Charities Need To Be Courageous

For more than a year the charity sector has been subject to a number of less than positive media stories. Campaigning, fundraising practices, executive pay and closures have all been centre stage with many commentators linking them to a general failure of governance in the sector. The ongoing saga around the demise, of Kids Company continues to raise questions about the quality and appropriateness of the governance model in the sector. Rightly or wrongly, there is a growing feeling that charity governance is no longer fit for purpose. Trustees' Week 2015 brought the opportunity to engage in constructive debate.

Some of the many accusations levelled at the sector's understanding and implementation of good governance principles are:

The term governance is frequently misunderstood and misapplied Limited use of the unitary board adds to the governance challenge The approach to board positions must move from amateur to professional Inappropriate and haphazard methods are used to recruit trustees, as opposed to skills and evidence-based approaches There is a lack of formal appraisal for boards collectively and individual trustees Too many charities are fishing in too small a talent pool ICSA brought charity sector governance professionals together for a roundtable event to address these issues and key points emerged from the frank and constructive discussion.

'The elements of good governance in the sector are fine: it is their understanding and application that is not working'

Given the charity sector in England and Wales covers over 160,000 registered charities, it is unsurprising that some charities have better governance arrangements than others. There was no overwhelming feeling that the sectors' governance arrangements were no longer fit for purpose. However, trying to apply one version of governance to such a diverse sector is inappropriate and unhelpful.

We do not expect the UK Corporate Governance Code to be implemented wholescale to non-listed companies or small and medium sized businesses - some aspects just aren't appropriate, proportionate or necessary. In the corporate sector many investors prefer companies to explain rather than comply with every aspect of the code - this speaks to clear and qualitative thinking rather than just ticking boxes. Charities should also consider a comply or explain approach - follow Good...

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