In delivering the conference’s keynote address, Philip Kirkpatrick discussed the increasing regulatory and reputational burden on charity trustees. He then proposed a new model of charity governance, where the core responsibility for running the charity sits with an executive board of senior staff, supported by a volunteer “assurance board”.
Here’s the full text of Philip’s speech:
“My themes today are that charity trusteeship is a benefit to society beyond measure; that society is in breach of the social contract for trusteeship; and that in this environment we need new operating models.
And I am going to propose one possible new model.
My views on this have been forged among the recent tribulations of large and complex charities, often operating nationally and internationally but I think my concerns apply more broadly.
For many charity trustees these views will not resonate and, actually, that would be a good thing.
Benefits of trusteeship
So, what are the benefits of trusteeship?
I don’t think I have to advocate too strongly in this room for that, although it is something I have advocated for 25 years as a lawyer practising in this field, as a member of a firm that is a partner in Trustees Unlimited alongside NCVO and Russam, and until recently as a member of the Trustees Unlimited board. And, of course, as a trustee myself.
For individuals, it brings personal growth and development; it helps build strong social bonds; it helps to develop a sense of self-worth and one’s value to society.
For society, trusteeship brings, free of charge, the skills, experience and commitment of people to help solve some of our most pressing needs.
It also brings these skills to fundamental aspects of our lives, without which we would not even recognise our own society – our schools, our hospitals, our churches, mosques, synagogues, gurdwaras and temples, our theatres and other cultural institutions, our sporting and other clubs, our village halls.
Trusteeship is the warp and weft of society’s tapestry.
What more can society ask?
Well, the answer, it seems, is ‘one hell of a lot’.
Breach of the social contract
Given what trusteeship delivers for society, you would think that there would be an annual public holiday to celebrate trustees or maybe medals given out like the Mėdaille de la Famille française, which is given in France to mothers of large families for their service to society.
Instead, we like to carp and criticise. We seem to enjoy feeling outraged. Whenever anything goes wrong in a charity, we freely criticise what the trustees did or did not do.
None of us was that ‘man in the arena’ described by Theodore Roosevelt, “whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes up short again and again…” and to whom the credit must be given. We are all just unforgiving spectators, none of whom could have done better and few of whom would even have tried.
And among the unforgivingly critical, you will find parliamentary committees the Charity Commission and the government, whom you might expect would have the backs of trustees who make mistakes while trying their best.
The problem with the current model
One reason I think trustees sometimes come up short is that they are often asked to perform a task that is too great in a manner that is too burdensome.
The Charities Act 2011 tells us that the charity trustees are the people ‘having the general control and management of the administration of a charity’. If you have ever genuinely had the general control and management of the administration of any institution, you will know that it is a pretty full-on job. But trustees are asked to undertake it part time.
When charities have staff, and I am really talking about those charities, we tell the trustees that they should not get involved in day-to-day management – but that they have to ensure that this management is undertaken properly.
How? How as part timers with a helicopter view of the charity do they get the assurance that they need? Where do they obtain it from when even a statutory audit does not now provide sufficient assurance?
Trustees feel overburdened by regulation; by a vast array of (admittedly very good) Charity Commission guidance that they feel they must be on top of; by the detail of what they now seem expected to know about the inner workings of their charities; and what they are expected to know about safeguarding, data protection, fundraising and many other issues.
This would be fine if our regulators, our government, parliamentarians, our press and, frankly, all of us, kept our part of the bargain in the social contract for trusteeship.
But we don’t. We tell trustees they are responsible if it all goes wrong and we make them carry the can when it does. We watch, often in self-righteous ignorance, while trustees are publicly vilified.
And we ask them to do it with no reward except their own satisfaction in having tried to do some good. We have collectively breached the social contract.
At the same time, we pretend that the people who are actually running the charity, the paid senior executives, are not in fact responsible – are not acting as trustees. That is dishonest.
A new model of governance
I think this governance model, in this regulatory and social environment, is unfair on trustees. And this set me thinking about what other models there might be. My suggestion is what I am calling ‘Assured Unitary Governance’.
It recognises that the people ‘having the general control and management of the administration of the charity’ are those who are actually running it – the senior staff, often with ‘director’ in their job title. It then calls those people the trustees.
Alongside those executive trustees there would be a non-executive chair, normally recruited externally, and another non-executive ‘senior independent trustee’. These would be much more closely engaged in the work of the charity than most trustees, taking on the significant responsibilities and time commitment that society now expects. They would be like the chair and non-executive directors of a large commercial company. They could also be paid but of course need not be.
Essentially, this would be a unitary board but one with more executives than non-executives on it.
What, I hear you ask, about the voluntary principle?
I could answer that the voluntary principle was a fundamental term of the social contract that has already been breached by society and that trustees are therefore entitled to repudiate the contract.
I could answer by asking you whether, if you were setting up a business to deliver anything as complex as the operations of many of our charities, and you wanted to do it in the best way possible, would your first though be, “Let’s get some volunteers to pop in every now and then and run it”?
But I am a believer in the voluntary principle. So, in the ‘assured unitary governance’ model, the thing that would give assurance and maintain the voluntary principle would be an entirely unpaid ‘assurance board’.
The members of this board would actually be, or be incorporated within, the membership of the charity. They would not be trustees and would not have trustee responsibilities. In large part, however, they would perform the functions that most trustees of large, complex charities currently perform:
- They would be deeply informed about the work of the charity through the provision of board papers and through observing the charity’s operations
- They would meet up to four times a year
- They would review and comment on strategy, policies and budgets
- They would provide support and guidance to the executive
- They would bring to that support the particular skills and experience they have
- And they would be chosen with care, just like trustees.
But, unlike charity trustees, they would not be the decision-makers.
They would, however, have some serious powers that would enable them to give to the public the necessary assurance while stopping short of turning them into trustees. Those powers would include:
- Appointing and removing the trustees
- Approving the remuneration of the executive trustees and any paid non-executive trustees
- Receiving annual reports and accounts
- Providing advice and support to the trustees
- Approving constitutional changes
So, under this model, those who currently run large, complex charities would continue to run them, but would have the added regulatory burden, as well as the authority and the regulatory certainty, of being charity trustees. Those people who do not actually run such charities on a day-to-day basis, but are currently being held to account for doing so as trustees, would be able to provide some of the oversight and assurance that the word ‘trustee’ signifies. But they would no longer be held to unreasonably high standards by regulators and the public in respect of a task that they cannot reasonably be expected to perform.
I make no claim that this model would lead to better-governed charities. What I do say is that it would be fair.
I’m interested to know what you think about it.
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of November 5, 2019.