past:
‘I had volunteered with a local charity, but I found this quite frustrating because I wasn’t using my skills. I thought it would be a better use of my time to find a skills-based volunteering role, but I didn’t know how until I found Reach.’
Reach benefited from support for what was very much uncharted territory for the organisation: ‘We had no track record of implementing digital projects’, says Janet. ‘We wanted someone who could scrutinise and advise on the whole process including procurement and implementation, and who could help us draw in other people at crucial moments.’
Whereas, for Dominic, joining the board gave him the opportunity to expand his horizons: ‘Overseeing a major redevelopment such as this was much as I expected,’ he explains. ‘But it has been fascinating to learn about all the other aspects of running a charity and to build my skills in other areas from fundraising and marketing to accounting, and volunteer recruitment.’
‘Technology is developing quickly,’ adds Dominic. ‘Many charities are a few steps behind so volunteers need the patience to explain technology to others and support them in building their knowledge.’
And what impact can a digital trustee have? ‘We are now in a digital age and most beneficiaries expect to communicate through digital channels’, says Janet.
‘The board needs the expertise to be able to ask searching questions and make sure the staff team has adequate expertise to navigate this type of challenge.’
‘Since the launch of our digital service’, she adds, ‘we have seen record numbers of volunteer placements. And by 2019 we expect to have doubled our activity, whilst reducing our costs.’
A final word from Dominic on volunteering his skills on the board: ‘I cannot emphasise enough how rewarding the experience of skills-based volunteering can be. Online matching makes the process of finding the right match and making a commitment so much easier. I just wish I’d signed up sooner!’
At Reach, we are committed to helping connect people like you with causes that really inspire them. Becoming a charity trustee could help you grow your skills and experience in a totally new environment and context.
Charities are always looking for trustees with professional qualifications, especially accountants and finance professionals. Charity boards have responsibility for financial management so your background can be key to advising and guiding fellow trustees on reporting, control systems, solvency and investments.
You may even want to take on the role of honorary treasurer, a unique kind of trustee with specific responsibility for finance. More than just a busman’s holiday, the role of an honorary treasurer is more varied and challenging than “just doing the books”.
Many trustees find working as part of a team hugely energising and satisfying. As a trustee you could help a charity improve people’s lives, change the environment or transform a community. Being a trustee can also build your network, broaden your experience or get you involved in something completely new. Learn more about being a trustee.
Our friendly team can suggest opportunities in some of the thousands of charities we support in London and throughout the UK. You can get to know the charity of your choice and make a real long-term difference as a financial trustee or treasurer.
Keith Owen registered with Reach hoping to take on a treasurer position; he shares his experience of the process and the positions he found:
Musical Keys Logo”When recently seeking voluntary treasurer positions, I set myself a maximum of two charities within 20 minutes’ drive of my home. I found two – each quite different and without a treasurer for some while – and joined them both.
“Both are expanding as both are successful at funding. I am developing simpler financial reporting for their boards, helping to cost bids and meeting their partners. As a former accountant, I am certainly not finding the work a busman’s holiday. In fact, quite the opposite!”
Keith is now the Honorary Treasurer for both The Magdalene Group and Musical Keys. Read more accountant to treasurer success stories below.
Find out more
Read a blog piece about what to expect when becoming a treasurer from Denise Fellows, CEO of the Honorary Treasurers’ Forum.
To search for treasurer roles visit our website.
The rewards of being a trustee, and giving back to society, should outweigh any worries about liabilities which potential trustees might have. However, anyone considering taking up the role will want to know what legal duties, responsibilities and potential liabilities are involved. While most people in the sector would find it difficult to name a single situation in which a trustee has actually suffered personal loss and liability, anyone wishing to become a trustee should know what the potential risks could be.
Andrew Studd and Sukanya Ransford of the law firm Russell-Cooke LLP explore the risks of becoming a trustee.
Many of us are concerned about managing risk in the activities we undertake. Trustees will want to know what risks they could potentially face and claims that may be brought against them. Despite the potential risks, cases where action has been taken by the Charity Commission or by the courts against trustees are almost unheard of amongst the 180,000 registered charities in England and Wales. The Charity Commission and the courts appreciate that trustees are only volunteers and they do not seek to punish them except in the most serious cases of fault or neglect. So don’t be put off.
Liabilities arise out of the duties the trustee takes on for the organisation they are appointed by. These are personal obligations which come with being a trustee. By accepting the ‘job’ of trustee, you agree to do the ‘job’ properly. The law and the governing document set out the minimum that must be done to achieve this. If you fall below that minimum, the charity itself, the Charity Commission or the courts may take action which may result in personal liability. Such action is in fact very rare. Personal liability generally only arises if the failure to discharge duties actually results in loss to the charity or improper gain to the trustee.
If trustees do not discharge these duties they may be personally liable to replace the loss, be liable to criminal prosecution or be barred from being a trustee in the future. One of the main duties of a trustee is not to receive any personal benefits or payments, be they direct or indirect, unless the governing document or the Charity Commission has authorised it. Any such benefit that a trustee does receive could result in the trustee being obliged to repay the benefit he received. This is why individuals cannot be paid for carrying out their duties as trustees.
Duties of company directors
Trustees of charitable companies have additional statutory duties. As trustees of a charitable company they will also be directors. Company directors have a series of duties under the Companies Act 2006 which are very similar to those of trustees. Like trustee duties, these arise because they are directors of an incorporated body and can be enforced against them personally.
The Charity Commission has produced a number of helpful documents summarising what trustees’ duties are, in particular CC3 The Essential Trustee and CC60 Hallmarks of an Effective Charity. The Charity Commission emphasises that it is only likely to enforce personal liability where a trustee has acted dishonestly or recklessly. Under the Charities Act 2006 the Charity Commission now has the ability to relieve a trustee from personal liability for breach of trust or breach of duty if the trustee has acted honestly and reasonably and ought fairly to be excused.
Where do liabilities come from?
Liabilities fall into the two categories of governance liabilities and operational liabilities. Governance liabilities arise from the duties that a trustee has. For example, where a trustee has entered into a contract with an organisation that benefited the trustee the trustee has to repay the improperly obtained profit.
Operational liabilities are liabilities incurred by the organisation because of what the organisation does. For example, where the trustee of an unincorporated charity has signed a lease for the organisation and it fails to pay the rent. Unlike governance duties, they do not arise from the trustees’ personal duties. Where operational liabilities ultimately fall will depend upon whether the organisation is incorporated, i.e. whether it was established as (or has become) a company limited by guarantee or other corporate entity. If the charity is incorporated then operational liabilities generally fall on the organisation.
Remember that incorporation alone will not protect you from all liabilities. Even if the charity is incorporated, there are some provisions of the law under which a trustee may still be liable if they have contravened the law, e.g. health and safety. Similarly, if a trustee directly authorises a wrong, for example libels someone or instructs someone to act in a way that leads to loss being caused by trespass, then a trustee as well as the organisation may be liable.
By registering at Companies House you receive the protection of limited liability, but registration requires a number of obligations such as filing annual returns and keeping proper registers of who are the members and who are the directors. If you fail in these duties, the company and you may be fined, or in extreme cases, imprisoned.
Insuring the organisation
Insurance of the organisation and its activities and assets is always an important duty for trustees and trustee indemnity insurance can offer protection for trustees. Typically it covers omission or negligence, breach of statutory duty, errors in investment decisions, breach of trust, libel and slander, wrongful trading and a wrongful act in respect of an employee (e.g. discriminatory behaviour).
For an in depth review of the duties, responsibilities and potential liabilities involved, visit the Reach website guide to being a trustee.
Andrew Studd is a partner in the charity team at the law firm Russell-Cooke LLP. Sukanya Ransford is a solicitor in the charity team and both authors advise charities and not for profit bodies on a wide range of matters including new charity registrations, incorporations, governance reviews, mergers and charity trading and service delivery.
The Charity Commission is warning that weaknesses in governance are frequently the root cause of many things that can go wrong in charities. Responding to the launch of TrusteeWorks, Neal Green, Senior Policy Adviser at the Commission, says the Commission shares Reach’s desire to see charities benefiting from having skilled and experienced trustees. And, in an article specially written for Reach, he points out that being a trustee has its benefits.
Regulator will signpost TrusteeWorks
The Charity Commission is keen to work with a range of partners to encourage volunteering, particularly volunteering as charity trustees. Once our new and improved website is launched, it will signpost TrusteeWorks and similar resources to help those interested in trusteeship and charities in need of trustees, to find each other. And, to help would-be trustees, I’m particularly encouraged that TrusteeWorks signposts so much of the Commission’s guidance for charities, alongside other useful documents.
Some might expect the charity regulator to take little interest in the make-up of trustee boards. Surely our role is limited to ensuring boards are spending charity money in accordance with the charity’s objects and not pocketing any themselves? But experience has taught us that, in order to be an effective and proportionate regulator, prevention is always far better than cure. Getting the right skills and experience onto a board in the first place is crucial.
More recently, we’ve been told that the Commission is only interested in fraudulent fundraisers or ‘bent’ accountants. Yet looking back at the lessons learned from our Compliance work, Charities Back on Track, of over 180 cases in 2008-9, only 24 involved concerns about charity fundraisers and none involved ‘bent’ accountants (which would, in any case, be something for the police or accountancy bodies to investigate, not us). We are more concerned about poor governance, internal financial mismanagement, failure to protect vulnerable beneficiaries, and crossing the line when it comes to supporting political campaigning. And of course, although it’s often the most high profile, our compliance role is only one aspect of our work.
Time after time, weaknesses in governance are the root cause of so many things that can go wrong in some charities. Difficulties such as disputes that paralyse charities, loss of focus leading to mission drift, or poor controls and procedures that lead to financial mismanagement or create opportunities for fraud or theft. A few charities somehow limp along despite having such problems, but they are unable to fulfil their potential and use their resources as effectively as they could. This is why good governance is such a focus within our guidance, from The Essential Trustee to Hallmarks of an Effective Charity and The Big Board Talk (15 questions trustees need to ask). Getting governance right both helps to prevent the kinds of problems I’ve mentioned, and underpins compliance with the letter of the law.
So where does good governance start? I am more and more convinced that it is with trustees properly understanding their role. You really need to understand the purpose of your organisation; your powers, duties and responsibilities. Also, your role in terms of overseeing the work of the organisation, managing and supporting staff and volunteers, and championing the organisation’s vision and values. Such understanding will mean that you have the information and the motivation you need to ensure that the charity works effectively. This is the first principle in the ‘refreshed’ code of governance for the voluntary and community sector, which the Commission fully supports.
We know that most trustees do a good job and want to do a better one. As regulator, we have to maintain the balance of focusing on all the responsibilities (for the few who need to be reminded) without taking too much focus away from all the benefits of trusteeship. Not only do trustees benefit society by the work they do, but they can also benefit by developing new skills, insights and friendships through carrying out their role. Some even find it fun.
Senior Policy Adviser
The Charity Commission
TrusteeWorks aims to close recruitment gap and improve governance
With close to half of the UK’s charities reporting that they have vacancies on their governing boards, a major new initiative to boost trustee recruitment has been launched by Reach. Called TrusteeWorks, the new service is setting out to raise awareness amongst thousands of existing and potential skilled volunteers of the rewards and challenges involved in being a trustee. And organisations of all sizes are being offered specialist help and assistance to bring fresh talent onto their boards.
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The launch by Reach of TrusteeWorks comes in the wake of a hard-hitting review of charity trusteeship in the UK. Produced by New Philanthropy Capital, ‘Board Matters’ claimed that charitable trusteeship “is not up to scratch” and identified a shortage of new trustees as one of the major reasons.
“Recruitment of new trustees is getting harder, and nearly half of charities have vacancies on their board” says the report. It goes on to point out that “less than five per cent of people are aware that they can support a charity by becoming a trustee.”
The report says action on recruitment is important to address the shortage of trustees, and also to improve diversity, a lack of which can undermine a charity’s mission. The report warns that “a homogeneous board will miss out on the benefits that come from having people with different backgrounds and experiences working together as a team.”
Janet Thorne, one of the mangers who is co-ordinating the new TrusteesWork service, says Reach is only too aware of the importance of trustee recruitment.
“It’s because we are so committed to help improve governance in the voluntary sector that we decided to create a new focus for our expertise in skilled volunteering” she says. “We knew from conversations with many of the organisations we work with that finding the right people, and persuading them to become trustees, is often a major headache. At the same time, we knew that many of our thousands of skilled volunteers were simply not aware of the need for trustees or the rewards that the role can offer. We think TrusteeWorks provides a really effective response to both sides of the issue.”
Equipped with its own new dedicated website, TrusteeWorks sets out to be a unique ‘one stop shop’ for organisations of all sizes, from small community groups to large national charities. It provides resources and advice to help them identify prospective trustees with the right skills and experience for the role. The actively managed recruitment services on offer are tiered, to provide different levels of support. All offer access to Reach’s extensive register of skilled volunteers but vary in cost according to how much of the recruitment workload is taken on by TrusteeWorks and how widely a client organisation wishes to cast its recruitment net.
For volunteers, TrusteeWorks offers a personalised service to identify trustee opportunities that would make good use of their particular skills, provide satisfying rewards and challenges and fit it around work, home and other commitments. Help is also available to clarify the role, duties and responsibilities involved in being a trustee.
“Reach is investing substantial resources and a great deal of effort into the recruitment of new trustees” says Janet Thorne. “We will be actively marketing trustee roles to our register of volunteers, many of whom just don’t realise how interesting, fulfilling and even exciting the job can be and what a difference it can make to the work of a charity.
“The sophisticated recruitment technology we are currently adopting, with its improved registration procedure and matching capabilities, will make us more effective in identifying potential candidates,” adds Janet. “Beyond that, TrusteeWorks will exploit wider opportunities to promote trusteeship in general, and advertise specific vacancies through online and other media.”
New additional services are already being devised for TrusteeWorks to help organisations with their ongoing board development such as skills audits and board reviews.
More information about TrusteeWorks, including case studies of successful trustee recruits, is available by visiting: www.reachskills.org.uk/trusteeworks