Charities play a fundamental role in British society, often referred to as the third sector. Their effectiveness hinges on fair and effective governance, which is where trustees come into play.
Trustees are uniquely positioned to fulfill six main duties, as outlined in the Charity Commission’s guidance CC3a:
- Ensure the charity is carrying out its purposes for the public benefit
- Comply with the charity’s governing document and the law
- Act in the charity’s best interests
- Manage the charity’s resources responsibly
- Act with reasonable care and skill
- Ensure the charity is accountable.
These duties may seem straightforward in theory, but recent high-profile investigations remind us how easily governance can falter in practice.
The case of Sentebale
It's no secret that the Charity Commission is currently investigating whether Sentebale's “current and former trustees, including its chair, have fulfilled their duties and responsibilities under charity law.” This investigation highlights several pertinent issues that are relevant to all charities.
Board governance – Who do trustees serve?
Trustees have a duty to act in the charity's best interest, which can only arise if they are able to act independently without undue influence.
Allegedly, Sentebale chairwoman Dr. Sophie Chandauka undertook a finance review and noted a loss of funding from corporate sponsors, families and individuals, which corresponded to Prince Harry's departure from the UK. There was no mention of this in the review of the board minutes, and when the board was questioned about the lack of discussion surrounding this, it was said that this was not raised as it’s an uncomfortable conversation to be held in Prince Harry’s presence.
Typically, the risk register would inherently note reputational risk, as Sentebale was co-founded in 2006 by a high-profile individual, Prince Harry, and therefore have processes in place to mitigate this.
The risk register would also typically contain risks around funding or loss of corporate sponsors or key individuals, but allegedly, these were not noted as risks.
This lack of independent operation to support charitable objectives and the organisation's interests can create dysfunction if trustees serve external parties above the charity's interests.
Board attendance and trustee term limits
Effective governance also depends on consistent trustee engagement.
In the case of Sentebale, it was alleged that one of the trustees had irregular attendance and so was unable to observe trends over time. It was also alleged that some Sentebale trustees had been on the board for more than nine years. While there is no regulatory requirement in place, the charity governance code recommends a maximum of nine years, with a review for longer terms, to ensure the board remains dynamic and effective.
Trustee appointments and agenda setting
Trustee selection should be in line with the charity's governance document. Where trustee appointments are made, it should be to create a balanced and effective board.
An alleged concern with Sentebale was the introduction of off-agenda topics during board meetings. While flexibility is important, consistent and well-structured agendas help boards stay focused and responsive to the charity’s most pressing issues.
In another alleged instance, Prince Harry appointed an individual to serve as a trustee on the board with immediate effect. Due process must be undertaken for trustee appointments to avoid a dysfunctional board, which can then negatively impact the charity's strategic direction. Carefully curated agendas should be crafted to ensure that the board is able to discuss pertinent issues in a timely manner.
Charities change over time
Sentebale's founding mission was to help people living with HIV and AIDS in southern Africa. Today, their mission has broadened to “create sustainable solutions that address issues of health, wealth inequity, and climate resilience in Lesotho and Botswana.”
Like all charities, missions will naturally evolve, and so too must the structure. For the charity's mission and structure to fulfil its ambitions, it must have a board that is able to operate effectively, direct independently and serve the charity first.
In summary
Effective charity governance requires more than just good intentions. It demands that trustees act independently, responsibly and transparently, ensuring the charity's mission is upheld and its reputation protected.
The next step
If you have any enquiries regarding the above, please contact Zaynab Aswat or your usual UHY charity adviser.
