Blogs/Vlogs

Are charity trustees up to the job?

18 January 2018

The Charity Commission has published the results of two recent surveys together with recommendations for improvements.

If you are the trustee of a charity you are one of about 700,000 people in England and Wales who carry out this function and, it appears, a member of a diminishing band, because previously the number was thought to be 850,000. The report, published in November, is entitled: 'Taken on Trust: The awareness and effectiveness of charity trustees in England and Wales'. It differentiates between two types of charity, the smaller charity with incoming resources of less than £100,000, and the larger charity. There are 134,000 of these smaller charities and they employ in total 35,000 paid workers and 116,000 volunteers.

As a typical trustee of a smaller charity you will be a white male aged 65-74 and you will spend just less than five hours per week working for your charity. There is a 24% chance that you sit on more than one charity’s board, in fact the average number of positions held per trustee is 1.35. Your motives for doing the job will mainly be that you have a personal interest in the aims of your charity but it is almost as likely that you have been asked to take the position because you were perceived as having the relevant skills. You might also have had a desire to give something back to society. In fact there is a 71% probability that you were appointed to the job through an informal network – only 5% of trustees are recruited through a formal open process.

Whilst not detracting from the value of the work done by unpaid trustees in the charity sector (estimated on a time-value basis as £35bn p.a.) the Commission nevertheless expresses anxiety about a number of issues:

  • a lack of diversity – many trustee boards do not truly represent the public they serve;
  • lack of technical support for trustees;
  • a large gap between the confidence that trustees have in their knowledge and their actual level of awareness of regulations and legislation; and
  • an acknowledgement by trustees that they lack relevant digital, fundraising, marketing and campaigning skills.

In fact 80% of small charities have trustees who exercise both a governance and executive role and have no staff or volunteers to advise them. This gives rise to concern because the survey also revealed that only 9% of trustees think training is very important. The main source of advice for most trustees is their peers, although a significant proportion also state that they use the Charity Commission as a resource. Furthermore, relatively few boards assess the effectiveness of trustees, only 12% have a formal induction, only a third have a job description, and very few have appraisals.

It was also found that only 24% of boards have the skills needed to safeguard against fraud, and only 40% have governance skills.

Recent events have prompted the Commission to look more carefully at the way trustees are recruited, trained and reviewed, in particular the collapse of Kid’s Company. It is also very conscious of public interest in the large amount of funds that were raised for the victims of the Manchester bombing and the Grenfell Tower disaster, and keen that such high-profile charitable activities are managed competently.

At the same time there has been a tightening of criteria around trustees’ responsibilities, especially the 'fit and proper person' requirement.  From 1 August 2018 changes to the rules mean there will be more restrictions on who can run a charity. New rules will preclude disqualified people from being able to act in some charity senior manager positions. Grounds for disqualification include being involved in a disputed tax-avoidance scheme or having previously been removed or disqualified from acting as a charity trustee by a charity regulator.

What action should charities take?

Charities will need to update their recruitment checks to avoid appointing or retaining disqualified individuals as trustees or into senior manager positions.

They should also take note of the many recommendations in the report, which include a campaign, supported by professional bodies including the Institute of Chartered Accountants, to promote:

  • awareness of the public benefits of trusteeship;
  • greater diversity within charity trustee boards; and
  • awareness of how the legal responsibilities of trustees can be effectively managed, and the benefits of appropriate trustee induction in this respect.

It is also recommended that:

  • a national register and regional registers of trustee vacancies be established and publicised widely;
  • a ‘more differentiated and granular’ approach be taken to the provision of advice and support to the charity sector, recognising the huge diversity in the scope and nature of its activities, and the consequent needs of its trustees:

There are many more recommendations and it is good to see our profession recognised as a source of support and advice and part of a movement for change. If we are to boil down the message to its essentials we can state that many trustees lack the skills and training required to run a charity, but most fail to recognise this, so there is a serious need to raise awareness and offer advice. We also see that the make-up of many trustee boards do not represent the communities they serve and that this problem is perpetuated by a lack of openness in recruitment procedures which tends to concentrate appointments within one particular sector of society. Click here to read the full list of recommendations.

If you acknowledge a skills gap in your charity board, there are many training and advisory resources available to you. The first step is to contact your usual UHY partner who will be able to put you in contact with your nearest UHY charity specialist.

Let's talk! Send an enquiry to your local UHY expert.