The Kilfinan Group is a group of senior business people who provide free and informal mentoring to charity chief executives. Ask members of the group what their mentees frequently single out as their biggest challenge and most will reply “Handling the board”. Why is this? Are trustees viewed by Chief Executives and their staff as a help or a hindrance, as coaches or critics?
Trustee boards, of course, are as varied as the organisations that they represent. When at their best they are supportive, strategic, proactive and fun and at their worst they are exasperating, political boring and viewed as just a necessary evil. This article is an attempt to draw out some lessons that may make help senior management ask more from their boards and encourage trustees to be more productive and useful for the organisations they govern.
The Charity Commission website states that “Trustees have overall control of a charity and are responsible for making sure it’s doing what it was set up to do”. There are important legal duties associated with being a trustee but it too easy to treat the role as primarily the discharge of legal duties. Most of the rules are common sense and, unless the organisation faces serious legal or financial difficulties, the legal obligations remain as a backdrop, a “hygiene factor”. Non-compliance with the law defines a bad board but compliance is not enough to make a good board.
One legal duty worth highlighting though is the obligation to act in the charity’s best interest. This means avoiding putting yourself “…in a position where your duty to your charity conflicts with your personal interests or loyalty to any other person or body”. This duty sometimes places trustees, often well connected ones such as local government representatives, in a compromised position. This is never more so than at a time of public spending constraints when grants to arts organisations and museums are being reduced. My personal view, which is not universally shared, is that government officers or elected representatives that are also trustees of organisations which receive significant grants or service contracts from the local authority are placed in an invidious and legally dubious position. If they focus solely on the charity’s best interest, as required by law, this may conflict with their duty to the local authority or even their electoral best interests. Though it is widespread practice, the potential for conflict needs to be examined more carefully and trustees that are described as local authority “representatives” must be aware that they can only wear one hat in a charity board room and that is as the trustee of the charity.
So beyond discharge of legal duties, what makes a “good board”? Trustees must keep a focus on and occasionally re-examine the charity’s mission. Many boards spend their meetings discussing tactical details of survival or other pressing issues and forget to consider whether the course of action will actually further the charity’s mission – its public benefit. Boards should also be prepared to ask themselves from time to time whether the charity should continue to operate or whether the public benefit would be better served by closing or merging with another organisation. No organisation, particularly one that enjoys special privileges, as charities do, has a divine right to exist.
Staying faithful to the organisation’s mission can mean more than just testing whether the business activities will achieve the public benefit. There is a not unreasonable expectation among members of the public that charities will behave in a manner that is consistent with their mission and status. Are the fundraising activities ethical and appropriate? Is a business sponsor’s image consistent with the mission? Are the staff treated in a manner that donors and funders would expect? Are the salaries and expenses incurred appropriate and proportionate to the organisations’ activities?
Trustees are also there to provide a strategic perspective to complement the executive’s operational focus. Many boards spend time considering how to generate enough income to make it through the next twelve months but this may not be the best strategic direction of travel. A useful exercise, particularly for arts organisations and museums in a time of public expenditure cuts, is to examine the mix of income today, usually a blend of earned, grant and contributed income, and then to define how that might look three and ten years from today in light of the changes that are taking place around us. Clearly, a dependence on a small number of sources of income, particularly government grants in the current funding climate, should ring alarm bells. Once a consensus develops about what the income mix might look like in the future, it becomes easier to identify the changes that may be needed today to achieve that goal tomorrow, including a reserves policy that is appropriate to the situation.
So who are the right individuals to make up this mythical supportive, strategic, proactive and fun board? Diversity is essential. This does not only mean the diversity that represents Britain’s multi-cultural communities, but also diversity of skills, experience and age. Boards need to include not just the great and the good, but also people with business or professional skills and knowledge of the art form or the charitable mission. There is also a clear need to develop a new cohort of younger trustees that will step up to become the chairs of the future.
Diversity of personality is also a vital ingredient. After all, boards are only assemblies of individuals, so the chemistry that makes board meetings energising, challenging and fun depends on the mix of personalities. People that always challenge may be disruptive, but they are an insurance policy against group think, a common malaise within boards, particularly where the organisation is led by a charismatic chief executive.
Diversity and healthy discourse is hard to maintain if boards are not refreshed regularly. It is good practice for trustees to serve fixed terms. The most common arrangement is two terms of three or four years, but there may be good reasons why a third term should be offered to committed and engaged trustees, though this should be an exception rather than the rule and require a special vote of the board. Trustee terms don’t preclude the continued involvement of valued, supportive individuals, such as founders, that have reached their term limits, as honorary roles can usually be created – patron or president. Indeed, sometimes these individuals are more valuable to the organisation in ambassadorial roles than they were as trustees.
Trustees must also be prepared to take risk. Of course, this must be within a context of wise stewardship of the organisation, but risk and reward are inextricably linked and few organisations can achieve their goals, whether artistic, social or financial, without taking risks. The role of trustees is not to wear carpet slippers and seek an easy life but to support the staff to take measured, managed and carefully evaluated risks so that the organisation can realise its potential. It often seems ironic to me that trustees with a business background that take significant risks in their professional life seem to be reluctant to take risks when they become charity trustees.
A great deal of the discussion about trusteeship focusses on governance and trustees as external, independent critics. Unfortunately, this often leads to trustees behaving like seagulls, flying into the meeting room, making a mess and then flying out again. External scrutiny is essential, but the best trustees will always work to find solutions to problems, not just to critique what is put forward for their approval. As a trustee, you should always ask what you can do to support the staff to address an issue, particularly if it arises because the board have refused to approve a request or decided to pursue a particular direction. If you make a mess, you should help to clear it up.
Personally, I find being a trustee of charities and arts organisations rewarding, interesting, challenging and fun, at least most of the time, but it does involve playing many and varied roles –officer with legal duties, prudent risk-taker, supportive critic, strategic thinker, counsellor, ambassador. When trustees play all these roles well, the board can be a huge asset to the organisation.
 Charity Commission website: https://www.gov.uk/guidance/charity-trustee-whats-involved