Divisions between charity trustees and executives need to end
Trustees are too scared of challenging charity executives, the chair of RNIB has claimed.
In a no-holds-barred critique of charity governance, Kevin Carey has called for radical changes to how charities are structured and regulated.
In an essay written for think tank New Philanthropy Capital, he said the sector needs brave, in-your-face, hard-headed governance.
Divisions between boards and senior staff are outdated said Carey. Instead, he said the sector needs more unitary boards that are made up of both senior executive staff and trustees.
He said: “Most charities don't fail because they lack a governance code, a risk register and a trustee handbook. They do so because of trustee cowardice.
“Assemble all the 360 degree appraisals, skills audits and Nolan Principles you like; they are redundant if nobody has the guts to say that the chief executive is useless, the deficit is structural or, more widely, that the emperor has no clothes - and if there is one paramount reason for trusteeship it is this last.”
Non-executive directors of private companies, Carey said, had “less leverage than poodles” but he claims the situation is “much worse” in the charity sector.
RNIB plans to apply to England's Charity Commission to creat a unitary board, having already “adopted unitary governance at a secondary level”. He said: “I think the default for the governance of major charities should be unitary.
"It helps avoid the farce of the executive team not telling and the non-executive board not knowing; the executive team doing all the crisis management and the non-executives turning up once a quarter to smile at a crisis averted or to pick up the pieces.”
Referring to the RNIB's recent merger with Action for Blind People, in which RNIB offered to “sacrifice its brand and very existence”, Carey says more charities should prioritise their beneficiaries when discussing mergers.
The default for the governance of major charities should be unitary
Trustees should be legally required to show good reason for rejecting merger proposals, similar to the way commercial boards act, he said.
Without such, the sector, particularly larger charities, faces a "long-term deterioration" as there is increasing opposition to their existence from politicians and the media.
In the lengthy article, published by New Philanthropy Capital, Carey also suggested the Charity Commission, the National Council for Voluntary Organisations and the Association of Chief Executives of Voluntary Organisations should be scrapped in favour of a self-regulatory regime for major charities, leaving smaller ones to operate under generic tax, civil and criminal law.
Patricia Armstrong, chief executive of Acosvo, said: "It’s really important that trustees understand that challenge is an essential part of their role but that it needs done in a constructive, supportive way that is in the best interest of the organisation and its purpose.
"It’s equally important that the executive sees this challenge as healthy and as a way to robustly test the organisations actions against its objectives.
"Studies show that trustees consistently rate their organisations effectiveness more highly than the executive do and the only way this can be tested is by exploring and questioning the information that is presented.
"Building a transparent, trusting relationship between trustees and executive (and especially CEO and chair) and ensuring a safe space for robust discussion goes a long way to ensuring healthy discussions around the board table.”
