17 April 2019
Good governance is a vital part of how charities and not-for-profit organisations operate and how they are held accountable for what they do. Trustees often delegate day-to-day activities to particular trustees (such as the chair), volunteers or staff, which can make it difficult at times to stay fully abreast of current issues.
For a board of trustees to provide good governance and leadership, it is important that they collectively and individually understand their roles and responsibilities, and how delegation can be a key part of this.
Part of a charity trustee’s role is setting and safeguarding the vision, strategy and reputation of the charity. A trustee should also be involved in overseeing the work of management and be available to support staff and volunteers, where applicable.
There are then the legal responsibilities which come with holding the position of trustee, and the need to safeguard the charity’s assets.
Structure
Charities should have a defined board with a named chairperson, secretary and treasurer, although it is important for all trustees to understand that they must always accept ultimate collective responsibility and that, in law, all board members are treated as being equally responsible. For example, all trustees share responsibility for finances, not just the treasurer, and a chair can only make decisions in accordance with any provision in the governing document or delegated authority agreed by the trustees, and should notify the other trustees of any decisions made.
Communication
A key method of communicating this collective responsibility to new trustees is via a thorough and effective induction process and document pack.
Any charity’s governing document should clearly set out the various responsibilities and duties of board members and the procedures that need to be followed for electing new members and arranging meetings. If your governing document is very old it is worth reviewing this and comparing against the Charity Commission’s model governing documents.
An induction pack could include, amongst other documents, the following:
- Copy of most recent financial statements
- Recent management accounts
- Governing document
- Copy of Charity Commission CC3 “The Essential Trustee: what you need to know”
- Policies and procedures, and terms of reference for board committees
- Mission or values statement
- Copy of Charity Commission Charity Governance Code
- List of current trustees and contact details.
Strategy
A further key part of the trustee’s role is to ensure delivery of the charity’s purpose. The board should regularly review the objectives to ensure these remain relevant and valid, and a long-term strategy should be agreed and developed.
Budgeting is an important consideration. Budgets should be set which deliver the charity’s aims within the constraints of in-year funding and prior reserves available, and spending against the budget should be monitored regularly at board meetings. During the year it may be appropriate to amend the plan and budget if circumstances change.
There are many other aspects to good governance, far too many to list here. UHY have helped numerous charities develop and improve their governance structure, so if you would like to discuss your own organisation please contact me or your nearest UHY charity sector expert.
Alternatively, you can read more about the services we provide to charities here.
