Calum Munro argues prudence shouldn't be dismissed as a Victorian concept in charity governance – trustees must ensure their charity is viable
Passion, commitment and innovation are all essential in creating benefit through the work of the third sector, but if charities are to be sustainable, some less exciting values are needed in their governance.
Ten years ago when I was interviewed for a job in the third sector I was asked to describe my operating philosophy for a charity. I characterised it as “the three Vs” – viability, value and visibility.
If a charity is not viable it cannot meet the need that it is designed to address
If it is not valued by service users it has no purpose for existence, and funders have to see the value of the work if they are to support it.
If it is not visible it will not attract beneficiaries and funders.
Kids Company was certainly visible – its founder and supporters ensured that. It was obviously valued by its beneficiaries, politicians and statutory services – each for their own reasons – but the question exists over the viability of its operational and funding model.
In the examinations of the collapse of Kids Company the key issue must be the role of the trustees – how they controlled the charity, approved its working model and secured its long term viability and how did they relate to the charismatic founder/chief executive and held her to account?
Because the trustees failed to take the hard decisions the charity no longer exists to work for any of these kids and families. There are employees who are out of work and may be short of money, and whose families may now be at risk of poverty. There will be suppliers who may have their future threatened, and their employees and families futures threatened because their bills will go unpaid.
Getting folk to be trustees is already not an easy task and the public collapse of the charity and the criticism – both justified and ill-informed – of its trustees will not help matters. But there is no benefit in avoiding the fundamental issue centred on governance. Being trustees of an organisation founded and led by a charismatic individual who embodies the life of the charity must be extremely challenging.
Alan Yentob was the chair of trustees of Kids Company for 18 years – a magnificent commitment as a volunteer to improving the lives of underprivileged children – but is that too long for a single chair to work alongside a founder and chief executive? Could he provide the necessary distance and realism that trustees must bring to the business of a charity after such a close and long association with the founder? No matter how hard it is to say it, there has to be a point at which trustees move on or over in their roles and fresh eyes secure the governance of the charity.
Being prudent is such a boring Victorian concept in a world where we want to get things done and be creative all the time
In the Charity Commission’s guidance trustees in England are directed to manage their charity’s resources responsibly.
It states: “You must act responsibly, reasonably and honestly. This is sometimes called the duty of prudence. Prudence is about exercising sound judgement. You and your co-trustees must: make sure the charity’s assets are only used to support or carry out its purposes; not take inappropriate risks with the charity’s assets or reputation; not over-commit the charity; take special care when investing or borrowing; comply with any restrictions on spending funds “
It appears that the main issue in the Kids Company collapse is the third bullet point “not over commit the charity”. This is the boring work of making sure that the charity survives to meet the need it was established to address – that it is viable.
If need exceeds resources trustees have the task of living within their means and leaving some need unaddressed. Or they can close the charity and pass its resources on to another organisation that can do the job. Pointing this out to the founder who is the chief executive, and who was utterly committed to young people in need, would have been an enormous challenge. But Yentob was supported by a board that included at least one hard headed and successful businessman who should have had sufficient business insight to bring realism – prudence – to the discussions of the charity’s operating model.
Being prudent is such a boring Victorian concept in a world where we want to get things done and be creative all the time. But, in fact, it means ensuring that trustees have addressed all their obligations to service users, staff and suppliers and secured the charity’s viability.
Calum Munro has volunteered in various roles in a range of organisations for forty years. He has recently retired from professional work in the third sector where for ten years he was a policy officer for a charity working for children and young people with additional support needs. Thirty three years ago he co-founded and continues to lead a fundraising charity supporting other charities working in the Highlands.
