I was recently discussing the challenges of charity governance with a colleague and a quote from Spider-Man’s Uncle Ben came to mind (I may not be the first person you’d associate with Marvel Heroes, but I do love a great quote). He said: ‘With great power comes great responsibility.’ I wondered – are power and responsibility really found in the same place in charities, and if so, is this a problem?
Our discussion covered common governance themes; paying trustees and unitary boards. In both cases, these proposals felt a bit like answers in search of a question. It made me wonder exactly what problem we were trying to solve and why charities have the governance structure they do.
Governance in charities grew out of trust law over many centuries. Our first charities emerged from wealthy and privileged individuals and establishments providing for the poor and needy. It was less about partnership and more about paternalism – and this extended to governance. Trustees decided and ‘staff’ executed their wishes. We’ve never really stopped and asked whether we would do it like this if we started again.
For a very long time, charities of all sizes have had boards of trustees with ultimate responsibility for everything, and in recent years – even as people have been growing ever busier – we’ve piled more and more responsibility on their shoulders.
Whilst some charities may struggle to recruit trustees, there are still large numbers of people willing to hold the position. But we have to ask ourselves whether great power really comes with great responsibility, or if it’s more accurate to say that actually great responsibility doesn’t always come with the power.
Is our current governance approach fit for purpose? Is it useful or appropriate for the board to carry the can for every action rather than the executive? Boards dip into an organisation circa four times a year and trustees’ knowledge may be limited by what is put in front of them by the executive. They risk being held responsible for things they had no idea about. Have we spent enough time thinking about what governance is actually for, and what we want to get out of it?
Julia Unwin wrote about the five modes of governance: strategy, scrutiny, support, stretch and stewardship. Great governance gives you all of these – remove any one and a charity can become dysfunctional. Does the weight of ultimate responsibility for everything undermine a board’s ability to deliver on all five? After all, it can be difficult to make the right long-term decisions, be supportive and stretch the performance of your charity if you’re liable when the proverbial hits the fan.
Further, do we really want the same mode of governance at every charity? Do permanent endowments need the same governance as those which provide public service delivery? Do the tiniest charities need the same board structures as the largest?
My point is not that I have the answers, but more that we need to give them, as a sector, the consideration they deserve. Rather than saying ‘we need to pay trustees’ or ‘we need unitary boards’, it might be more fruitful to stand back a little further and ask what we want out of governance. If you were starting with a blank sheet what would you design for modern charity?
For me the answer to the first part is; well-run charities who balance risk and ambition – always acting in the public interest and always putting beneficiaries at the heart of what they do. For the second question, the answer will be very different for different parts of the sector, and this may mean some redesigning and investment in change. To not do so would be false economy. Few things are as expensive as bad governance.
Let’s not get side tracked by whether trustees should be paid or whether staff should sit on boards and instead, let’s ask: what governance structures do charities need to ensure those with the great power also have the great responsibility so together we can deliver great change?
Caron Bradshaw is the chief executive of Charity Finance Group (CFG).