KnowledgeNET Blog

carmichael

In March of this year, the House of Lords in the UK published the Report ‘Stronger Charities for a Stronger Society’ following consideration of issues relating to sustaining the charity sector in the UK and the challenges of charity governance by the Select Committee on Charities.

The Report makes for very interesting reading and throughout its nearly 160 pages there is constant acknowledgement of the fundamental role charities play in civic life. We are reminded that charities are often in the front line of support for the most vulnerable people in society and are therefore in the best place to assess their needs. Charities not only provide, they inspire and innovate, and through their advocacy help shape laws, government policies and society as a whole.

The Report also acknowledges the importance of the work of the Charity Commission in supporting charities and welcomes its decision to refer to the Charity Governance Code (UK) as the benchmark for governance in the charity sector. Such endorsement can only help to encourage organisations to embrace the Code and the good governance standards it represents and would surely be welcome here in Ireland.

 

Training for Trustees

The Report makes 42 recommendations and I won’t have time to detail all of them here but the first 3 recommendations are in relation to the need for charities to regularly undertake skills audits of their boards to ensure trustees have the necessary capabilities to undertake their vital governance role. It is recommended that existing training opportunities within the sector are reviewed, shortcomings identified, action taken to address them and collated information be made available about training opportunities including a platform for learners to rate the value of training they have accessed. In Ireland, www.activelink.ie is probably the best centralised resource for identifying training and other opportunities for charities and other not-for-profit organisations. At Carmichael Centre we evaluate most of our scheduled and customised training events by asking attendees for feedback on the day, and twice a year we conduct surveys to assess the effectiveness of the training after attendees have had an opportunity to apply their learning within their organisation.

In line with our own Governance Code, the Report emphasises the need for proper induction processes for new Trustees in order that they can feel confident enough and well enough informed to provide strategic direction, oversight and challenge.

 

Board Diversity and Turnover

The Report acknowledges how challenging it can be for charities to recruit trustees with the necessary skill set to fulfil their duties and suggests more can be done to promote trusteeship and incentivise people to become trustees. People should be encouraged to see both the selfless, charitable value of trusteeship and the personal benefits in terms of skills and career development. Employers should be encouraged to give greater recognition to trustee roles in recruitment and progression of staff.

Furthermore, it is suggested that the Government hold consultations on the possibility of introducing a statutory duty on employers to allow employees of organisations over a certain size to take a limited amount of time off work to perform trustee roles.

In addition effort should be made to increase diversity so that boards have access to a wide range of skills, ages and backgrounds and the Charity Commission should lead by example in this regard.  In line with the Governance Code in Ireland, the Report suggests that there should be a time limit for people to serve as trustees in order to make way for new board members with new energy, enthusiasm, ideas and thinking.

 

Transparency, Accountability and Impact

The requirement for charities in Ireland to demonstrate transparency and accountability in how they are governed and managed has never been more important and this too is reflected in the House of Lords Report. A simple website or social media page is suggested for all, but the very smallest of charities, though I would suggest these as a minimum requirement no matter how small the organisation. Recommendation 10 in the Report suggests funders and donors evaluate the transparency of charities when considering requests for funding and Recommendation 11 suggests organisations include in their annual report the fact that they are compliant with the UK Governance Code or another Code relevant to their sector: not exactly an onerous level of transparency being suggested. I think a good website is a key requirement with as much information available to visitors including organisation’s mission, values and legal status, board membership, staff make-up, last annual report (including accounts) and current strategic plan.

Measuring outcomes and impact can be a challenge for charities as all too often the focus can be on outputs. In Recommendations 12-14 the Report emphasises the need for charities to acquire independent evaluation of their impact on their beneficiaries and for Government to pursue initiatives to better understand and promote the impact charities have.

 

Commissioning & Finance

In the Report ‘Let’s Commission for Communities’ (produced by The Community Foundation for Ireland, Clann Credo and The Wheel) the need for Government policy towards commissioning services to recognise and support the financial and non-financial societal value inherent in the community and voluntary approach is spelt out very clearly. It goes on to say that in order to sustain such societal value, statutory funding models need to take into account the full range of financial and non-financial benefits that different providers demonstrate in the way in which they propose to meet the particular service objectives being sought.

Similarly, ‘Stronger Charities for a Stronger Society’ recommends that Government provides support for the development of voluntary sector bidding consortia, and takes steps to promote commissioning based on impact and social value rather than simply on the lowest cost. Recommendation 18 states that the Government requires public sector commissioners to “account for” rather than merely “consider” social value.

We all understand that charities cannot operate unless their core costs are met and the Report recommends that public sector commissioners should be expected to have regard for the sustainability of the organisations which they commission to deliver services. This should include an expectation that realistic and justifiable core costs are included in contracts. It also goes on to acknowledge that tightly-prescribed contracts that dictate the process of delivery, rather than the desired outcome, can be  the  greatest  inhibitor  of  innovation and instead recommends that public sector commissioners refrain from setting overly-detailed requirements for the mechanisms of service delivery.

 

Fundraising

There is a recently established, separate Fundraising Regulator in the UK which is part funded by a ‘voluntary’ levy paid by charities who engage in fundraising. The amount payable is dependent on the amount of money charities spend on fundraising, not on income generated.

The Report recommends that awareness and availability of payroll giving be improved and advocates that Government should set an example in this regard by ensuring that payroll giving is offered to staff as standard in all Government departments and executive agencies.

 

Volunteers

Nearly 50,000 people serve on the boards of not-for-profit organisations in Ireland with many thousands more serving in other capacities within such organisations. The House of Lords Report acknowledges that charities are the primary conduits for volunteering and emphasises the need for charity law and policy to promote and support the role of volunteers. It makes the very important point that volunteers need managing, supporting and training and that investing in volunteers, where possible, is a way of respecting their contribution as well as increasing their value to the charity.

Recommendation 29 sets out the need for Government to allow people to incorporate volunteering into their lives with Government departments, the public sector and businesses encouraging greater flexibility for employees to take time off for charitable work.

 

Mergers

Rather than discourage people from setting up new charities as a way of avoiding duplication or overlap in the sector, ‘Stronger Charities for a Stronger Society’ suggests staff, trustees and volunteers should reflect upon the possibilities for mergers and consult with their beneficiaries where opportunities may exist. Mergers, it says, should not be seen as a sign of failure.

In Recommendation 31 it is suggested that the Charity Commission considers what support and guidance it can offer to charities seeking to merge, and provides signposts to help that may exist elsewhere. It recommends that the Commission include options for time-limited structures in the model governing documents that they produce for charities, as such clauses would prompt new charities to consider their lifespan from their inception.

 

Regulation of the Charity Sector

The Charities Act 2009 allows for the Charities Authority in Ireland to charge charitable organisations a fee of such amount as may be determined by the Minister for the purpose of defraying any expenses incurred in establishing or maintaining the Charities Register though as of now no such fee has been introduced. The House of Lords Report notes that resource pressures and the wider economic climate that have led the Charity Commission to consider charging charities an annual fee to be on the register and suggests that any charging model must ensure that the burden does not fall upon small charities which will not be able to afford it.

In conclusion ‘Stronger Charities for a Stronger Society’ commends the Charity Commission’s efforts to improve the effectiveness of its regulatory functions, particularly in the context of reduced resources but also calls on the Commission to be a source of support and guidance and not just regulation for the sector.

Good governance is fundamental to a strong charity sector here and in the UK. Charities need strong governance, with robust structures, processes and good behaviours, not only that they may deliver effectively for their beneficiaries but also to ensure that they enjoy the support and trust of the public as they do so.

 

Useful links:

House of Lords Report - Stronger Charities for a Stronger Society

www.carmichaelcentre.ie

https://www.charitiesregulatoryauthority.ie/

www.governancecode.ie

Add new comment

Featured Article

Alice Murphy

How to Establish a Company Limite...

Alice Murphy

ARTICLE ON HOW TO ESTABLISH A COMPANY LIMITED BY GUARANTEE The purpose of this article is to explore the relative advantages of a company limited by guarantee when compared with other...

News

carmichael

Our Chair Kevin Smyt...

09.02.2016

Watch our new video where our Chair Kevin Smyth, explains what goes into making a good Chair in...

carmichael

650 organisations on...

02.07.2015

http://www.governancecode.ie/news/article.php?article=includes/news/article_updatechairjul15.html