Transcript Governance A Charity Commission perspective

Governance
A Charity Commission perspective
Neal Green – Senior Policy Advisor
Title
The Charity Commission
• Independent regulator & registrar for charities in
England and Wales
• Our objectives (Charities Act 2006):
– increase public trust & confidence in charities;
– promote understanding of public benefit;
– promote compliance by trustees with their legal
obligations in governing charities;
– promote the effective use of charitable resources;
– enhance charities’ accountability to donors,
beneficiaries & the public.
Charity regulation and governance
• The law - “you must”
• Good practice - “you should (consider)”; “we
recommend/advise”
Governance is about good practice:
• Good governance can enhance effectiveness
• Good governance can help ensure
compliance with legal responsibilities
Different ways of looking at
governance
1. Systems and structures…
• systems and processes
concerned with ensuring the
overall direction, effectiveness,
supervision and accountability
of an organisation
(Cornforth 2003)
• not necessarily about doing; it is
about ensuring things are done
(Adirondack 2002)
Different ways of looking at
governance
2. People and relationships
“Everyone is clear about their role”
(Genny Kiff, Wellcome Trust)
Being clear about/managing:
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Responsibilities
Boundaries
Relationships with others
Accountability
In other words…
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Leadership
Authority
Accountability
Transparency
Control
Delegation
Effectiveness
Impact
Legitimacy
When things go wrong…
It’s often because of a governance problem!
“The elections were unfair”
“S/he controls everything”
“The Finance Director kept us in the dark –
now we’ve found out we’re bankrupt!”
“They are trying to take over!”
“We were a youth club, then we got
the contract for Meals on Wheels…”
“Our ex-CEO is suing us!”
Common governance issues
• Election/appointment of trustees
• Membership (records)
• Independence, control,
dominance
• Conflicts of interest
& trustee benefits
• Mission drift
• Financial control & management
• Staffing/management issues
• Handling complaints
Governance good ideas –
Proportionate Governance
• 44% of registered charities have income
below £10k
• No paid staff (i.e. managers)
• Trustees’ role: doing, managing or
governing?
• One size does not fit all!
• In practice, not a sharp division between
governance and management
• Principles not prescription!
• Tailor it to fit the organisation
Governance good ideas –
Relational Governance
• The banks had all the “right” committees,
policies and procedures in place; but
• Board members failed to:
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Really understand their role and functions
Give sufficient time
Ask the right questions
Understand the answers
Challenge and hold executives to account
Tailor governance to suit the organisation
(David Wilson, ICSA)
Good Governance – a code for the
voluntary and community sector
• By the sector, for the sector
• Joint project by Acevo, CTN/SCC, ICSA,
NCVO
• Supported by the Commission
• First published 2005
• Second edition (full and summary) - Oct 2010
• Version for smaller organisations – Nov 2011
Second Edition – what’s new?
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Shorter (26 pages)
Clearer principles
Emphasis on delivering the mission
Focus on “what” and “why” rather than “how”
Designed to be proportionate and adaptable
Focus on people as well as systems
The Code for smaller
organisations
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Mainly for organisations with no paid staff
Groups for smaller organisations wrote it
Same key principles
Simpler language
Jargon buster
Supporting activities and resources (more
help with ‘how’) – to follow!
The Code – summary (“small”
version)
An effective board will provide good governance
and leadership by:
1. Understanding their role - what they are responsible
for and what they have to do
2. Making sure the organisation does what it has been
set up to do
3. Working effectively as individuals and as a team
4. Exercising effective control
5. Behaving with integrity – showing their honesty and
having strong ethical principles
6. Being open and accountable
For each principle:
• The principle unpacked (what it means)
• Why do it?
• Supporting material
– Summary of key legal requirements (“you must”)
– Key examples of good practice – “important things
to consider”
Helping a charity to apply it
• “Do you understand the principles?”
• “What would they mean for your charity?”
• “Apply the principles and use relevant
examples of good practice”
• “What are you already good at? Well done!”
• “Where are the risks and weaknesses that
you need to work on? What actions will you
take?”
Challenges for the future… or the
present?
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Challenges to independence
Funding challenges
Competition, blurring of boundaries
Risk of mission drift
Litigation and liability
Crime/fraud targeted at charities
Accountancy and good
governance – you can help!
• Are there sufficient and appropriate financial controls?
• Is delegation effectively managed?
• Do trustees get adequate financial and management
information that they can understand?
• Are risks properly assessed, logged and managed?
• Are conflicts of interest properly dealt with?
• Do annual accounts/report comply with SORP?
• Do annual accounts/report give readers a true picture of
the charity?
• Are filing requirements being met? NB please file
accounts in time and online!
Where to find the Code
Copies of the Code, and other useful resources:
• www.charitycommission.gov.uk
• Acevo (www.acevo.org.uk)
• Charity Trustee Networks (www.trusteenet.org.uk)
• ICSA (www.icsa.org.uk)
• NCVO (www.ncvo-vol.org.uk)
The Code Group is developing its own website :
• www.goodgovernancecode.org.uk