Where spending on your board can add value
Your trustees may be volunteers, but that doesn't mean they should be amateurs
By Penny Wilson
A few months ago, I wrote an article talking about the need to invest in trustee recruitment. In it, I touched briefly on other areas where it might be useful to spend money on your governance function. This time, I want to look in more detail at some areas where investment in governance could generate benefits for your charity.
Governance is a skill, and an important one. It’s not a skill that we tend to learn in our day jobs, though. So your trustees will come to your board with very varying levels of ability. They are very likely to lack confidence in their first few meetings and will not be sure about how much they can contribute. So it’s sensible to make sure they’re fully trained in the essential skill of governance.
Training could involve understanding the legal requirements for trustees. It could involve understanding constructive and effective board behaviours, or it could involve the key aspects of how charities operate and fund themselves.
Some of this needs to be done externally. Some can be internal. Some can be part of the induction process for new trustees, which is essential if you want to have strong governance. It is likely to be worth offering guidance on the key elements of your funding and delivery models as part of an induction. Trustees cannot effectively set strategy or provide scrutiny – arguably their two most important functions – if they do not understand your processes.
If possible, it’s also valuable for trustees to get the chance to shadow staff in their natural environment as part of their induction and really understand what happens day to day.
One major problem with governance is the hourglass effect, whereby all information is channelled through the chief executive and other senior staff, if you have them – the very people whose performance the board is supposed to scrutinise. The board is starved of impartial information and any board requirement takes up senior management time. Many of us have seen how much senior management time before a board meeting gets absorbed in producing papers and planning presentations.
At a minimum, the board needs to be able to access key performance indicator data independently, without having to pester staff every time or rely on a brain dump once a quarter.
Most boards neither want nor receive payment for their time. But it also seems entirely reasonable that working as a trustee for a charity should not cost money, either in travel costs or lost earnings.
This is especially important to think about because trustees can have very different financial situations and can understandably be very reluctant to discuss that fact. If you have board members who are well off, and others who aren’t, and this affects their ability to contribute, this can lead to very difficult board dynamics. Board members will be quietly unhappy and say nothing, a classic example of an endemic phenomenon that Ruth Lesirge of the Association of Chairs calls "dysfunctional politeness".
Most trustees are retired in the current world of charities or have comfortable white-collar jobs where they can wangle time off work if they need. But trusteeship shouldn’t be designed as if we want this to continue to be the norm.
One answer is to make it clear that accurate expenses are required and insist on actually compensating everyone, whether they like it or not. Then make it clear they can give you the money back if they really don’t want it. This has the added advantage that, if they do make a gift back, you can claim Gift Aid, so you might even end up better off. Check the HM Revenue & Customs guidance on this, but essentially if the money actually leaves the charity’s bank account, and is then returned by the trustee, it’s deemed a qualifying gift, whereas if the trustee simply waives the expenses, that doesn’t count.
Why don’t charities spend this money?
I think there are four reasons why charities don’t spend money on governance. First, many charities have boards just because they have to and have never really thought about why they have them. Second, because boards are unpaid, and too often this means we think they should be free. Third, because we often can’t easily see the impact that comes from spending money on governance, so we think there isn’t any benefit.
Fourth, of course, is that some charities don’t have any money. They will need to be more creative about bringing new trustees up to speed. They also have the most to gain by equipping new trustees in this way.
What you do need to think about is what you want from a board. And you need to accept that investment in getting it will be worthwhile. Because while we can’t always see the benefits of good governance, it’s dead easy to see the costs of bad governance. Just ask Kids Company.
So invest resources in your board. Your trustees might be volunteers, but that doesn’t mean they should be amateurs.
This article originally appeared in Third Sector: https://www.thirdsector.co.uk/