Posted by Deanna Hurst, Partner
Who’s actually running your charity – governance
When setting up your charity, it’s important to have confidence in the charity trustees (who may be called directors if you opt for an incorporated structure*) that you appoint or wish to appoint to your charity. They will need to appreciate the importance of accountability and transparency in their role.
If your charity is already established, the question of ‘who is actually running your charity?’ is just as important in making sure you remain satisfied in the appointment or new appointments to your board of trustees. Such decisions are usually made with a view to the long term (as they should be) and will be tested during a charity’s ups and downs.
It’s essential that not only is the board well qualified, but also that the senior management team and head of the charity are too. This team will be responsible for collectively ensuring the charity’s policies and protocols are relevant and carried out at all levels – and that the charity’s objectives are being fulfilled. As can be seen in the example below, a fine balance needs to be found in carrying out this role.
Kids Company, a large, national charity closed down last summer following public criticism relating to significant mismanagement. Damaging criminal allegations were made alongside reports of a lack of clarity over how charitable money was being used (such as whether conditions attached to gifts were being satisfied).
This case highlights the importance of the role of trustees and the need for them to take an active interest. While they will not usually be involved with the charity on a day-to-day basis they must make sure they have a good relationship with the management team and be ready to ask difficult questions when necessary.
With Kids Company, one of the problems was that the trustees were too remote from the running of the charity and failed to take any responsibility. If a trustee’s duties are not properly carried out then, at times of crisis, holding appropriate people to account together with identifying and dealing with any issues can be difficult.
Difficulties can also arise where a Chief Executive of the charity is too reliant on the trustees and doesn’t have total ownership of the day-to-day running and management of the charity or where the trustees interfere too much with the operational side of things.
There is a fine balancing act and getting the right advice from the outset can avoid many of these obstacles as well as recognising the need for when it is right to seek further advice along the way.
*Please note that charity directors are often referred to as trustees.
If you are setting up a charity our specialist charities team can advise on charity governance, the trustees’ duties and what to consider when selecting appropriate trustees. Contact our team
0800 923 2077 Email us
Invaluable insight into the charity sector