Zac Parsons
Hello everyone, and welcome to Charity Professional Development Community’s 20 minute webinars. Today, we are very pleased to say that we are joined by Ruth Dwight. Ruth is a strategy and governance consultant with 20 years’ experience in the charity sector, including director roles at Coram Family & Childcare and Young Citizens. Ruth is also a trustee and has an MSc in Voluntary Sector Management with a Distinction no less from City University. So Ruth, I shall hand over to you.

Ruth Dwight
Thanks very much, Zac. And it’s lovely to be here. Thanks for inviting me. And I’ll just quickly put my slides up. So today’s session is all about what governance is and why it’s important. And it can feel sometimes like a bit of a dry subject.

So, what I want to explain to you today and talk to you a bit about is what it is, what it isn’t, and what kind of a difference it can make and provide you with some tips, some top tips about how to make it really work for your organisation. So that’s what we’re going to do by the end of by the end of this session. But just to start with a little bit of a bit of a definition about what it is. And it sort of depends on what kind of organisation you are working in. So a kind of corporate definition, might say something like “governance is a framework for managing organisations and identify who can make decisions, who has the authority to act on behalf of the organisation, and who’s accountable for how an organisation might behave and perform”. But that’s quite corporate in its nature.

So how does that apply to the charity sector? Well, actually, it can be more about how an organisation is being led, and the direction it’s aiming to and getting everyone on the same bus getting that kind of clarity of direction, ensuring that the vision of what the organisation wants to achieve is shared, and being able to manage that organisation, oversee that organisation in broad terms, and that’s a really important term, a really important point, that kind of broad terms.

So it’s useful, I think, to see governance with sort of three cornerstones. And those three, being around resources, around the money, often the bit where a lot of boards, spend their time in meetings, looking at accounts, looking at budgets, etc, critiquing how much money is being spent, or how much money is being brought in.

But additionally, it’s really important that trustees and that governance also looks at strategy at what it is that an organisation is aiming to do and how it’s going to get there. So, thinking about how a board might think more about about that, considering potentially taking a big issue, you know, a sort of big ticket item that an organisation is trying to trying to achieve. And looking at that within a board meeting, putting that onto the agenda, giving space to talk about strategy, and giving space to assess and monitor how an organisation is achieving according to its strategic goals.

And thirdly, really, really important to be considering, are we actually doing what we’re aiming to do? What kind of impact are we actually having on our beneficiaries, on the people that we really want to make a difference to?

So it’s useful question, really to think: where does your board focus its time whether you’re a trustee, whether you’re someone working within an organisation. And, if it’s mainly on the on the money, which obviously is really critical, particularly at the moment, then, is there space, how can you make space for trustees, for the board, to think more about how it intends to achieve its goals, and whether it’s actually making the impact that it wants to achieve?

So, governance can often be confused with management, the lines in between are quite grey can be quite blurry. And so wanted to give a little bit of clarity between the two. This is a really useful distinction, I think, comes from Mike Hudson, who writes a great book called Managing Without Profit. And really the sort of differences that you want to consider are fact that governance should really be thinking about the board doing that, and management should be things that the staff are doing, of course, in lots of different organisations, with lots of different sizes, it is not as simple as that. In some organisations, there might not be any staff or there might only be a couple of staff and so often, the board have to get a little bit more involved. Sometimes, there are people on the board who have great amount have expertise. So they might be in a really good position to be able to support a more operational level.

But really important to think, whatever roles you have to play, if you have to put both hats on that you know at the time what hat you’re wearing, and therefore, what your goal should be what your drivers should be. So, going through this, it’s really important that there is a mission and a strategy within an organisation. So it’s the board’s responsibility to determine that, and agree that, and set it, and then to delegate that onto the staff to be able to continue to develop it and implement it. So that’s quite a nice clear one.

In terms of the values of the organisation it’s actually really important that the board and the staff are behaving in a way that is according to their values, quite often, that’s something that is stuck within the staff, so it’s important that the board is involved in establishing those and setting those, but that they uphold them as well.

Within stakeholders, it’s really important that management are communicating with the stakeholders, but the board might come out to represent the organisation, the board might also be representative of the stakeholders within within the organisation.

Within the resources that an organisation will need, the management are going to be raising those, but it’s within the board’s responsibility to ensure that the organisation continues to be viable continues to be a going concern.

So there’s a good balance to strike their performance. It’s really important that the board are able to monitor the performance, what is it that you’re monitoring as a board, are you trying to monitor both the finances but also, as we were talking about before, progress towards the strategy and the impact that an organisation is having, and then obviously staffs’ responsibility to monitor it, but also to be the ones that are delivering and measuring and reporting.

Decision making. Boards are going to be making those decisions, maybe resolving any conflicts that they might have, but the staff are going to be needed to present options. And then once decisions are made, to take action on those decisions. In terms of the governance process, staff are going to be supporting that. But really the board’s responsibility to be managing it.

For staff appointments, anything below the CEO really should be being done by the staff, there might be a trustee sitting on the board or a panel as a senior leadership appointment, for example, but really board’s responsibility to appoint and develop and appraise the chief exec, but leaving the rest to staff usually, again, a bit of a blurry line depending on the nature of the organisation.

For risk management and legal compliance things, you’ve got staff there to make sure that the organisation is compliant. But obviously, the responsibility ultimately sits with the board and then that’s going to be a really important thing for trustees to remember the amount that sort of levels of responsibilities they have, and how to limit any liability, reduce any liabilities that they might have.

And, lastly, and I’ll talk about this a few times today, but the relationship is just hugely, hugely important between the board and the staff, I put these two little cogs here, because – really – the two have to work together in order for the organisation to to thrive. So, you might have the board providing their insight and their wisdom being able to take that slightly removed, and slightly critical view on things. Whereas staff, it’s important that they’re able to provide the information, put forward their suggestions and their advice, because they’re obviously close to the action or running, delivering the services, and providing that support to the board if needed.

As I say, best when really the two organisations, the two groups, the two bodies are working closely together. But really, it’s a balancing act. So the two need to both be strong in order to for this to work.

If you’ve got a strong board and weak staff, the board is going to feel like it needs to intervene into the detail. If you’ve got the other way around, and you’ve got a really strong staff and a weak board, there could be some quite long-term risks; management are less likely to be held accountable, and staff might be taking on duties that should be carried out by the board. Or if they don’t, then it could be putting the organisation at risk because they’re not necessarily being challenged, or having enough rigorous enough decision making processes. Likewise, if you’ve got both weak, then obviously that’s not a good place to be. And neither group is going to be able to solve issues, you’d be sort of going in a bit of a downward spiral. Because then what happens is the reputation of the organisation declines, it becomes harder to attract effective staff and board members, the services then deteriorate, you’ve not got good people being able to … it’s a sad story; not a good story there. So you want to be able to prevent that, or if you’re there already, the organisation really needs to be rebuilt. And that’s where sometimes organisations might bring in interim CEO or an interim chair, for example, who might have that kind of specific turnaround experience to be able to support that charity to get back up on its feet. But the idea, obviously, is to have a strong board and a strong staff team.

So how do you get that strong board?

Well, there are some things that you have to do as a charity. If you are a registered charity, you are accountable as an organisation to the Charity Commission. Some charities are also incorporated. For some, that might mean that they’re also registered with Companies House. For some they might be CIOs, in which case, they wouldn’t be also registered with with Companies House, it would just be registered with the Charity Commission. But, important to make sure that if you’re a trustee, or even a staff member, you know what kind of charity make up, what your legal structure is, who you need to be reporting to, who you’re accountable to.

The Charity Commission has a lot of guidance. It has the Charities Act, which is the legal duties for charities compliance. And then it also has this document called CC3 – very catchy title for it – but what they have done is produced this quite nice infographic and summary of the duties of a trustee of what you need to know and what you need to do. Every trustee should receive a copy of this and make sure they’ve read it and understood it. It is being written and produced in a much more accessible way now, but that’s really, really important. So there’s a whole load of things you have to do.

And there’s also a whole load of things that can make governance that much more effective. So beyond the duties, how can you make sure that the governance of the organisation, which can clearly make a massive difference to the efficiency and effectiveness and the sustainability and impact that a charity can have, how do you go about doing that?

So, about 10 or so years ago, nope, sorry, about five or so years ago now, the Charity Governance Code was produced, and that was created by a cross sector working group with observation from the Charity Commission. So it’s not been developed by the Charity Commission, but by various organisations like NCVO, for example. And what it provides you is the imagining that the governance is the house.

So, you need a good strong foundation, you need to understand what the role is of your trustee and the context within which your charity is working, and it needs a roof on its house. And the roof is really about what your organisation is trying to do, what it’s trying to achieve, what direction it’s going in, where it’s trying to get to. And then the pillars that are holding that all up and giving you the structure of the house, are all these things within here. Each of these in the code, which is all available online, is broken down into the goal of what you’re trying to achieve by good practice here, by excellent practice, and also a series of best practice guidance, basically, that you can assess yourself, your organisation against. It’s split into two, so there’s guidance for large organisations that are over a million a year, and for smaller organisations that are under that. For some very small organisations, particularly where there’s no staff, that guidance is almost too much really still for those organisations. So there has been some guidance now produced for micro-organisations as well, which is really helpful. But it really describes what you could be striving towards. This is not a definitive statement of everybody should be doing absolutely everything in here. And, if you’re not, it’s not a disaster, it’s much more about these are the things that you can strive towards.

So, there are lots of ways in which you can assess your organisation against these. You can just do it yourselves by scoring and it’s a bit of a laborious exercise doing it that way. There are a couple of organisations who’ve designed surveys and questionnaires so that you can use it like a checklist and score. If every individual trustee does that, then it can be a really useful way to see a summary and say, “Where do we think we stand? What how do we think we’re doing around board effectiveness? And what are some of the areas where we think we can improve?”.

So NCVO, for example, has a governance wheel, where you can each assess and give yourself a score, it asks you a series of questions.

The Directory of Social Change, or DSC, has developed a governance app, which is free. And that’s a straightforward way of being able to do a self assessment.

There’s a digital tool called Digi-Board, of which I’m a registered practitioner, you can either do it yourself, or you can have an external consultant come in and support you to do that.

The Governance Code does suggest that about every three years, you should have an external review of your governance. And that should be the case whether you feel like you’re in a really good position or not, because there’s always places to improve. And it’s an opportunity for everyone to be able to speak to somebody who’s bit more objective and get that objective view of how your organisation’s going. So there’s lots of potential in that; a really useful thing to do.

And just lastly, I wanted to give you some top tips really from the organisations that I’ve worked with, and some of the things that I think come up quite a lot that can be really useful to improve your governance.

So firstly, to have really clear roles, everybody knows what they’re doing. Have roles descriptions, you can have Terms of Reference for subcommittees, schema delegation, so you know who’s going to be doing what.

That you have a really diverse board. So you’re moving away from any groupthink that you might have. An organisation has been founded by a particular person, they brought in their friends and family, is it time to bring in expertise from other sectors, bringing voices from people with lived experience, for example, recruit openly, so get support to do that from agencies promoted outside your circles outside of your sector.

And think about once you are recruiting those people, how your board behaves, to include everybody to make sure that everything is accessible, how your reports are produced, how meetings take place, what kind of support you might be providing for new trustees, can you buddy them up, for example.

It’s an obvious one, but that you follow your constitution. Lots of people haven’t read it or haven’t seen it for a long time. But make sure you familiarise yourself with it. And sure it’s up to date. Appreciate that you can change it, you have to go through the Charity Commission usually, but it is changeable. So it is possible to modernise it, if it needs to or change it according to the way your organisation now works.

Managing risks. So I mentioned this a little bit earlier. But making sure you’ve got a regular risk register, there are templates available to help get get that set up. And maybe even make sure that that’s a living document. So maybe you can take one of the highest risks each board meeting and discuss it, just bring it to the team. When you are bringing things to board meetings or sharing information, make sure you know as a trustee or you know, as a staff member, what information it is that’s needed, making sure it’s relevant, you’re not just providing reports for the sake of it that nobody ever reads or that people spend hours and hours developing. Keep it concise, keep it clear, connect it to the strategy that you have as an organisation so the board can do their job easily of knowing whether you’re on track or where things have gone off track or what’s not working, what you can do about that. And make sure those reports are really accessible.

Decision making. So really big thing that boards have to do and that is a huge part of governance and make sure that there’s a clear process for it. Everybody knows who’s responsible to for making those decisions and, crucially, I think the last two are probably my biggest ones.

I think relationships, as I said is the absolute key thing. Between the CEO and chair, it’s absolutely essential, that is the most important relationship, lots of really good advice and support on that from the Association of Chairs, I’d really recommend that. But also between the board and senior staff members. So much of good governance is about good, positive, effective relationships.

And lastly, this is part of all of that but keep learning. There’s no position you ever get to within an organisation where you know everything, so keep learning and keep finding out what people might need to know or know more about.

So finally, I’d say there’s lots in here, and it can feel a bit daunting. But the reassuring thing always is that the Charity Commission understands that trustees are volunteers. And so, as long as trustees are being honest and reasonable and doing the best that they can do, then they are usually protected. So that’s always a nice reassuring point to end with.

Zac Parsons
Brilliant. Well, thank you so much for that. I think it’s really useful to have that delineation between the board and the staff … I love the simple cog image, just to show that it is collaborative, and then with the good Governance Code it’s collaborative under the purpose of the charity, which I think is fantastic. Thanks for giving us some places to go and find areas to review our governance and for giving us some top tips. And obviously, I’m completely biased, but ending on the top tip of continuously developing… I promise I didn’t tell Ruth to do that. That was all by herself. So, thank you very much. For anyone who enjoyed this, then please do give us a like and subscribe. I’ve got to get those plugs in there anywhere I can. But Ruth, do you want to end with a final thought to close us out?

Ruth Dwight
Yeah, I think I’d go back to what I said at the beginning, really, which is that governance is often seen as a bit of dry topic, but actually I think it’s absolutely fascinating. As I say, I think it’s all about relationships, and about how organisations behave, and it can have such a huge impact on the difference that a charity can have for its beneficiaries. So definitely not one to be overlooked and I think actually huge, huge potential for it to make a massive difference.

Zac Parsons
Agreed. What a wonderful way to end. Thank you so much and we will see everyone next time.