Preparing charity trustees to meet the challenges of their role
The British public is very charitable, with the latest Charities Aid Foundation report showing Britons donate over £10 billion a year. But that generosity is dependent on the belief that funds raised by charities will go to good use.
As in business, if a charity wastes money, or behaves badly in some other way – it sadly damages the reputation of the whole sector. This hurts the recipients of charity and those admirable people who give their time to help vulnerable members of society and other causes. Unfortunately, the charity sector has had its fair share of bad press in recent months.
Failures of charity governance were exposed earlier this year when the scandals around fundraising were brought to the public’s attention following the Daily Mail’s expose of alleged unethical practices. The undercover reporter claimed charities were targeting the elderly and vulnerable people in order to raise money for their causes.
The scandals triggered a parliamentary review into the unethical practices employed in fundraising activities. It found that a number of charities that gave evidence needed to re-examine their governance and that lessons should be learnt from this difficult period. Crucially, it re-affirmed that trustees are ultimately responsible for every aspect of their charity’s activity, including fundraising.
I certainly sympathise with this predicament. As Director General of the Institute of Directors, an organisation which is an enthusiast champion of UK business, I have seen a fair share of backlash against corporate scandals in the past few years. Two of Britain’s best-known high street brands, BHS and Sports Direct, have been subject to detailed parliamentary inquiries in recent months, leading to reports which heavily criticised their management and boards. Ultimately, the failures link back to poor oversight and corporate governance.
We have to accept that in both business and the charitable sector things sometimes go wrong. But in order to reassure the public and rebuild confidence we need to ensure that trustees are taking responsibility for every aspect of their charities activities. Ultimately whether, in business or charity work, good governance is about holding leadership to account and guarding long-term interests, including financial instability.
I have no doubt that charities play a crucial role in ensuring not only a functional but also successful society. At a time when public dissatisfaction with both charities and business is at a high, it is imperative that ethical dilemmas are examined with greater awareness of best practice and governance responsibilities. The skills, knowledge and experience required of trustees are particularly important.
When someone volunteers to join the board of trustees of the charity, they take on a level of accountability that many don’t expect. It’s crucial to understand the relationship between a trustee and the executive management, regulators, beneficiaries and members of the charity. Shortly after joining the IoD I sadly had to resign a trustee position because the extra responsibility was more than I could take on in good faith. Trustees must go into the position with the eyes open, and judge honestly whether they have the time, skills and knowledge to perform the role.
Indeed, if they feel inadequately equipped to be an effective trustee, they should consider trustee-specific training, just as company directors would. Everybody needs benchmarks against which to judge their skills, and as I found, getting professional guidance on what is expected is always helpful.
I have made comparisons between company directors and trustees, but ultimately the greatest difference is pay. Company directors are paid based on the requirements of the job, with non-executives at large companies taking home handsome fees. By contrast, the one million charity trustees in England and Wales are mostly unpaid volunteers, dedicating their time and expertise at no cost. In recent years, some have suggested that remuneration would help trustees to take the role more seriously, boost recruitment and help to create more diverse boards, including experience. I do not expect that this will become the norm – most trustees have no desire to take money from their charity. But whether you are paid or not, the most important thing is to ensure trustees understand and are prepared to meet the challenges of the role.
Simon Walker, Director General at the Institute of Directors
Download the practical handbook, ‘Trustees and Fundraising: Practical Handbook to Fundraising Governance’, developed in partnership with NCVO, CFG and ACEVO and access a range of resources