This article was originally published in Charity Times’ Trustee Guide and can be accessed here.
What does exceptional governance look like post-COVID?
Charity governance (the systems and values that underpin the decisions needed to run the organisation effectively) is central to the resilience of a charity at any time but will have been put to the test over the last 18 months. On top of the cancellation of fundraising events and the closure of venues on which charities rely for revenue, we are seeing the end of the various measures introduced by the government to protect businesses from insolvency. Many charities are facing increased demand for their services, whether as a result of the financial impact on households or of the effect of the pandemic on people’s physical and mental health.
Now is therefore a good time for charities to review their governance and consider whether it can be improved in the light of their recent experience.
There has been no shortage of commentary on this subject, but it was good to hear the CEO of the Charity Commission talk at its latest Annual Public Meeting about the importance of trustees keeping a focus on their charities’ purposes.
From a legal angle, charitable purposes are the definition of any charity and it is the job of trustees to further that purpose as effectively as they can. It is also a feature of charity law that these purposes should evolve in response to changes in the social and economic environment. Just as it is no longer appropriate for a charity to equip young people for working life by buying them blue breeches, many charities will now be reconsidering their purposes taking into account recent experiences.
The Charity Governance Code reminds trustees that they should “periodically review[s] the organisation’s charitable purposes, and the external environment in which it works, to make sure that the charity, and its purposes, stay relevant and valid”. It also directs them to watch the external environment and plan for sustainability.
But it is also important for trustees to reflect on their own effectiveness: are they still able to devote the time it takes to participate fully in the running of the charity, and does this now take more time than it used to?
We have seen many charities respond to the pandemic by holding more frequent meetings in order to be able to react to a rapidly changing environment. The challenges of online meetings were of course well illustrated by the famous recording of a Handforth Parish Council meeting earlier this year. Again, the Code sets out the expectations in this regard:
“The board regularly discusses its effectiveness and its ability to work together as a team, including individuals’ motivations and expectations about behaviours.”
Many trustees have acquired new digital skills that help them to run their charities in a world where face-to-face events have been rare. Some charities have seen significantly improved levels of participation in virtual members’ meetings. This sounds like good governance, but the pandemic may have widened the divide between those with access to the internet and those without; the moving of charity services online may cut across the principle of equality, diversity and inclusion which aims to reduce obstacles to participation.
One final point: trustees’ annual reports rarely dwell on things that have not gone well, but they should be open about the impact of COVID-19, not only to provide an explanation for the figures but also to help other charities and stakeholders to learn from the experience. The sharing of experiences across networks of charities and trustees has been a great source of support during the pandemic.
To summarise, exceptional governance will include:
- Focus on the charity’s purposes;
- Keep an eye on external factors;
- Monitor board effectiveness;
- Don’t exclude people as you adapt to a changed world; and
- Share your experience with others.