Governnace and the Charity Commission

Governance in our sector is back in the news. So that puts in context the recent case of The Charity Commission refusing to publish the advice they have given to the trustees of the Shaw Trust following their investigation into the summary dismissal of the CEO and the events that followed.

Is this helpful ? Governance in our sector has to be good . Where it is not , then problems arise . The dismissal of Ian Charlesworth , and the subsequent resignations of 2 top members of staff , including the finance director, received considerable publicity . This was hardly surprising given that under Ian's leadership the Shaw Trust had grown and thrived. He was much respected by his peers in the sector .

I was proud that ACEVO gave him strong support , as we would with all our Chief executive members in similar circumstances. But this is now resolved in that Ian has moved on . And we wish the Shaw Trust well in moving forward ( they have had a recent merger with the excellent Karen Pappenheim) ,and in implelementing the advice of the Charity Commission . My purpose here is not to go back on that story but to use it to illustrate the more general point about sector governance and the need for us all to be reviewing and reforming practice. So what are the broader issues here? The governance model at the Shaw trust appears to have had a confused line between the executive and non executive. The charity's founder retained a role as a " Director General " with a number of staff reporting to him and not to the Chief Executive. He was also involved with the trustee board , with the CEO reporting to that Board. Good governance requires a clear distinction in these roles. ACEVO has published a lot of advice and guidance in this area as you would expect.

Now undoubtedly the Charity Commission have reasons for not publishing their advice. They may well be good ones , though that is difficult to know unless they publish the advice they have given . I certainly have a report of what was written but it is second hand and so makes effective commentary difficult . But we ought now to concentrate now on the broader lessons to be learnt about governance models.

The recent NPC report on governance has again highlighted the need for the sector to "wake up and smell the coffee " on governance.

On the one hand the Charity Commission have a light touch on governance as part of their general approach to regulation . This is , on balance , the right approach . But it can be difficult for my members who want to get change and move to different governance model , as for example , paying trustees where they think that is the right approach. A " light touch" approach needs to be more accommodating to change and different approaches , as long as the basic integrity of the system is maintained.

I suspect that the Commission will have to get more involved in governance. For example , in expecting the bigger charities to be implementing performance appraisal of their Boards , and to be expected to have training and induction systems.

As the sector grows then there will be more of a spotlight on our governing arrangements. As we deliver more and more public services people will rightly expect a rigorous approach to how we govern ourselves. The fact that still the majority of trustees are appointed by word of mouth is just not good enough.The Brooke Commission found that 57% of Boards rely on word of mouth recruitment. The fact that the level of Board appraisal is dismally low , ( the Brooke Commission again found 76% of Boards have no formal appraisal process ), or the fact that few boards have effective induction or training is simply not tenable if we are to maintain the levels of trust that people have in our sector.

We have made some progress with the Code of Good Governance that charities are supposed to sign up to . Evidence and research for ACEVO's Brooke Governance Commission showed that though 88% of charities know of the Code only 44% are signing up to it. This was a sector generated document , though the Commission support it and send to all new trustees. But they rather spoiled their pitch when recently the Commission's Rosie Chapman , writing in Third Sector , suggested that the recession means that charities should not be thinking of paying trustees. Unhelpful advice . Indeed I would suggest that the recession is exactly the time you review and transform your governance if it is not fit for purpose.

All third sector organisations should be prepared to tackle governance and constantly look to how to build and improve. It is a core task for the CEO and the Chair . There are many examples of good governance and brilliant trustees , but there are also plenty of examples of bad practise . So it may be time for the Commission to institute a full scale review of how they tackle governance and how we ensure more effective accountability and transparency in our sector.