Why charities shouldn't shudder at the thought of a governance review
In the wake of Kids Company’s closure, good governance is at the top of charity agendas, but what pitfalls should boards look out for?
If you had suggested a governance review to a chair of trustees at a charity this time last year, they would have most likely responded with something along the lines of, “Yes, good idea, we must have a look at that at some point in the future.”
Things feel rather different now. The sad and very public demise of Kids Company has been followed with a flurry of post-mortems from sector worthies and tabloid columnists alike – most of which have pointed to a perceived weakness in the charity’s governance. People who sit on, or work with, boards have reported an almost universal sentiment at their latest meetings, with questions like “Could that happen to us, as well? Are we, as a board, getting it right?”
So if good governance is suddenly top of your to do list how do we go about getting it right? Here are three governance red flags to watch out for.
1.You’re always saying yes
A good chair of trustees will assess the risks of adopting new technology.
We all need a cheerleader in our lives at some point and if anyone deserves one, it is the charity chief executive. Under pressure from cuts to funding and rising demand, our trusty chief executive needs to feel like the board’s chair is in their corner. However a good chair will achieve the right mix of support and challenge, and won’t be afraid to ask difficult and probing questions when the situation demands.
Imagine a chief executive is proposing, for instance, that the charity needs to invest heavily in a new technology platform that will underpin a different way of working with beneficiaries. A good chair and board will ask, “What are all the implications of this? What risks will we face by taking up new technology? Have you got what you need to make this work in practice?” By acting as a critical friend to the chief executive, the chair will ensure the thinking behind big decisions is robust enough to determine a successful outcome.
2.You’re sweating the small stuff
Ever heard of the Parkinson’s Law of Triviality or the Colour of the Bike Shed Phenomenon? This law states the time spent on any agenda item will be in inverse proportion to its cost and importance, on the basis that smaller matters are less intimidating to deal with than complex ones. Most boards slip into this mode at times despite the fact the board exists to address those 'do or die' issues that are central to the success of the charity.
One way to avoid this is by taking a firm grasp on the agenda. Every item contending for board attention should face the following questions
- Is this a governance issue (as opposed to a management issue)?
- Does it have policy or strategy implications?
- Is it a priority for board time?
A further governance tool useful here is to organise your agenda items using four categories : for information; for approval; for discussion; for decision.
3. You’re looking inwards rather than preparing for new challenges
Avoiding questions like about how well the charity is achieving its mission is no good.
An effective board makes time and space to help the charity come up for air and thinks about the future as well as the now. The board needs time to work with the chief executive on making sense of these, in order that the charity can stay three steps ahead.
An away day is a tried and tested way of creating space for the board to remove themselves from day-to-day governance concerns and tackle some of the more fundamental questions that it is hard to get air time for in the normal board meetings. Questions like, “What policy changes are going to impact us in the next three years? What can we learn from last year’s work? Which direction are other charities in our space moving in? Are we still doing what we say we will, in terms of our mission?” Getting in an external facilitator to lead the day frees up the chief executive and senior staff, allowing them to focus on contributing to, rather than running, the meeting.
In summary, successful boards ask powerful questions, cheer and challenge in equal measure, and use their insight to think about the big picture for the future. Does that sound like your board? If not, now might just be the perfect opportunity to change that and begin that long-put off governance review.