Governance Challenges in Smaller Charities

Those interested in the topic of good governance in charities know how useful a tool the (excellent) Governance Code is for undertaking a health check of what’s going well, and what needs to be improved. But those working in small charities, and by that I’m talking about those with one or two members of staff, also know even the framework specifically adapted for smaller organisations can be daunting – and requires significant time and attention to work through. In this short blog, I want to highlight a few of the more common issues that smaller charities face, with some small pointers to how they might be addressed.

It’s a common feature that expertise often outstrips the capacity to deliver. By that, I mean that those involved in the charity often know what should be done, or what best practice is, but also lack the time to deliver it perfectly. This is a common feature when volunteer board members come from within the sector or have significant experience from other non-executive roles. This can be both a blessing and a curse. The frustration of knowing what is missing can create tension and in some cases lead to paralysis – not knowing where to start. In this case, it’s critical that the board agrees a formal action plan with clear prioritisation – accepting that it might have to aim to satifice (yes that’s a real word, I bet you’ll use it lots now you’ve looked it up) rather than to satisfy.

Another familiar challenge is the tendency to emulate larger, more complex charities, implementing structures and processes that are fit for purpose in organisations with more risk in their operation and more resources to support this. One of the best things about the sector is the willingness for organisations to collaborate and share work, but boards in smaller charities need to be mindful of whose work they are using to benchmark against. Best practice for one charity doesn’t always equate to best practice in another. It’s important that trustees are mindful of the principles behind good governance and then consider these in the context of their own organisation. This will yield the right result for the specific organisation.

A third common feature is more operational, where there is often a lack of induction or training process to help new trustees understand their role and what is expected of them. The Charity Commission is currently shifting tack, positioning itself as a much stronger regulator to rebuild some of the public trust lost by some of the high profile ‘scandals’ of the past five years. Part of this is a clear narrative that trustees need to be much more aware of their responsibilities, and much more prepared to use their powers when they see things go wrong. Most smaller charities look to address this by recruiting individuals with the right experience or knowledge in the first place – but time and time again we see that this isn’t enough. Knowledge fades and times change. It is important that organisations take this seriously, and build time to induct and refresh training for trustees on a cyclical basis – even if that means starting every board meeting with a discussion on a particular good governance issue.

Finally, the fourth challenge is one of those often termed ‘a nice problem to have’. For charities performing well and delivering impact for beneficiaries, it is sometimes difficult to find the time to fix issues that don’t seem immediately urgent. How many times have we heard the line ‘the governing document needs updating, but its not a priority right now’? It’s important that all charities, but particularly smaller ones, fix the roof when the sun is shining. Governance is a key determinant of success. But it is also a key guardian against complete failure. It stops the building from flooding when it rains. Investing time and resource in putting things right for when things go wrong, is the right thing to do, especially when things are going well.

No charity is perfect, and good governance is undoubtedly an aspirational concept: there is always more that can be done. Now more than ever it’s important to make sure you’ve got the basics in place, and for smaller charities, that might mean prioritising some (here comes that dreaded phrase) ‘back office’ work over something else. But that’s what being a trustee is all about: making strategic decisions in the long term interests of the organisation.