Governance, governance, governance

Posted on January 25, 2016 by Karl Wilding
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Fundraising, fundraising, fundraising

Another day, and another set of grim headlines for charities to wake up to.

A cross-party group of MPs has published their report into what happened during a series of fundraising scandals last summer. The Public Administration and Constitutional Affairs Committee’s (PACAC) report says that while most charities did not engage in such practices (a point reinforced by many NCVO members), the behaviour of some charities has damaged the reputation of all. It says that ‘charitable ends can never justify uncharitable means’ and concludes that self-regulation must be made to work otherwise the sector should be forced to submit to statutory regulation.

The report itself will be uncomfortable reading for anyone connected with a charity. Just seeing some of these words in black and white is upsetting for anyone who believes in charities and knows first-hand the difference we can make. No-one, least of all charities, would want to be associated with the ‘exploitative and unethical’ practices exposed. However this report – along with the Etherington review before it – marks an important turning point for the sector, as undoubtedly understanding the problem is key to fixing it.

There are, of course, some reassuring messages to take away. The committee has ‘no doubt that most of the charities in the UK do not engage in the practices outlined above’ . They also recognise the changes set in train by the recent Etherington report into fundraising self-regulation are broadly in the right direction, specifically the establishment of a new Fundraising Regulator.

However this does not mean that the sector (and its leadership) can afford to rest on our laurels – the report is unequivocal about a number of other issues. This is the ‘last chance’ for self-regulation of charity fundraising and the responsibility for ensuring better behaviour lies with the trustees of charities, not the regulator itself. As the Etherington review noted, trustees are the first line of defence when it comes to getting things right.

Are problems in fundraising indicative of a bigger problem: governance?

More than anyone else, trustees have been singled out by PACAC for failures in fundraising.

The exam question set by PACAC’s report – and one which the sector has been wrestling with for some time – is not how do we sort out fundraising but how do we ensure that our governance is as robust and effective as it should be. The report suggests that no system of regulation can substitute for effective governance by trustees. It rightly highlights that this requires a change of attitude and behaviour from trustees.

What’s more, PACAC will return to the issue imminently when they report on Kids Company, where failures of governance are especially apparent. While not indicative of charities more broadly, there is clearly likely to be a narrative that they were.

Reassurances that everything is OK are neither likely to convince the press nor act as a wake up call to ourselves. And let’s be clear here: in a sector where some trustees are surprised to find out that they are in fact trustees, with legal responsibilities, there is clearly work to do. With a growing assortment of scrutineers not only in parliament but in the media and the blogosphere, charities have to manage the risk of poor or inadequate governance.

Where next?

There is now a head of steam building behind the implementation of the Etherington review. The new fundraising regulator has been established and working groups are looking at specific issues such as the Fundraising Preference Service (which PACAC did not endorse). Meanwhile, the Charity Commission is consulting on revised guidance for trustees and fundraising.

Addressing long standing challenges in the governance sphere are however more difficult, particularly as many challenges fall under the heading of cultural and behavioural change. We certainly don’t know all the answers. And, in the absence of large scale funded programmes such as ChangeUp (which were roundly criticised anyway) or BASIS, it’s not immediately apparent where the resource for any large scale programme will come from.

That doesn’t mean we shouldn’t try. NCVO will be working closely with the Charity Commission as it looks to strengthen guidance for trustees. We will continue to invest in trustee training and providing a range of resources to help trustees carry out their duties, including the widely used Knowhow Nonprofit Governance pages and Studyzone video courses.

At the risk of sounding stupid, I can’t help but think that it’s time for some fresh thinking and new debate about how we do charity governance in the UK. It would be worth debating – though perhaps not killing – some sacred cows such as payment of trustees. The forum for this might be the cross-sector working group that stewards the Good Governance Code for the Voluntary Sector. And we should look at models and ideas from other countries – the ideas at www.boardlearning.org are a good example.

Finally, this is a problem. A chronic problem, even. But it is not a crisis. Many charities continue to be well governed. Many actively manage their governance process. And it’s no accident that NCVO’s bestselling publication (by far) is the Good Trustee Guide. But there is clearly a debate to be had and work to be done as charity governance will dominate the headlines for much of this year I reckon.

 

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Karl Wilding Karl Wilding served as NCVO's chief executive from September 2019 to February 2021.
All blog posts by Karl Wilding

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