Common Governance Mistakes
Our Charities Team kickstarted their ‘Good Governance Series’ on 25 October 2023 with a session on common governance pitfalls and how to avoid them. The session was led by Gerry Morrison and Harriet Wheeldon and covered a range of issues, a few of which are discussed below.
Trustees do not understand their role and how to discharge their legal duties
It is important that the charity has clear goals with regard to trustee recruitment and that the board spend a proper amount of time in ensuring that suitable trustees are recruited, who are passionate about the charity’s mission. An accurate description of the role will help to manage everybody’s expectations. The board of trustees is a team and needs to exercise efficient teamwork by knowing and using each individual’s skills, experience, knowledge and background to its maximum potential.
An induction will be invaluable in supporting the new trustee and confirming that they are on board with the charity’s aims, how these are delivered and by whom. This may also be an appropriate time to highlight their legal responsibilities and the charity’s key policies and procedures.
Trustees should be advised of the importance of attending trustees’ meetings so that they can remain up to speed with the direction of the charity, and the board should have continuous awareness of training needs.
Trustees do not provide effective oversight and appropriate challenge
Trustees should have an active role in the decision making of the charity, including attending, contributing and voting at meetings. Whilst the board will stand behind collective decisions, alternative views should still be respected.
Regular reports should be made to trustees on matters of importance which may take place between meetings. Prior to meetings, it is useful if an agenda is circulated so that trustees can adequately prepare for the meeting and make a meaningful contribution at the meeting.
Committees can be useful for the board to delegate to specific individuals and to encourage those people to have the right conversations, however, it should be reported to the board who is responsible for any specific area to make sure that other trustees can hold them to account.
Out of date, inconsistent and unclear governing documents
Charities should have a periodic review of their Constitution, Articles of Association and/or Rules. This helps to ensure that the documents are up to date and properly reflect how the charity operates, which in turn makes it easier for trustees to act in accordance with the governing document.
As trustees naturally come and go, it is important to ensure that the governing document is not limiting any current board’s ability to convene meetings and take decisions.
The board of trustees should be clear about the charity’s aims and make sure that these are being delivered effectively and sustainably; the trustees should share an understanding of and commitment to the charity’s purposes and be able to communicate these clearly.
Funding and finance
A charity’s financial information should be presented to the board in an accessible way so that the trustees can make an informed decision on whether the charity is making the best and most effective use of its assets and resources.
Part two of the series will take place at our Hull office on 21 February 2024 and will cover effective decision making, holding productive meetings and the role of the Chair.
Book your place here